In our December 7th report, we had forecast a bullish reversal in the Ethereum Classic token. Additionally, we had also indicated our willingness to invest in a call option to gain from the predicted uptrend. The Ethereum Classic token, which was trading at about $23.50, rallied to a high of $34.22. Correspondingly, our call option expired in the money. The ETCUSD pair, which is currently trading at $29, is expected to remain bullish due to the reasons presented below.
As mentioned in our previous report, the new monetary policy employed to limit the total supply of ETC tokens to a range of 210 million to 230 million has turned it into a deflationary currency. Further, the block reward has decreased to four ETC from Dec 12 onwards, from the prior five ETC. These two major changes have turned ETC significantly bullish.
A cryptocurrency should have the ability to record transactions, which cannot be modified in any manner. Ethereum, which crossed $600 yesterday, failed in that aspect. The introduction of the hard fork has created questions about the immutability aspect of Ether. On the other hand, Ethereum Classic is highly immutable. Thus, supporters of Ethereum Classic argue that it should command more value.
Ethereum Classic, which is the original chain, has all the capabilities as Ethereum. It is a decentralized programmable blockchain, which offers the functionality of smart contracts and decentralized applications. Both Ethereum and Ethereum Classic share the same smart contract language called Solidity.
However, Ethereum became popular after it formed the Enterprise Ethereum Alliance partnership. Thus, a large number of dapps were created on the Ethereum platform. In the past few weeks, there has been huge network congestion in the Ethereum blockchain. That may discourage companies from using the Ethereum platform to create dapps (decentralized applications) and instead opt for the ETC platform.
Such an expectation is fuelling the rally. Some of the noteworthy projects and ICOs on the Ethereum Classic platform are Postalgia, DEX, Corion, InPay, Stamp.io, BitTicket, etc. Thus, a limitation in the supply of ETC tokens, immutability, and smart contract facilities at par with Ethereum is expected to keep Ethereum Classic bullish.
Technically, as the image below shows, the ETCUSD pair has broken above the ascending triangle pattern. Thus, we can expect the uptrend to continue in the short-term.
To gain from the uptrend, we may park our surplus funds on a call option offered by a reputed binary broker. Further, the option should remain valid for one week and the ETCUSD pair should be trading near $28 at the time of investment.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
