The central theses
- Ethereum Classic is up 11.5%.
- “Cheaper Ethereum” surges as Ethereum’s Proof-of-Stake update approaches.
- Ethereum miners have also flocked to Ethereum Classic, taking its hashrate to new all-time highs.
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ETC and ETH are up 11.5% and 1% respectively on Monday.
Ethereum Classic Rallies on Merge Hype
Ethereum Classic capitalizes on anticipation of Ethereum’s landmark “Merge” event.
ETC is up 11.5% on Monday, rising from $32.12 to $36.10 at press time. The Ethereum fork previously ranged between $30.90 and $33.90. According to CoinGecko data, ETC trading volume has surged from around $265 million to $1.1 billion over the past 24 hours, suggesting the breakout could be sustained.
While there is no clear driver behind Ethereum Classic’s rise, it is likely to benefit from Ethereum’s upcoming proof-of-stake upgrade. Dubbed “The Merge” by Ethereum enthusiasts, the highly anticipated event will see the number two cryptocurrency drop its proof-of-work consensus mechanism in favor of proof-of-stake. The merger, currently scheduled for September 15, is expected to reduce ETH emission by 90% and make the network 99.9% more energy efficient.
The main asset that will be affected by the merger, ETH, also rose on Monday. It is up about 1% and trading at $1,582 at press time. While ETH experienced an upswing in the run-up to the summer event, ETC also saw a surge of renewed interest. Unlike ETH, ETC also causes “unit bias” as the price per token is lower than ETH. This can result in market participants buying into an asset without considering the market cap, which determines an asset’s overall value (Bitcoin has the highest market cap of crypto, followed by Ethereum and so on). Alongside repeated endorsements from Elon Musk, unit bias has helped Dogecoin’s DOGE rally from fractions of a cent to $0.73 in 2021. In the case of Ethereum and Ethereum Classic, ETC is sometimes perceived as “cheaper Ethereum” since one ETH is worth $1,582.”
It’s also worth noting that post-merger, Ethereum miners will become obsolete, which will cause many to flock to the Ethereum Classic proof-of-work network. Since the market bottomed in late June, the network’s hash rate has more than doubled, hitting an all-time high of around 47 terahashes per second (th/s) on Monday. This means the network is now more secure than ever.
Disclosure: At the time of writing this article, the author of this article owned ETH, ETC and several other cryptocurrencies.
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