Is Ethereum Classic (ETC) Actually Running or Merely Sentiment Driven?

The general spike in the price of most (nearly all) of the cryptocurrencies in the market has been the course of jubilation for most investors in this space.During the last two weeks, the different cryptocurrencies have risen and risen to levels the stock market could only dream about. One currency that has enjoyed the above quite a lot has been Ethereum Classic (ETC).The week has seen the price of Ethereum Classic rise from as low as $18 to highs of up to $33, a near 100% increase in prices. This can be seen in the chart below: ETC Daily ChartChart courtesy of coinmarketcap.comThe above has necessitated our look into the currency as we try to establish who and what is the driver of such a valuation.The HistoryBack in 2016, a venture capital fund known as The DAO which is built on Ethereum raised $168 million with the intention of investing this into smart contracts: computer protocol intended to facilitate, verify, or enforce the negotiation or performance of a contract and used primarily in the enforcement of cryptocurrencies.A few weeks later, in May 2016, the company was hacked and drained of 3,689,577 Ethereum. This brought about the debate on whether a fork on this system was necessary for the company or not. Well, it seems many thought it was quite necessary.Ethereum Classic came about in July 2015.The currency was as a result of a hard fork that took place during this period courtesy of disagreements between two factions of its users: those opposed to the fork and those promoting it. The former held on the principle of ‘immutability’, one that holds that the blockchain cannot be changed.The latter got to obtain a forked currency which is today known as Ethereum while the former in turn retained the ‘unforked’ currency that is Ethereum Classic.Since then, a lot has happened to the currency. It remained stable for quite some months at about $1 until March this year when it began rising. It hasn’t stopped going up since and neither has its traded volumes.The DevelopmentsThe most recent development has been the ‘New Monetary Policy’ the currency is planning to adopt. The latter has been presented to the market as the catalyst that drove the price of Ethereum Classic upwards from $18 to $33 in just one week.We will debunk this later.The policy has been stated as one meant to permanently alter the supply of Ethereum Classic. It follows a hard fork that took place earlier this year that would see the reduction of the ETC block reward over time until the currency supply reached a hard cap of approximately 210 million to 230 million tokens.The first of these reductions, a 20 percent reduction, would occur at block height of 5 million, which should be mined in about two weeks.This, coupled with the implementation of a new algorithm that increases the difficulty of obtaining additional coins, go a long way in ensuring that the currency is ‘stable’ in the long run which is where the name ‘monetary policy’ comes in.The Price SpikeA lot of volatility has been seen in the cryptocurrency world with the currencies rising and falling in one day. It comes as no surprise nowadays when the market witnesses the price of a currency jump from $9,000 to $11,000 and back down to $9,000 in one day as was witnessed in the price of Bitcoin as late as yesterday.As such, a volatile price is expected for such cryptocurrencies. However, Ethereum Classic has seen a consistent rise in price which begs the question, what is the catalyst?Initially, the narrative held that the implementation of the new monetary policy was the reason behind this, however, we have our reservations and they are warranted.The implementation of this new protocol has been the talk of town since early this year and with each lag, the effects on the upward share price movement seemed to have been mitigated. As such, as we draw closer to the close of the year, the announcement that there will be a new protocol is more mundane than was back in the beginning.This being the case, the reason for the price movement is therefore the traded volumes.During the week, a large volume of this currency was traded and most of it was by the South Korean market which moved over 40% of the traded volumes to close at nearly $700 million. Therefore, we believe that the above was more as a result of market sentiments than it was catalyst driven. As such, we do not expect the high price to hold in the short run, however, the price will rise again in the long term.ConclusionWe will be updating our subscribers as soon as we know more. For the latest updates on ETC, sign up below!Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.