Ethereum Classic (ETC) Hits 6-Month High: What's Driving the Surge?
Ethereum Classic's Impressive Rally
Ethereum Classic [ETC] experienced a significant rally, jumping 17.27% to reach a 6-month high of $25.59 before settling slightly at $24.8. This surge has caught the attention of investors and analysts alike.
The trading volume also saw a massive increase, surpassing $1 billion, a 290% rise reflecting substantial capital inflow. The market capitalization of ETC reached $3.9 billion, a milestone not seen in the last six months.
Why the sudden resurgence of ETC amidst a broader market correction?
Buyers Return with Force
While the cryptocurrency market has seen buyers stepping back, Ethereum Classic has witnessed increased demand.
- On July 18th, ETC recorded a Spot Buy Volume of 3.57 million, compared to a Sell Volume of 3.08 million.
- The trend continued on July 19th, with Buy Volume at 685k versus Sell Volume at 623k.
This consistent buying pressure resulted in two consecutive days of positive Buy-Sell Delta in the Spot market, at 492k and 61k, respectively.
Derivatives Market Shows Skepticism
Interestingly, as buyers entered the market, strategic positions indicated anticipation of future moves.
- Ethereum Classic’s Open Interest (OI) increased by 28.2% to $313 million.
- Derivatives Volume soared by 213.5%, reaching $2.43 billion.
Typically, a simultaneous surge in OI and Volume points to growing participation and high capital flow in the Futures market. However, despite the price increase, many investors appear to be betting against the rally. The Long Short Ratio remains below 1, currently around 0.97, indicating more investors are opening short positions.
Profit-Taking on the Rise
As ETC rallied, so did the desire to secure profits. Exchange Netflow initially surged to $10.37 million but decreased to $1.28 million. Such a significant uptick in Exchange Netflow implies that investors, who have been underwater for the past six months, are aggressively cashing out.
Historically, this behavior often precedes a price decline as downward pressure increases.
Can the Bulls Maintain Momentum?
Despite market volatility, Ethereum Classic has shown resilience, driven by buyers accumulating the asset.
- The Stochastic RSI surged to 100, indicating an overbought condition.
- The Relative Strength Index (RSI) also reached an overbought level at 86.
These momentum indicators suggest strong buying pressure but also warn of increased volatility. If buyers persist, Ethereum Classic could target $29. However, buyer exhaustion could lead to a pullback towards $20.80.
Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Cryptocurrency investments are inherently risky. Always conduct thorough research and consider your risk tolerance before investing.