When should investors redirect funds from Ethereum Classic to another crypto
Ethereum Classic’s market has not subjected itself to any sort of bullishness for quite some time now. Even though the ‘rise in price’ narrative is gaining steam in the broader market, the alt has been continuing its downward trajectory on the price charts.
In the last 24 hours alone, for instance, the crypto shed more than a percent of its value. It was seen exchanging hands around the $52-mark, at the time of writing.
Multiple downfalls
Well, ETC’s downward trajectory is definitely not something new. The quick pace of development activity, however, is the astonishing and not-so-expected twist to ETC’s otherwise monotonous tale.
It can be observed from the snapshot attached below that this metric rapidly rose in October and hit a yearly high. Nonetheless, it fell back as quickly as it rose in the same month and was seen quite close to its local bottom, at the time of writing.
What’s more, amidst Grayscale’s ETF hype, the ETC Trust has been commanding the biggest discount to its net assets among all of the firm’s investments. At press time, it was seen that ETC’s shares were trading at less than half the price of ETC’s spot value. As per data from Grayscale, the Ethereum Classic Trust closed at an underwhelming $19.3 on Friday.
At this point, if you divide the $652 million ETC that the trust owns by the nearly 14 million shares outstanding, you’ll get a value of $46.64 per share. In other words, investors are getting exposure to ETC for around $0.4 on the dollar.
So, is this the right time to fill bags?
Simply put, no.
One, buying into the trust doesn’t mean that investors would be able to cash out at the going rate of the crypto. Even amateur investors who believe that they’re getting shares at a bargain of more than 50% have no assurance that the discount would get narrower when they decide to sell.
So, at this point, any sane investor familiar with the whole ecosystem would instantly decline to enter the ETC market. But, for dilettantes, ETC is like the golden duck – given its earlier out-of-the-blue rallies.
In effect, market participants who bought the token during May’s highs are still clinging to it, hoping history will repeat itself.
Clouds of uncertainty
Keeping aside the share’s market price, there is a lot of unpredictability associated with the valuation of Ethereum Classic itself. Given the crypto-asset’s current downward trajectory, even its 6 September local high of $77 seems quite far-fetched right now.
To make things even worse, the alt has been trading below its moving average over the last couple of days – Not a healthy sign. In essence, it doesn’t look like ETC would be able to inch closer to its $180 ATH anytime soon.
ETC/USDT || Source: TradingView
Lost cause
Even the on-chain metrics of the coin did not support the change in trend narrative, at press time.
Consider the NVT itself, for instance. This metric has been treading more towards the lower side of late, implying that Ethereum Classic’s network value hasn’t been able to keep up with increased usage of the network. This potentially represents bearish sentiment.
Now, at one point, alts like XRP seemed to be in quite similar positions, one where achieving previous ATHs seemed to be close to impossible. Attaining that feat now, however, seems to be quite a possibility for such alts.
Nevertheless, XRP and other alts’ success doesn’t necessarily mean that ETC would be able to pull off something similar. ETC is cut from a different cloth altogether. In light of the state of its current price direction and metrics, it is quite unlikely the crypto will recover and pump anytime soon.
So, investors can consider re-directing their funds to better-performing assets, instead of just waiting for this crypto to rally.
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Lavina Daryanani, Khareem Sudlow
