The Next Dogecoin? Traders Pump Ethereum Classic Price to Record High

Ethereum Classic’s price surged overnight, sending the token into uncharted territory. In the last week, it has demolished its April 15 high of $38.43, ascending all the way to $97.24 today, according to data from Nomics. 

But, depending on the exchange you use, you might be paying a lot more. On Coinbase, the price went as high as $149.75 before settling down into the $127 range—a full $35 more than on Binance and $12 more than on trading app Robinhood. 

While the large price discrepancy is likely short-lived, the upward price movement is real. Explanations for the trend include overall exuberance across the market, ETC’s listing on popular trading apps, and major changes to its competitor chain.

Ethereum Classic is the result of a 2016 fork of the Ethereum blockchain. After a smart contract related to decentralized venture capital project The DAO was exploited for 3.6 million ETH (then $50 million), the Ethereum community rallied behind two different courses of action. Most stakeholders wanted to intervene and change the blockchain’s code to retroactively eliminate the theft. Others wanted to do nothing and let the theft stand.

Unable to reconcile their fundamental differences, developers went through with a hard fork. The anti-interventionist camp became Ethereum Classic, continuing to use the original Ethereum blockchain. 

For years, Ethereum Classic, or ETC, has trundled along; throughout 2019 and 2020, it never rose above $13. In the same time frame, ETH never dipped below $100.

But it’s enjoying a moment as demand for altcoins such as Dogecoin, Bitcoin Cash, and EOS also intensifies. 

Will Foxley of cryptocurrency mining company Compass Mining told Decrypt, “Mining Ethereum and Ethereum Classic now has about the same profitability, following the latter coin's recent price surge. It's remarkable if you think about where Ethereum Classic was less than a year ago: reeling from multiple 51% attacks, little application traction and a split core developer team.”

But why?

For starters, as US Federal Reserve Chairman Jerome Powell said last week in reference to Dogecoin, which has risen from $0.01 to $0.62 this year despite being created as a joke, “Some of the asset prices are high.” 

Noted Powell, “You are seeing things in the capital markets that are a bit frothy.” Froth is actually a technical term that means prices are unsustainable because they’re higher than the intrinsic value of the asset. Ethereum Classic diehards might argue that this isn’t true of ETC—that it’s historically undervalued instead. 

ETC also benefits from three key exchange listings: Binance, Coinbase and Robinhood. While the former is the most-used exchange in the world, the latter two are gateways to crypto novices as they focus on user experience and make it easy to buy/sell. Robinhood and Coinbase, in fact, are currently trending as the #1 and #3 top apps on the Apple App Store—above TikTok, YouTube, and Instagram.

Technical reasons could also be at play. The Ethereum blockchain is in the middle of transitioning to a proof-of-stake Ethereum 2.0 blockchain that will do away with energy-intensive ETH mining, in which computers connected to the blockchain secure it and earn tokens by solving extremely hard cryptographic puzzles. 

Ethereum Classic, however, has no plans to switch, meaning that ETH miners may want to use their hardware on the ETC chain. And, even before Ethereum’s merge to a new chain, a July upgrade will implement a proposal called EIP 1559, which will lower the rewards given to miners.

“It will be interesting to see if Ethereum Classic's price holds up, particularly as the greater Ethereum ecosystem gets closer to EIP 1559 and the Eth 2.0 ‘Merge,’” said Foxley. “If the coin's price does, it could be a lifeline, albeit weak, for capital heavy GPU miners."