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After Ethereum Classic Crash, Patient Investors Can Get In

Let’s be honest. In terms of market capitalization and trading volume, Ethereum Classic (CCC:ETC-USD) doesn’t hold a candle to Ethereum (CCC:ETH-USD). However, this doesn’t mean that Ethereum Classic isn’t worth owning.

Concept coins for Ethereum (ETH) and Ethereum Classic (ETC).

Source: Shutterstock

Indeed, I’d say that among the vast sea of altcoins, ETC is an underappreciated gem that investors should consider now.

It’s interesting to witness sentiment change so quickly in the world of cryptocurrency. Ethereum Classic rallied 128% across the first five days of May, but then crashed during the next couple of weeks.

And now that ETC is out of favor, it’s a great time for contrarian investors to add it to their watch list, and perhaps even take a position.

Analyzing the Ethereum Classic Price

According to InvestorPlace contributor Sarah Smith, Ethereum Classic emerged in 2016. Evidently, the fans appreciate its “commitment to the original technology” (hence the name “Classic”).

Back in November 2016, believe it or not, ETC was trading below $1. The price shot up to $40 in early 2018, but then came the “crypto winter” bear market.

For a couple of years, all attempts to keep the Ethereum Classic price above $10 failed. But then, in March 2021, the buying pressure really started to ramp up.

It was an astounding multi-month rally, culminating in the ETC price reaching $176.16 on May 6. Unfortunately, this rally wasn’t sustainable.

A painful sell-off followed, and on May 23, Ethereum Classic was trading between $41 and $62. Hopefully, the buyers will step in and save the day so that the investors can relax and enjoy the summer.

Great Inflation Hedge

People buy cryptocurrency for many reasons. For some folks, it’s just a fun asset class to gamble with.

A certain amount of speculation is fine, but there are more serious reasons to buy crypto. Among them is the desire to avoid the wealth-destroying effect of inflation.

The U.S. dollar and other fiat currencies have been particularly prone to devaluation in 2021. It’s gotten so bad that you might even hear newscasters talking about inflation in the non-financial media nowadays.

Now, I’m not suggesting that anyone should exchange all of their dollars for cryptocurrency right now (though this might actually be a possibility in the coming years).

However, a reasonably-sized position in certain cryptocurrencies might not be a bad idea. One potential issue with more popular Ethereum, though, is that it doesn’t have a a fixed supply cap.

In contrast, Ethereum Classic’s ultimate supply is capped at 210.7 million coins. Meanwhile, governments around the world continue to print up fiat currency units at a rapid pace.

Cryptocurrency enthusiasts might choose to build a position in ETC simply to mitigate the impact of fiat inflation on their portfolio.

Ready to Play Catch-Up

When InvestorPlace contributor Mark R. Hake declared that Ethereum Classic is likely to catch up to Ethereum and rise nine times faster than ETH over the next three years, I had to look further into this.

Hake mentioned Ethereum Classic’s supply limit, along with the fact that ETC has a much smaller market capitalization than ETH.

You’ll have to read Hake’s article if you want to see his calculations.

For now, we can say that Ethereum is like a large-cap stock, while Ethereum Classic is comparatively like a small-cap stock.

And, small-cap stocks often tend to move faster, percentage-wise, than large-cap stocks. That type of leverage is what makes small-cap stocks appealing to some traders.

Likewise, cryptocurrency traders can own ETC and hope to get some leverage if and when the ETH price rises in the coming months and years.

It’s a speculative bet, no doubt, but there’s a certain logic to it and Hake’s take is worth considering.

The Bottom Line

I don’t know if we’ll ever see a day when Ethereum Classic is as popular as Ethereum.

But then, perhaps it’s not a bad thing that ETC is lesser-known. It could be the secret weapon in your crypto portfolio, offering leverage while helping to combat fiat inflation.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content — and crossed the occasional line — on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


Article printed from InvestorPlace Media, https://investorplace.com/2021/05/after-ethereum-classic-crash-patient-investors-can-get-in/.

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