In a wild week for altcoins, both Ethereum (CCC:ETH-USD) and Ethereum Classic (CCC:ETC-USD) are setting new all-time highs. However, the rally in ETC has some investors a little confused. Why are some choosing ETC over ETH? And where are Ethereum Classic prices headed next?
To start, Ethereum has been on a tear in recent weeks. Many investors are flocking to the No. 2 cryptocurrency as an alternative to Bitcoin (CCC:BTC-USD). As InvestorPlace contributor Robert Lakin wrote, an interest in decentralized finance (DeFi) and upcoming blockchain upgrades are also helping. As Ethereum co-founder Vitalik Buterin recently shared, Ethereum will soon have a sharding feature. This will basically help split its database into mini-blockchains, addressing congestion that users have complained about.
Perhaps most importantly, Ethereum is also working to become more eco-friendly. Buterin said that blockchain upgrades will include a shift from proof-of-work to proof-of-stake. Current levels of Ethereum energy consumption have prompted investors to find other alternatives. Proof-of-stake will ultimately remove the need for ETH miners.
With all of these updates in mind, it makes sense that Ethereum prices hit an all-time high above $3,500 yesterday. But ETH is not alone in its record rally.
Since earlier this week, Ethereum Classic prices have also been climbing. Today, the altcoin is trending on Twitter and setting a new record high of its own above $93. That reflects price gains of more than 50% over the last 24 hours.
So why are some investors opting for ETC instead of ETH?
Why Are Ethereum Classic Prices Rising?
As InvestorPlace Assistant News Writer Brenden Rearick wrote earlier this week, Ethereum Classic emerged in 2016, after a hack exposed risks in the blockchain. Fans of Ethereum Classic prefer its commitment to the original technology. On the other hand, Ethereum has become much larger in terms of market capitalization, and is considered more efficient.
But importantly, ETC is an altcoin that many investors may have forgotten about in recent weeks and months. In fact, the altcoin gained just 26% in 2020, a year that saw exponential gains for other cryptocurrencies. This has prompted some on social media to speculate that investors see it as a cheaper version of Ethereum.
However, as CoinDesk reported, there are genuine reasons that investors may be pouring into Ethereum Classic right now. Messari highlighted that Ethereum Classic could be an answer to inflationary pressures, because its ultimate supply is capped at 210.7 million coins. This fight against inflation is a key driver of interest in cryptocurrencies, meaning the Messari theory does make sense.
So where do Ethereum Classic prices go next? As Rearick wrote, investors are divided on ETC. With its rally today, it has already surpassed a handful of year-end targets. Some analysts still see prices above $100 in store by December, and Wall Street may soon be revising its forecasts.
With fears of inflation swirling, be sure to keep this story on your radar.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is the Editor of Today’s Market with InvestorPlace.com.