Ethereum Classic Market Update: ETC/USD under pressure following 51% attack

Ethereum Classic (ETC) attempted a recovery to $7.35 on Wednesday, but failed to hold the ground and dropped below $7.00 in a matter of minutes. By the time of writing, ETC has recovered to retreated to $7.10. The coin dropped below has lost nearly 2% since the start of the day, however, it is still above the critical $7,00, which is a positive signal for the bulls. Ethereum Classic take the 25th place in the global cryptocurrency market rating with the current capitalization of $824 million.

A second 51% attack on the Ethereum Classic blockchain may erode the trust in the project unless the team comes up with a viable solution to avoid similar situations in the future.

Ethereum miner Bitfly reported that order and contents of over 4,000 blocks were shuffled around during the weekend. The hackers managed to double-spend ETC worth of $5,6 million, while the cost of the attack amounted to $204,000. That’s what they spent to get enough hash power to launch 51% attack.

Vitalik Buterin, a co-founder of Ethereum, suggested that Ethereum Classic should change the consensus mechanism to Proof of Stake to reduce the risks of double-spend attacks. 

ETC should just switch to proof of stake. Even given its risk-averse culture, at this point making the jump seems lower-risk than not making it.

ETC/USD: Technical picture

On the intraday charts, ETC/USD recovery is capped by a combination of 1-hour SMA50 and SMA100 on approach to $7.20. Once this barrier is out of the way, the upside momentum may gain traction with the next focus on the recent recovery high of $7.35 and $7.40 reinforced by the upper line of the 1-hour Bollinger Band.

ETC/USD 1-hour chart

On the downside, the local support is created by the psychological $7.00 reinforced by 200-daily SMA.  A sustainable move below this area will worsen the short-term technical picture and bring 100-day SMA at $6.50 into view.

ETC/USD daily chart