The Ethereum Classic [ETC] community can be considered in the middle of a controversy involving a smart contract platform called Ergo. This controversy might be a key reason for ETC’s bearish performance and price slippage below $27.
The ETC controversy stemmed from Ergo’s announcement that it took over control of a Twitter account associated with ETC. The official announcement revealed that the Twitter account has a large following from the ETC community.
I started this account with memes about an important topic. @ErgoFoundation made the decision to use an account with many followers from the ETC community. Many #Ergo community members don't like this decision, but ultimately, it's the foundation's decision. (1/5)
— Ergo (@ErgoBlockchain) October 9, 2022
The account takeover brought some controversy, with some claiming that Cardano’s Charles Hoskinson was behind it. Hoskinson criticized ETC in the past, thus sowing the seeds of discord within the ETC community.
On the other hand, Ergo made its focus clear. It plans on creating smart contracts and dApps. Furthermore, its involvement with ETC may pave the way for dApp development.
Are the bears around?
The controversy involving the Ethereum Classic community and Ergo may have played a hand in dampening investors’ sentiment. On 10 October, ETC traded at $25.97 after tanking by slightly over 10% from last week’s highs.
ETC’s sell pressure in the last few days was strong enough to push below the $27.90 price range. This was a critical support zone for the price because it sat right on the 0.382 Fibonacci retracement level.
The downside price action previously experienced friction in this zone, indicating that there was some accumulation at the $27 range.
The excitement associated with Ethereum Classic during the Merge has already dissipated. ETC has been struggling with lower volumes since then and low organic demand contributed to its downside.
Furthermore, ETC’s volume dropped to its four-week lows courtesy of its ongoing south move. Despite this, ETC maintained strong development activity as witnessed on 10 October. However, the budding development activity has done little to boost bullish sentiment and cushion ETC against more downside.
The derivatives market also demonstrated a similar situation. Both the Binance and FTX funding rates hovered near four-week highs. The demand for ETC in the derivatives market was also disproportional to the price performance.
Here’s AMBCrypto’s price prediction for Ethereum Classic (ETC) for 2022
Assessing the possible outcomes
The current expectation was that the above indicators might point towards a potential pivot. The factors discussed above may help fuel a sentiment shift.
However, this wasn’t a guaranteed outcome. We might see ETC continue on its downward trajectory if the recent controversy spoofs investors too much that they panic sell.
ETC’s next support zone was near the $25 price range which had previously provided some support and resistance. The next support level lower than that would be near the $22 price range on the 0.236 Fibonacci zone.
However, at press time, on 11 October, ETC fell to $23.95 post plummeting by almost 11% in the last 24 hours.