Ethereum Classic [ETC] just concluded its most bullish month in July, during which it soared by more than 200%.
If you hold ETC, chances are that you are wondering whether to sell or whether to hold in anticipation of a more bullish recovery. Here are some things to consider, that might help you make a more informed decision.
After delivering a 244% upside in July, ETC experienced resistance slightly above the 0.786 Fibonacci retracement level.
This was its biggest bounceback since the start of the bear market in 2021 but some investors have already capitalized by taking profits.
As a result, ETC has so far pulled back by as much as 28%. An expected outcome considering the heavy upside.
Source: TradingView
Despite the bearish pullback, ETC is already experiencing healthy demand in the first week of August. Its $37.59 press-time price represents a 17% rally in the last two days after bouncing off the 0.5 Fibonacci level.
This confirms that ETC is still experiencing healthy demand at its current level, and more importantly, relatively low selling pressure.
Evaluating the possible outcomes
The above observation suggests that Ethereum Classic might maintain its price level above $30, and potentially seek more upside.
However, this would require an incentive to encourage investors to HODL. The latest rally may have been supported by the expectation that many investors and miners who prefer a Proof of Work consensus will shift to Ethereum Classic.
Ethereum Classic’s market cap growth confirms a strong inflow of capital, especially since mid-July.
Its market cap more than doubled from less than $2 billion at around mid-July, to as high as $5.9 billion by 29 July. The network also experienced a healthy uptick in development activity, hence contributing to investors’ sentiment boost.
Source: Santiment
While healthy development activity may provide a healthy sentiment boost, the jury is still out on market forces in August. If the month turns out to be bullish for the crypto market, then ETC will potentially experience more upside.
On the other hand, if the bears reclaim dominance, they will wipe out ETC’s gains.
Well, the token’s strong upside in July is a testament to the strong demand that the cryptocurrency garnered after a previous heavily bearish period.
The crypto market has generally demonstrated bullish strength but a similar outcome occurred in the second half of March. Investors should thus move cautiously in case a similar outcome plays out.
