Ethereum Classic Surge Following Digital Currency Group
Amid the general recovery of the crypto market led by Bitcoin, the price of Ethereum Classic (ETC) has risen to reach its highest point in almost a month.
This surge in price was sparked by Digital Currency Group's $50 million investment backed by Barry Silbert. After DCG’s purchase, Ethereum Classic, which is the 17th largest cryptocurrency by market value, began trading for as high as $63.19, increasing by approximately 98%.
Simultaneously, the market value of all the ETC tokens currently circulating the market when tallied exceeded $7.53 billion.
The General State Of The Crypto Market
On June 21, Digital Currency Group (DCG), made an announcement revealing that it had authorized the purchase of up to $50 million worth of shares from Grayscale Ethereum Classic Trust (OTCQX: ETCG).
On the day of the announcement, Ethereum Classic fell by 22.56%, a phenomenon experienced by the rest of the cryptocurrency market, a result of the hashrate tumble due to China’s crackdown on the crypto industry within its borders, and the country’s decision to ban all mining-related activities.
However, despite many difficulties, the Bitcoin and altcoin markets recovered sequentially. Traders took particular advantage of the dip, quickly taking buying opportunities in the Bitcoin market as BTC/USD slipped below $30,000.
According to the press release, DCG bought the shares on the open market with cash already on hand. Before the purchase, ETC had recorded its ATH in May, just like many other crypto tokens in that period, before falling about 70% into the low $30s, where it remained until DCG's massive investment. ETC currently trades above $53.
Several digital currency analysts are however suggesting the ETC rally to be a speculative fever similar to the Dogecoin (DOGE) frenzy rather than a knowledgeable investment based on the potential of blockchain technology.
DCG made a remarkably similar move in March; buying up shares of Grayscale's chief Bitcoin Investment Trust.
Grayscale's Part in the Purchase
Grayscale is a New York-based investment firm whose trusts were developed to provide accredited investors with access and exposure to digital currencies in the form of traditional securities thus saving them from the stress of setting up a wallet or securing cryptographic private keys.
Ethereum Classic was created in 2016 due to a controversial split of the original Ethereum blockchain. After a hack on the Ethereum based DAO project, Russian developer and Ethereum Founder, Vitalik Buterin, proposed that the attack be erased from the ETH network's blockchain history, leading to the creation of ETC by opposing factions.
Since its split, ETC have followed and imitated changes on the Ethereum blockchain over the years with its Magneto hard fork expected to go live in July, weeks after Ethereum’s Berlin. Like previous years, funding for ETC’s hard fork will be borne by Grayscale, who has funded ETC’s 4 developers since 2017, a commitment the firm has said will last through the end of 2021.
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