ETH vs. ETC - Potential Parity - Follow Up On Technical Analysis Article

 This article is a short follow up on our article from saturday. That article can be found here.

Since that article was posted, ETH has fallen from .0193 to .0181 and I still have a target price of .01 BTC for ETH, on the flip side ETC has risen from .0025 to .00389 with my target of .01 still in
Place.
ETH Before


ETH Updated

ETC Before


ETC Updated

In the the above charts, you can see how our analysis has performed since publishing.


This article will not be about Technical analysis, it is about the fundamental reasoning behind my call for price “parity” among both ETH and ETC chains. Please note, I have no bias towards the ETH fork issue, this is simply to explain the market dynamic that I think will come into play.

“Stock Split”

Ethereum investors are left with two versions of Ethereum when the fork happened, those two versions are both ETH and ETC. This is very similar to when a traditional public corporation decides to do a stock split.
Investopedia.com definition of a stock split:
“After a split, the stock price will be reduced since the number of shares outstanding has increased. In the example of a 2-for-1 split, the share price will be halved. Thus, although the number of outstanding shares and the stock price change, the market capitalization remains constant.”

Based on the above definition, and if the market where to react to the dilution of Ethereum as a stock split, that would mean that ETH and ETC should both equal 0.10BTC holding a market cap of approx $1.2B. The Ethereum will still hold a market capitalization of $1.2B If ETH and ETC where to both have a market capitalization of $600M.

Ultimately the market will decide if this is true.

Miner Support

There is a positive sign for ETC that i'd like to point out, the hash rate of  ETC has skyrocketed this week, at one point reaching over 800GH/s. This shows miner support. Other than ETC being more profitable to mine at the moment, I believe that miners are deciding to spread their risk by mining both Ethereum chains. If this were to be true, then the hashpower will naturally even out. And as we have seen in crypto markets, price tends to follows hash power. You can see a live chart displaying the price to hashpower correlation here.

ConclusionThe digital assets markets is still in its infancy, I believe this market is in a very pure state, meaning market opportunities are not realized by computer algorithms, but by humans. We have never seen a 2 for 1 split situation like this in this market before. It will be very interesting to see how free market dynamics play out.


Nathaniel Freire is a full time day trader trading Digital Assets, Forex and Stocks. Based in New Jersey, Nathaniel Freire specializes in technical analysis with a twist of social sentiment and fundamental analysis.

You can follow Nathaniel on Twitter @Cryptocoinrun