A quick glance at the Ethereum Classic (ETC) weekly chart shows a clear setup for a perfect sell order. That’s because price failed to break above the critical 55-day MA, which is the weekly resistance level. A technical trader can also confirm such a trade with the BTC chart, where bitcoin is now forming a bearish engulfing, a popular signal, for investors looking to go short. Clearly, shorting Ethereum Classic (ETC) at this point is a low-risk trade, right? Well, looking at the bigger picture, it’s probably not the best decision, and could lead to heavy losses! Reason? Coinbase!
A few weeks ago, Coinbase announced that they will be listing Ethereum Classic (ETC). They then followed it up with an announcement that integrating Ethereum Classic (ETC) into their systems was going to be easy since it is quite similar to Ethereum (ETH). The only thing they have not announced is the date, when they will be listing it. This means they could be listing at any time in the near future. It could be next week, tomorrow, or even today! No one on the outside knows the date. The only thing that everyone knows is that the moment the announcement is made, Ethereum Classic (ETC) will rally hard.
Therefore, under current market conditions, if they were to make that announcement, you can 100% sure that there would be an epic short-squeeze. It could very easily rally to over $20, and catch everyone flat-footed. Charts would turn so quickly that anyone who is short on Ethereum Classic wouldn’t have much time to reverse their trades. It would actually expose the biggest weakness of technical analysis, and that’s its inability to predict the future, especially in times of market uncertainty.
Another factor to consider before shorting Ethereum Classic (ETC) is Bitcoin (BTC). The main reason why the crypto market is crashing is because of uncertainty as to whether the SEC will approve the CBOE ETF. However, things are tricky on this front because after the Winklevoss ETF rejection, disagreements between the SEC commissioners have come to the fore. It is clear that they are not on the same page, when it comes to Bitcoin ETFs. As such, there is a good chance that they could actually approve the CBOE ETF as a way of saving face. The last thing that the SEC wants is to paint a picture of being a hindrance to innovation. If they were to approve it, chances are that bitcoin would rally, and Ethereum Classic (ETC) would rally together with it due to the Coinbase issue.
In essence, it would be wiser to either buy into Ethereum Classic (ETC) at its current prices, or sit on the sidelines until the price settles. These two options are actually less risky than trying to short it on the basis of technical analysis. Too much can change too quickly on the basis of news, and a short-seller would get hurt big time.