Ethereum Classic Soars Over 70% This Week, and This Other Cryptocurrency Is Close Behind – The Motley Fool

What happened

CryptocurrencyEthereum Classic (ETC 4.16%) is having a week to write home about. According to CoinMarketCap, Ethereum Classic is up 72% over the past seven days, and it's likely because of upcoming changes to Ethereum (more on that in a moment).

Interestingly,Bitcoin Gold (BTG 0.05%) is also up big over the past seven days: 47% as of this writing.But this Bitcoin alternative doesn't have a clear catalyst like Ethereum Classic.

This week's outsize moves from Ethereum Classic and Bitcoin Gold are interesting considering they're both hard forks -- of Ethereum and Bitcoin, respectively.

Cryptocurrencies are decentralized. Private, independent parties volunteer their computers for the blockchain network. However, if developers tweak the code, miners or validators could choose to keep using the old code and no one could stop them -- a fork. Moreover, developers could tweak things in different directions, leaving parties to decide which blockchain to use.

Ethereum is getting closer to completely changing from a proof-of-work blockchain to a proof-of-stake blockchain, which greatly alters the network's incentive structure. Miners won't be able to operate as they have in the past. And for this reason, there's speculation that miners will jump over to Ethereum Classic instead, which could explain why it has been gaining so much recently.

As for Bitcoin Gold, I'm not sure why it's suddenly gaining momentum. According to CoinMarketCap, trading volume is up over 1,200% in just the past 24 hours. It could be that traders are looking for forks of popular cryptocurrencies, considering Ethereum Classic is a fork and performing well. But that's just speculation on my part.

Whether investing in stocks or cryptocurrencies, I recommend always looking for fundamental reasons to be bullish. Therefore, I'd be leery of getting too excited about Bitcoin Gold today, considering there doesn't appear to be a fundamental driver to its performance.

But Ethereum Classic is a different story. If Ethereum miners truly do jump ship and switch blockchains, that would theoretically make Ethereum Classic more stable and secure, which could help boost its long-term adoption. But this driver will remain fairly speculative until Ethereum's actual merge, which likely won't occur before September.

Jon Quast has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

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Ethereum Classic Soars Over 70% This Week, and This Other Cryptocurrency Is Close Behind - The Motley Fool