ETHW reported a significant price increase despite the ETHPoW blockchain network suffering a smart contract hack in the first week after launch.
Bull trap risks surround the ETHW market
ETHW recovered over 150% eight days after the attack and was trading around $10.30 on September 27th.
Essentially, this indicates that traders ignored the hack and believed in the long-term viability of ETHPoW as a blockchain project.
However, from a technical point of view, the increase in ETHW prices was accompanied by weaker volumes. In other words, there have been fewer traders involved in pumping the price of the ETHPoW token over the past eight days, as the data from the Bitfinex exchange in the chart below shows.
Daily ETHW/USD price chart. Source: TradingView
The widening gap between higher ETHPoW prices and lower volume indicates that the interest of traders in the ETHPoW token is waning. In other words, the price of ETHW is in danger of correcting sharply in the coming days.
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This “bearish divergence” setup has been supported by a descending trendline that has acted as resistance for ETHW since September 2.
In the four-hour chart below, traders have shown the possibility of their ETHW holdings falling near the indicated resistance. Moreover, before the last pullback of the token on September 27, the movement occurred close to the same trend line, which increases the likelihood of a prolonged price correction.
Four hour ETHW/USD price chart. Source: TradingView
As a result, ETHW’s short-term technical bias is bearish. Therefore, if the correction continues, the PoW token risks falling into the $8-9 price range, which also coincides with the support of the rising trend line, or a 25% drop from the current price level.
ETHPoW hash rate received
Also, the hash rate of the ETHPoW network came up considerably after the smart contract hack, increasing from 29.44 TH/s on September 19th to 48.48 TH/s on September 27th. A record high of 79.42 TH/s.
ETHPoW hashrate performance since launch. Source: 2miners.com
However, the high hash rate means more miners have joined the ETHPoW network since it split from the Ethereum Proof of Stake (PoS) chain on September 15. Theoretically, this should provide 51% better protection against potential attacks.
At the same time, ETHPoW showed an increase in its total closed value (TVL). As of September 27, ETHPoW had 66,548 ETHW deposited across four decentralized exchanges that run on top of the blockchain, up from nearly 38,000 ETHW three days ago, or 75% more than the previous three days.
ETHPoW TVL as of September 27, 2022. Source: Devi Lama.
Interestingly, UniWswap, a fork of the decentralized exchange platform Uniswap based on the Ethereum blockchain, has over 50% of the TVL of the ETHPoW chain.
Functional DApps on top of the ETHPoW chain. Source: Devi Lama
Other DApps include PoWSea, an immutable token (marketplace), and the PoWSwap and HipPoWSwap exchanges.
