Ethereum fork token ETHPoW climbs 150% after smart contract hack — A fakeout rally?

ETHW has logged a significant price rebound despite its blockchain network, ETHPoW, suffering a smart contract hack in the first week after its launch.

The short analysis of the attackhttps://t.co/87OVRqaYb2 https://t.co/vhRJyZVc72

— BlockSec (@BlockSecTeam) September 18, 2022

Bull trap risks surround ETHW market

ETHW rebounded more than 150% eight days after the attack and traded for around $10.30 on Sept. 27.

Fundamentally, this suggests that traders ignored the hack and trusted ETHPoW’s long-term viability as a blockchain project.

But from a technical perspective, the ETHW price rally has accompanied weaker trading volumes. In other words, fewer traders have been involved in the pumping of the ETHPoW token’s price in the past eight days, as the Bitfinex exchange data shows in the chart below.

ETHW/USD daily price chart. Source: TradingView

The growing divergence between ETHW’s rising prices and falling trading volumes suggests that traders’ interest in the ETHPoW token has been dwindling. In other words, ETHW’s price risks a sharp correction in the coming days.

Related: Dogecoin becomes second largest PoW cryptocurrency

This “bearish divergence” setup is supported by a descending trendline that has served as resistance for ETHW since Sept. 2. 

On the four-hour chart below, traders have shown their likelihood of dumping their ETHW positions near the said resistance. Moreover, even the token’s latest pullback move on Sept. 27 has originated near the same trendline, raising the possibility of an extended price correction.

ETHW/USD four-hour price chart. Source: TradingView

As a result, ETHW’s short-term technical bias is skewed toward the bears. So, if its correction extends, the PoW token risks falling into the $8–$9 price range, which also coincides with ascending trendline support, or a 25% drop from current price levels.

ETHPoW hash rate recovers

On a brighter note, the ETHPoW’s network hash rate has recovered significantly since the smart contract hack, rising from 29.44 TH/s on Sept. 19 to 48.48 TH/s on Sep. 27. Although, the current hash rate is still down about 40% from its record high of 79.42 TH/s.

ETHPoW…..

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