As the second-largest cryptocurrency by market capitalization, Ethereum [ETH] has displayed impressive growth, with a significant spike of nearly 10% in the last 24 hours, reaching a trading value of $3,374 at the time of this report.
While still around 30% below its historical peak of $4,878 reached in 2021, the recent surge in Ethereum’s value hints at a potential bullish trend in the wider altcoin market.
A CryptoQuant analyst known as Mac.D has pointed out the start of an altcoin season in a recent post on the QuickTake platform. The analyst highlighted Ethereum’s circulating velocity and transaction growth as key indicators of this upsurge.
Onset of Altcoin Season
Historically, a rise in velocity, which denotes how rapidly coins move within the market, has been associated with surges in the altcoin market. Despite the current velocity being around seven times the total supply, Ethereum’s role as a primary asset for institutional investors is expected to be crucial.
The analyst underlined that an increase in ETH’s value could trigger liquidity in DeFi and solidify the initiation of an altcoin season.
Ethereum’s recent upswing is situated within a broader narrative. While Bitcoin has been leading in recent rallies, Ethereum’s significance as the backbone of DeFi and a preferred choice for institutional investment positions it favorably for substantial impact.
Nevertheless, Ethereum faces challenges from competing blockchain networks like Solana, Tron, and Aptos, which offer faster and cheaper transactions. Despite these hurdles, Ethereum’s enhanced transaction growth and velocity are likely to boost liquidity creation, benefiting the altcoin ecosystem.
Case Study: LINK Performance
An examination of Chainlink (LINK), a prominent altcoin, supports the notion of an impending altcoin season. LINK has seen a rise of 16.6% in the past week, reaching a trading price of $15.26.
This growth aligns with Ethereum’s increased activity and suggests a broader momentum in altcoins. Supporting this argument are key metrics: LINK’s active addresses, indicating retail interest, have surged from under 2,000 in October to exceeding 5,000 by November 21st, according to Glassnode.
Further reinforcing the case for an altcoin season, Chainlink’s derivatives data portray positive signals. Coinglass data reveals a 7.76% surge in LINK’s open interest, now standing at $294.88 million.
Moreover, LINK’s open interest volume has increased by 0.86%, reaching $726.97 million. These metrics indicate heightened investor engagement and confidence in LINK’s short-term performance.