The crypto market may be at the onset of an altcoin season, say analysts at crypto exchange Bitfinex, due to Ether’s (ETH) latest performance.
According to this week’s Bitfinex Alpha report, the resurgence in ETH’s value is rekindling investor interest in the broader altcoin market, indicating a shift in focus from Bitcoin (BTC) to other digital assets.
Over the past week, ETH has recorded significant gains, marking its highest value in 22 months and achieving its highest weekly close in 97 weeks. The second-largest digital asset has surged past the $3,000 level over and over again, staying resilient against brief pullbacks.
Ether’s rally has been linked to several key developments in the Ethereum ecosystem. These events include the potential approval of spot Ethereum exchange-traded fund (ETF) in the United States, the upcoming Dencun upgrade, the anticipated launch of several scaling solutions, and the introduction of staking platforms like EigenLayer.
“These developments are perceived as significant catalysts for Ether’s resurgence, especially after a period where it had lagged behind BTC in terms of percentage growth over several months,” said Bitfinex analysts.
Crypto exchanges have recorded large Ether withdrawals in the past four months, with 800,000 ETH worth roughly $2.4 billion leaving the platforms since the beginning of the year. The decrease in the ETH exchange reserve represents the strongest supply crunch for the asset since the Shapella upgrade. It is expected to exert upward pressure on ETH’s price, possibly triggering an altcoin season.
The switch in focus to altcoins follows a major BTC surge, which saw the asset’s dominance reach a 55% high in December 2023 before hovering above the 50% level from the 39% recorded during the bear market. Historically, such a move has preceded an altcoin season.
Analysts revealed that between January 2018 and Q3 2019, BTC witnessed a significant rally for almost 600 days, after which it stabilized and gave room for altcoins to surge.
With BTC’s dominance hovering around 51%, a move below 50% could signal momentum behind an altcoin rally, which would continue over the next few months.
Meanwhile, the Bitcoin ETF market remains bullish, with the new funds experiencing net inflows of roughly $600 million in the week ending February 23.