- The altcoin market saw a ubiquitous recovery, and Ethereum gains might be the reason.
- The alpha altcoin established a new all-time high north of $4,640.
- More gains are underway for ETH, according to the token burn rate and on-chain metrics.
YEREVAN (CoinChapter.com) – The largest DeFi platform Ethereum (ETH), gained another 8% since Nov 2 and scored a new all-time high at $4,643 in the Asian-Pacific session Wednesday. Additionally, the altcoin bulls might have Ethereum to thank for their gains.
Is it altcoin season time?
In the past 24 hours, Cardano (ADA) gained 6.5%, while Solana (SOL) put on 14% in the same period. Ripple’s XRP joined the altcoin recovery with 10.5%, Polkadot (DOT) followed with 6.4%, and Terra (LUNA) gained 9.3%. So has the altcoin season begun, or is it too soon to blow the horn?
Altcoin season typically happens after a Bitcoin rally, when the flagship crypto cools off and offers smaller returns than other digital assets. Traders then shift their attention to the altcoin market for further gains.
Bitcoin initiated a new leg up in October, establishing a new all-time high of $67,016 on Oct 20, bringing its Q4 gains at that point to 60%.
However, the alpha crypto went into a consolidation phase after the peak, while many altcoins seized the opportunity. The graph below shows the altcoin progression the week after Bitcoin’s peak and subsequent setback.
Also read: Polkadot (DOT) rallies to a new all-time high after announcing its long-awaited parachain slot auction.
While altcoins outperformed the flagship cryptocurrency in the past two weeks, a metric dubbed the Altcoin Season Index suggests that the market has not reached the required parameters yet.
According to the metric, an altcoin season starts when 75% of the top 50 altcoins “outperform Bitcoin in terms of market capitalization” during the previous 90 days. As of publication, ASI stood at 55, in the middle of the spectrum.
As mentioned, the Ethereum rally might have catalyzed the altcoin recovery wave. Instead, the second-largest cryptocurrency market cap gained 62% quarter-to-date and flipped the $4,300 resistance into support.
Ether (ETH) rallies to a new ATH
The alpha altcoin moved sideways after the peak and traded at $4,618 in the Wednesday session. If ETH declines in the upcoming sessions, it could revisit the previous all-time high at $4,440 and start a new leg up.
The deflationary issuance and heightened activity among ETH addresses could support the bullish outlook. As CoinChapter noted in the previous Ethereum review, Ethereum has been burning ETH tokens at an increased rate, which led to the first deflationary issuance week for the DeFi network.
In detail, it means that Ethereum burnt more ETH than miners created in the same period. As a result, the supply squeeze could subsequently raise the asset value. Moreover, analytical platform Santiment noted that the daily ETH address activity has increased by 45% in the previous month.
Ethereum could be poised for another leg up in the upcoming sessions, given the bullish fundamentals and good on-chain metrics. How long until the altcoin season is here? It is not yet clear. However, Ethereum’s uptrend could be a strong catalyst and bring good news to the altcoin bulls.