The price of Ethereum, the native cryptocurrency of the Ethereum blockchain network, reached a new milestone on Jan. 19, hitting $1,439.33 to surpass its previous all-time high of $1,432.88 last seen just over two years ago. The digital asset rallied nearly 12% Tuesday to reach the new peak.
Ethereum has been trending up for quite some time and first hinted at a rally earlier this month. However, it temporarily lost steam due to Bitcoin’s pullback from $40,000 to $30,000 last week.
Since the beginning of January, the price of Ethereum has gained 92% compared to Bitcoin’s 27%. One of the biggest factors why Ether has outperformed Bitcoin in recent weeks is because of its rapid growth.
Ether’s price rise can be attributed to the rally of decentralized finance (DeFi) tokens. Which has been fueled by the fast-growing total value locked (TVL) of DeFi markets. At over $24 billion, there is more capital locked across DeFi protocols than ever before, signaling massive demand.
This is important for the momentum of Ethereum, and especially its Ether token. As more apps and tokens begin to rely on its network. DeFi is widely regarded as the best Ethereum use case to date. Its markets allow for permissionless and automated lending, as well as trading and borrowing to anyone with an internet connection.
Ethereum additionally has thrived due to Bitcoin’s relatively low volatility. Over the past week, the leading cryptocurrency has been mostly consolidating, allowing many altcoins to catch up.
This has increased the demand for altcoins with lower volume and liquidity. For these reasons, traders have referred to the current period as “alt season.” Such occurs when many altcoins rally in tandem due to Bitcoin’s small price movements.
The Beginning of Altseason
This altseason — historically witnessed in the first months of the year — takes place when Bitcoin is ranging and investors seek high-risk plays. Altcoins usually see bigger price movements because their low liquidity makes them vulnerable to extreme volatility in short periods.
The high volatility of the altcoin market makes smaller cryptocurrencies more appealing to retail and derivative traders in the near term. While BTC/USD remains in an uncertain position, it could break down from its range at any time and lead to altcoins seeing larger losses.
However, technical indicators related to Ethereum suggest that its current rally will not be ending anytime soon. At the end of 2020, ether price sat in the $500-$650 range.
Within the first few days of 2021, the price of Ethereum skyrocketed to $1,200 and maintained the level for the most part. If this “bullish” trend continues and the market does not face any serious negative backlash, it is possible to expect another upward surge that will take the currency to the $2,000–$3,000 territory.
Popular crypto trader Crypto Michaël reiterated this notion in a recent YouTube video. Which he gave a full analysis of the recent market movements on the altcoin markets including a technical perspective of the upper coins.