According to analysts at the major cryptocurrency exchange Bitfinex, the crypto market may be preparing for an altcoin season, influenced by the recent surge in Ethereum‘s (ETH) price. The analysts have compiled signals indicating a strong upcoming altcoin season.
Investors’ Focus Shifts to Altcoins
In the latest Bitfinex Alpha report, analysts noted that the revival in ETH’s price has reignited investors’ interest in the altcoin market and shifted their focus from Bitcoin (BTC) to altcoins.
ETH’s performance last week was notable for significant gains that brought its value to the highest level in the past 22 months. Despite occasional pullbacks, the largest altcoin consistently stayed above the $3,000 level, achieving its highest weekly close in the last 97 weeks. The rise in ETH’s price is associated with several key developments in the Ethereum ecosystem, including the potential approval of a spot Ethereum exchange-traded fund (ETF) in the US and the upcoming network upgrades such as the Dencun update.
Bitfinex analysts highlighted these developments as significant catalysts for ETH’s resurgence, especially after a period where it lagged behind BTC in terms of percentage growth for several months. Additionally, there have been significant outflows of ETH from cryptocurrency exchanges in recent months. According to on-chain data, approximately 800,000 ETH worth around $2.4 billion has been withdrawn from crypto exchanges since the beginning of the year. This decrease in ETH exchange reserves indicates a supply squeeze for the asset, potentially creating upward pressure on its price and laying the groundwork for a potential altcoin season.
Bitcoin’s Market Dominance as a Key Factor
The shift in investors’ focus to altcoins follows a significant rise in Bitcoin‘s market dominance, which reached a level of 55% in December 2023 before stabilizing above 50%. Historically, such movements in Bitcoin’s dominance have preceded periods of increased interest in altcoins and rising prices.
Bitfinex analysts recalled Bitcoin’s nearly 600-day strong rally from January 2018 to the third quarter of 2019, followed by a consolidation period that paved the way for the rise of altcoins. With Bitcoin’s market dominance currently around 51%, analysts expect a drop below the 50% threshold to potentially trigger an altcoin rally that could spread over the next few months.
