January has been noted to be a historic one for Altcoins. Most Altcoins performing well in Q1 has been linked to a phenomenon called ‘Altseason’.
For the next ‘Altseason’ to kick off, it is critically important for the Altcoin market to see Ethereum gain traction against Bitcoin.
Altseason refers to the phenomenon that is part of the cryptocurrency market cycle that causes many Altcoins to skyrocket in their USD and BTC pairs. Most ‘Altseasons’ usually start when Bitcoin cools down.
When Bitcoin reached its prior all-time high of $20k back in December 2017, Ethereum attained its all-time high of near $1,500 in January 2018, barely a month later.
It is believed that Ethereum is likely to be the first to drive Altseason as institutional investors start opening up ETH as a long-term investment opportunity in 2021. The rise of Altcoins has been driven in part by the momentum of Ethereum. After ETH broke the major resistance level of $600, it continued to rise above $1,000.
ETH is now close to hitting its all-time high above $1,400, up 60% in the first two weeks of 2021. Raoul Pal recently noted:
“By the way, ETH is up 60% in the first 14 days of the year. I think it outperforms all year but I still own much more BTC”
Bitcoin’s recent stagnation below $36k is gradually causing Ethereum to gain some ground against BTC.
At the same time, decentralized finance (DeFi) tokens such as Aave, Yearn. finance and SushiSwap have outperformed Bitcoin and Ethereum well over the past two weeks, with data confirming a steady rise in sentiment and social media activity in recent months.
The Ethereum blockchain network has become increasingly congested lately causing DeFi protocols like Aave, SushiSwap, and Synthetix to grow rapidly since November.
Recently, Bitcoin investor Raoul Pal tweeted that he believes Ethereum could reach $10,000 to $20,000 if it follows the same cycle as Bitcoin-based on Metcalfe’s Law. While there is no definite correlation between Ethereum and the rest of the Altcoin market, if Ethereum takes off, large Ethereum-based projects could grow proportionally.