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Ether Price Growth Overtakes Bitcoin— Will ETH Push the Market Towards an Alt Season?

January 13, 2021

Since Bitcoin's momentous rise this holiday season, alt coins have been making noise. What is driving this alt season, and what coins have been leading the way?

The Crypto-market and the Alt Season

We are just one working week into the new year, and analysts are already speculating about the onset of an alt season, a rare event that typically occurs only once or twice a year. During alt-season, altcoins rise in succession for a specific period of time and behave with tempered price momentum in comparison to Bitcoin (BTC). During alt season, we see altcoins race to outperform the dollar and Bitcoin[1]. Outside of these instances, altcoins are particularly susceptible to wide price dips. Over the last 7 days, however, many altcoins have exhibited a jump in price well over 10-20% this year alone[2].

  • Litecoin (LTC) rose by 11% over 24 hours, Cardano (ADA) by 21%, and Chainlink (LINK) and Bitcoin Cash (BCH) by 15%[3].
  • Two altcoins, Polkadot (DOT) and Binance Coin (BNB), have performed exceptionally well against competitor cryptocurrencies.
  • Other altcoins such as Ripple (XRP), Dash (DASH), ZCash (ZEC-USD), and Monero (XMR), however, are not experiencing the same success. Following a lawsuit from the US Securities and Exchange Commission, XRP fell 22% over the last week. The other three are also facing similar regulatory concerns[4].


BTC and ETH in the First Week Of 2021

The past week has shown a remarkable appreciation of the aggregate cryptocurrency market cap. The world’s second largest cryptocurrency, Ether (ETH), is leading the current rally. Since its collapse in April 2020, the crypto market has experienced its third bull run, the largest one in over five decades[5].

Leading up to 2021, BTC led the crypto price surge until stalling around the $34,000 mark as we entered the new year. Following some retracement on critical dates, such as January 4th, when institutional traders returned to their desks after the holidays and sought to capitalize on the holiday spike by selling off, BTC price regained momentum and hit new all-time highs. Ether has also been gaining rapidly however, alongside many other alt-coins.

One day after the 12th anniversary of the Bitcoin Genesis Block, Ether surpassed the $1000 price mark to achieve a record-breaking high of $1,150 as of January 4th, 2021. Approximately 14% of the overall cryptocurrency market valuation is credited to Ether. It is one of the best performing major cryptocurrencies and has exhibited a spike of almost 50% over the last number of days[6],, outshining Bitcoin’s current momentum. Reserves across all cryptocurrency exchanges have now decreased by 20% due to high demand for ETH. Third-party custodial wallets, staking contracts, and decentralized exchanges have locked an estimated 2.2 million ETH out of supply[7]. Momentum was driven by its announcement late last year detailing the considerable headway towards the Ethereum 2.0 metamorphosis with the launch of the Beacon Chain.


Increased Investor and Mainstream Interest

Both institutional and retail Interest in the digital asset class has skyrocketed and investors are now eager to seek out alternative investments such as cryptocurrencies. Futures markets have been up over the weekend and the American Association of Individual Investors has reported that “bullish sentiment” is at its highest in many years and is likely to continue over the next six months.[8] Bank of America has reported that cash being held in reserves is of the lowest levels since May 2013.

Headlines about institutional investors (such as those about Anthony Scaramucci, former White House Communications Director, who plans to launch a Bitcoin fund in January 2021) following in the footsteps of MicroStrategy CEO Michael Saylor and his ten-figure investment into the cryptocurrency[9] also continue to drive positive momentum. Twitter analytics show that fervent social media interest has broken records across numerous key metrics[10]. The increase of crypto reporting in the mainstream news cycle indicates what may be one of the most prominent waves of interest from retail investors in crypto in history. It would be an understatement to say that the cryptocurrency market has made its most dramatic entrance to a new year yet.

 

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[1]https://cryptocurrencyfacts.com/what-is-alt-season

[2] https://cryptopotato.com/alt-season-2021-altcoins-rally-almost-40-billion-as-btc-stalls-at-33k/

[3] https://bitcoinist.com/ethereum-analyst-sees-record-high-this-week-as-price-climbs-60/

[4]https://www.forbes.com/sites/michaeldelcastillo/2020/05/12/privacy-coins-monero-zcash-and-dash-face-uphill-battle-in-japan/?sh=290ac6f24cf1

[5] https://decrypt.co/53080/the-everything-rally-of-2020-continues-as-alt-coins-boom

[6]https://coingape.com/litecoin-ltc-flips-xrp-moving-past-167-excitement-around-mimblewimble-launch-builds/

[7] https://bitcoinist.com/ethereum-analyst-sees-record-high-this-week-as-price-climbs-60/

[8]https://www.aaii.com/latest/article/13315-aaii-sentiment-survey-optimism-declines-but-remains-unusually-high 

[9] https://decrypt.co/53064/ethereum-breaks-past-900-in-sunday-push

[10] https://cointelegraph.com/news/social-media-interest-in-bitcoin-hits-all-time-high

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