Onchain Analysts Project Altcoin Season After Mixed Trading

Highlights

• Onchain analysts have pointed to slow Ethereum and altcoin movement as velocity bids tipped to grow. 
• Other networks are responsible for reduced Ethereum market share. 

• Ethereum’s growing DeFi potential could increase its dominance and trigger an altcoin season rally.

Crypto assets are marking huge gains following favorable market sentiments in Bitcoin, altcoins, and meme tokens. A new report from CryptoQuant shows how this affects decentralized finance (DeFi) and other areas. Bitcoin, the largest crypto by market cap, has seen the majority of inflows soaring to multiple all-time highs within days. 

While this has boosted the market’s growth this month, several altcoins have failed to take off to bullish rallies like previous cycles. Market commentators give reasons for the present dynamics and cite the possibility of an incoming altcoin season rally. 

ETH Velocity to Spur Rally

According to the report, ETH saw smaller gains compared to Bitcoin since Donald Trump’s win in the United States elections. However, the network’s velocity can point to a rally which will drive further flows to other assets. At the moment, velocity remains lower than expected, which translates to the current state of the market. 

Velocity shows how fast coins move within the ecosystem by calculating their proportion with the total supply. Price highs lead to move together with the velocity resulting in decentralized finance (DeFi) numbers among others. Ethereum maintains its position as a collateral asset for institutional investors making a price surge key for leverage and lending. 

ALTSEASON 2.0 UPDATE

THE ALTCOIN DOMINANCE HAS BROKEN OUT OF THE ACCUMULATION STAGE AND STARTED PUMPING.

ALTS ARE JUST GETTING STARTED. THIS IS YOUR LAST CHANCE TO GET INTO SOME ALTS BEFORE IT PUMP HARD.

WE ARE HERE. AND THERE'S SO MUCH GROWTH TO EXPECT IN 2025. pic.twitter.com/FwGucBNI6S

— Ash Crypto (@Ashcryptoreal) November 22, 2024

As traditional investors ramp up activities, Ethereum will notch inflows due to its DeFi offerings leading to an altcoin rally.

Analysts at CryptoQuant wrote: 

“Therefore, an increase in Ethereum’s price is necessary to boost lending and leverage, and the liquidity generated through this could signal the start of an altcoin season rally. In summary, the altcoin season rally is likely to begin with liquidity created through Ethereum DeFi, and will be confirmed by increased network transactions and velocity.”

Other Networks Challenge ETH Lead

A major reason for slow ETH is reduced transaction volumes compared to other periods. This is also caused by the efficiency of competitor networks. Also, Ethereum is the biggest in terms of smart contracts, other networks offer faster and cheaper fees. 

Recently, Solana earned the title of institutional favorite following consecutive inflows. Similarly, TON, TRON, Aptos, and SUI have also lowered Ethereum’s market share. While this is exciting for the community dubbed ETH killers, some analysts still pitch Ethereum to increase its dominance.