Ether Triumphs Over Bitcoin: A New Altcoin Season Begins

Key Points

• The positive outlook of Ethereum (ETH) is boosting the chances of an altcoin season.
• Nevertheless, market analysts are still unsure if the current altcoin trend can sustain itself.

The altcoin season, which has been eagerly anticipated by many in the crypto community, may be on the horizon, with the increasing strength and momentum of Ethereum.

Ethereum’s Promising Outlook

Ethereum, often considered the health barometer of the crypto sector, has been showing a positive outlook, thus sparking more speculation about the beginning of the altcoin season. Jake Ostrovskis, a trader at Wintermute, suggested that this optimistic outlook for Ethereum is encouraging capital rotation into altcoins.

Ostrovskis noted that the spike in implied volatility indicates options traders’ confidence in Ethereum’s prospects, which could potentially boost the altcoin sector.

Altcoin Season Status

Nicholas Merten of DataDash echoed Ostrovskis’ sentiment, pointing to the decreasing dominance of Bitcoin as a sign of a potential rally for altcoins. Merten observed that the altcoin sector, excluding the top 10 tokens, has regained key levels and is now above the 200-day moving average, indicating a potential for further growth.

However, according to the Altcoin Season Index from the Blockchain Center, a full-fledged ‘Altcoin Season’ is not yet in effect. The index is currently at around 50%, suggesting that only half of the top 50 tokens, including Stellar and Dogecoin, have outperformed Bitcoin in the past three months. An altcoin season is typically declared when over 75% of the top tokens outperform Bitcoin.

Despite the recent traction, questions remain about the sustainability of the current altcoin momentum. Similar spikes in altcoin momentum were observed in July and September, but these trends faltered when Bitcoin’s dominance increased.

On November 25th, Ethereum, along with L2s, GameFi, and DeFi segments, experienced double-digit rallies as Bitcoin dipped below $95K. However, the founders of Glassnode warned that a full-blown altcoin rally could only occur if Bitcoin surges above $100K, followed by a decrease in market dominance.

From an Ethereum/Bitcoin perspective, the outlook is cautiously optimistic. A rally in the Ethereum/Bitcoin ratio, which indicates Ethereum outperforming Bitcoin, is generally a positive sign for altcoins. However, Ostrovskis warned that the Ethereum/Bitcoin trend is not clear enough to predict a strong, sustainable altcoin season.