Experts assess Ethereum ETFs' potential to spark altcoin rally
Recently, there's been a noticeable uptick in discussions about the altcoin season, spurred on by developments in Ethereum [ETH] ETFs. Ethereum, as the cornerstone of the altcoin market, often serves as a gauge for predicting the arrival of an altcoin season, according to many experts.
Crypto Nova, an analyst who prefers to remain anonymous, highlighted that the ETH/BTC ratio is on the brink of a significant breakout, which could catalyze a rally across altcoins.
"Historically, whenever the ratio of ETH/BTC increased, it ushered in a prosperous period for the altcoin market at large. And it seems we're on the cusp of that once again,” they stated.
Michael van de Poppe, another market commentator, reinforced Nova’s sentiment with a statement:
‘Should #Ethereum maintain its ground above the 0.05 BTC mark, it signals the start of a new, upward trend.’
For those not in the know, the ETH/BTC ratio is a measure of Ethereum's performance in Bitcoin. Presently, the ratio hovers around 0.055, indicating that one ETH is equivalent to about 0.055 BTC.
An increase in this ratio suggests Ethereum is outperforming Bitcoin, which could lead to an altcoin season, while a decrease points to Ethereum's lagging behind Bitcoin.
This ratio has seen an upward trajectory owing to speculation around ETH ETFs. The expected introduction and trading of a spot ETH ETF could further elevate the ratio, benefiting the broader altcoin sphere.
The Altcoin Season Has Yet To Arrive
Contrastingly, another crucial barometer, the Altcoin Season Index, presented a reading of 37, implying the altcoin season has not yet commenced. The Altcoin Season Index considers it season time when 75% of altcoins outperform BTC over the last 90 days.
Within the bull market, while some altcoins have shown remarkable results, others have not fared as well.
Notably, meme tokens have defied expectations, with Pepe [PEPE] achieving new all-time highs recently. PEPE has soared by +950% year-to-date, and dogwifhat [WIF] has seen a +120% increase within the same timeframe.
On the other hand, several altcoins, particularly Ethereum Layer 2s, have significantly underperformed. A report by Deribit notes,
“OP, MATIC, and ARB have experienced declines of 33%, 26%, and 24% respectively. Meaning, an investment of 1 ETH in OP at the year's start is now valued at just 0.4 ETH. This downturn is attributed not solely to the ETH ETF or a general slump in the altcoin market,”
Deribit suggested that an influx of token unlocks leading to a supply glut could be causing Layer 2's subdued performance.
"$82m worth of OP unlocks were released to the market; a similar scenario occurred the week prior with ARB tokens,” they remarked.
Regarding other Layer 1 alternative, results have been mixed, with some, like TON up by +197% and NEAR by +97%, outshining others such as APT and AVAX which lagged.
Therefore, while an uptrend in the ETH/BTC ratio might bode well for some altcoins, its positive impact may not be uniformly distributed across the board.
