For the past two months now, Ethereum has been outperforming Bitcoin. The gains recorded by the second-largest cryptocurrency were 84% YTD compared to Bitcoin’s just 30%.
These gains, however, might be the start of something good for altcoins lovers. This could be the start of the alt rally.
“Ethereum, the primary platform that the majority of altcoins are based on, has begun to outperform other major assets,” noted Coin Metrics.
Whenever $btc regains $10k I look at major alts.
Since Feb 9 returns are pretty dispersed, which is unique because usually there's some sort of tandem. For example, from July 2-Sep 2 alts were almost all lower every time $10k was regained. From Oct 26 – Feb 9 avg. return was 58% pic.twitter.com/c3mEbyEpGj
— Ceteris Paribus (@ceterispar1bus) June 2, 2020
This week, we saw Cardano (ADA) surging 40% on the release date of its next major upgrade named Shelley. Another token OmiseGo enjoyed over 100% gains after Coinbase announced its listing and Bitfinex stated that Tether (USDT) will be integrated into the OMG Network.
Last week, trader Crypto Wolf had said, “Despite many bullish breakouts, Small-Mid caps have not yet released all the bullishness.”
Reminiscent of Late 2017
Small-cap cryptos are particularly seeing big gains. “The Small Caps Index was the big winner in May, gaining almost 23% and outperformed other indexes significantly,” reported Arcane Research.
In the past month, the likes of IOTA (32%), VeChain (53.55), THETA Token (104%), TFUEL (322%), ZRX (56%), Zilliqa (165%), Celsius Network (114%), Electroneum (147%), and Loopring (90%) recorded massive gains.
With altcoins starting to rally, this may “mark the beginning of an altcoin season regime shift.”
“Such market movements in response to mainnet launches, new product upgrades, and exchange listings are reminiscent of late 2017,” added crypto analytics firm.
Trader Pentoshi who reduced his altcoin exposure by 75% in late April also feels this could be the start of the alt season.
“BTC Dominance vs Alts: This is by far the closest we have been from a technical standpoint to an alt season starting.”
Bitcoin dominance has been on a constant decline since early May, tumbling from 68.95% to 65.7%, as per TradingView.
He points out how HH/HL structure has broken plus there is a bearish retest on dominance. Moreover, we are about to break an 871 day uptrend line on dominance and over 62% would lead to alt pumps unseen for more than 3 years.
The base of all
Ethereum is leading this rally and institutional investors are buying the cryptocurrency at a huge premium. This week, the premium went up to 750%, with ETHE trading at $194 with NAV $23.50, meaning ETHE investors were buying Ether at an implied $230 billion market cap.
This is not only much higher than the reported market cap of Ethereum is $26.4 billion but also much higher than bitcoin’s $175 billion.
Underlying transaction activity on the Ethereum blockchain has also risen rapidly in recent months. Daily gas usage, which is used to power platforms, smart contracts, and applications increased to a new high.
The rapid growth of Ethereum-based stablecoin has also contributed to gas usage. Over the last year, stablecoins added more than $5 billion to total market value. In 2020, the demand for stablecoins pushed higher as traders sought stability following the COVID-19 sell-off.
While leading cryptocurrencies suffered, the total market cap across the leading stablecoins continued to hit a new all-time high.
Fees paid out by network users also increased in line with transaction activity, reaching a recent high, as per TradeBlock.