The recent surge of Ethereum (ETH) has reignited expectations of an 'Altcoin Season' among investors. However, market data analysis firm Santiment warned that this crowd sentiment could be a precursor to increased price volatility. Looking at past cases, excessive optimism has often led to market crashes, so a cautious approach is required.
Over the past three months, Ethereum has risen by over 110% according to CoinGecko, reaching $3,732. Its weekly increase of about 20% significantly outpaces the overall cryptocurrency market's 3.8% rise during the same period. Consequently, large investors have also been moving. On-chain analyst Ali Martinez reported that over 500,000 ETH have been accumulated by whale accounts in the past two weeks.
Social network analyst Chyan pointed out that Ethereum-related mentions and market share are approaching their annual peak, noting that "a single spark could further ignite the market". Indeed, CryptoQuant revealed that altcoin trading volume on Binance futures market reached $100.7 billion, the highest level since February this year.
Bitcoin's (BTC) market dominance has dropped below 59%, declining 8.5% in recent weeks, while Ethereum has risen 11.2%. Swissblock analysts used this trend to suggest that the "threshold of Altcoin Season" has been reached. Particularly, funds are flowing into top market cap altcoins like Solana (SOL) and XRP, with Bitcoin relatively sidelined.
Nevertheless, not all signals are positive. Santiment publicly warned that "if crowd discourse about the start of Altcoin Season expands, a short-term crash could occur". Price increases are often more effective when the public is skeptical.
FxPro market strategist Alex Kuptsikevich also raised the possibility of market sharp adjustment as some investors reduce Bitcoin exposure and move to altcoins. Currently, Ethereum is technically facing strong resistance around the $3,800 level, having failed to break through twice in the past week.
Moreover, ETH is still 23.4% below its all-time high of $4,878 recorded in November 2021. However, it has maintained momentum, rising 67% in the last 30 days and nearly 43% in two weeks.
With daily trading volume exceeding $45 billion, increased individual investor inflow is also detected. This implies potential overheating and future profit-taking adjustments. However, according to CoinGlass data, the overall uptrend has not yet reached its peak, and many view this rally as potentially the beginning of a long-term bull market.
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