The calls for a potential “altseason” are growing louder as Ether approaches the $3,000 mark, but some analysts have warned that it may not happen so quickly.
On February 19th, Ether (ETH) reached an intraday high of $2,980, its highest level in 22 months. The last time the asset traded above $3,000 was in April 2022.
This price movement has led many observers to believe that an “ETH bull market” is imminent, while others have proclaimed that altseason has already returned to the crypto market.
“I think there are several powerful catalysts coming up that might spark an altcoin rally,” said Henrik Andersson, Chief Investment Officer of Apollo Capital, in comments to Cointelegraph. He highlighted Ethereum fundamentals such as the Dencun upgrade, as well as the mainnet launches for scaling solution Blast and restaking platform EigenLayer. Andersson added, “We’re entering an ETH bull market, which is positive for altcoins.”
Yuga Cohler, a senior engineering manager at Coinbase on X, echoed this sentiment, stating, “We’re entering an ETH bull market [which is] beta for altcoins.” Additionally, economist and trader Mikybull Crypto, with a following of 60,000 on X, predicted that March is always bullish for ETH and that $3,000 is within reach, declaring, “This cycle of altseason is going to be huge!”
However, Markus Thielen, head of 10x Research, remains skeptical, stating that there is a lack of evidence to suggest an altcoin season is on the horizon. He explained that sustained reductions in Bitcoin dominance below 45% are necessary to kickstart a viable altcoin season. Thielen also noted that recent altcoin rallies have quickly fizzled out, indicating a higher risk-adjusted potential favoring Bitcoin investments. Additionally, he pointed out that Ethereum’s momentum seems to be driven by potential ETF approvals in May rather than increased on-chain activity within decentralized applications.
On February 20th, blockchain analytics firm Santiment reported that the “vast majority” of crypto projects have generated profits for the average wallet on a mid to long-term timescale since the crypto markets began moving in October. However, Santiment cautioned that its model is indicating overbought signals, citing the market value to realized value (MVRV) metric, which reveals a higher risk than average in buying or opening new positions during a surge of more than four months. MVRV is used to identify local market tops and bottoms.
In conclusion, while there is growing excitement for an altseason as Ether approaches $3,000, analysts have raised cautionary flags, emphasizing the need for sustained reductions in Bitcoin dominance and highlighting potential risks associated with overbought signals.