Analysts at Arcane Research named the likely reasons for Ethereum’s rise and expressed confidence that the altseason is already in full swing.
In their observations, the Bitcoin dominance index fell below 50% for the first time since 2018. From the start of the year the metric has dropped from 71% to 47%.
Altcoin total market capitalization rose by a little over 420% in four months, from $222 billion to $1.16 trillion.
Among the drivers of the current market situation, analysts cited growing interest in the DeFi space. It manifested in the rally of many tokens from decentralized finance projects and the second-largest cryptocurrency by market cap.
Because of high transaction fees on the Ethereum network, coins of alternative DeFi platforms—Solana and Binance Coin—gained popularity. Notably, the hype around Dogecoin deserves mention.
Experts drew parallels with the 2017 bull market, in which periods of Bitcoin price consolidation were accompanied by strong gains in altcoins. They urged investors to study assets carefully before buying and to steer clear of tokens from “suspicious” projects.
Analysts are convinced that Ethereum’s records are largely driven by the spot market. They pointed to a decline in the ratio of open interest in futures to the cryptocurrency’s market capitalization.
The current phase of Ethereum’s rally differs from previous ones, where the speculative component prevailed. At the moment the indicator has fallen to 2.6%, which is about 1.5 times higher than the corresponding value for Bitcoin (1.8%).
Earlier, the volume of liquidations of short positions on Ethereum contracts reached new highs as the price rose toward $3500.
ForkLog previously reported that Ethereum’s rise above $3000 propelled its co-founder Vitalik Buterin into billionaire status.
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