Ethereum (ETH)’s strong performance over the past few weeks suggests that the crypto market may be entering a so-called “altcoin season.”
An altcoin season or “alt season” is a phase in the market cycle in which smaller cryptocurrencies than Bitcoin (BTC) catch up.
Ethereum has reached its highest close in 97 weeks
Ethereum, just like its big brother Bitcoin, has been rising sharply recently. The price broke through $3,000 earlier this week and is now at $3,355 after a 50% increase over the last month.
According to analysts at crypto exchange Bitfinex, this could be a sign that the aforementioned altcoin season is upon us.
“Ethereum has seen significant momentum, breaking through $3,000 and preparing for its highest weekly close in 97 weeks.
This surge is fueling discussions about the possible start of an “altcoin season,” a time when alternative cryptocurrencies outperform Bitcoin,” Bitfinex analysts say in this week’s Bitfinex Alpha report
Ethereum supply on crypto exchanges is rapidly decreasing
This sharp price increase is accompanied by a significant decrease in the total ETH supply on traditional crypto exchanges.
This drop could push the price even higher, Bitfinex analysts say:
“These net outflows indicate a severe supply shortage that could further drive the price of Ether higher,” Bitfinex said.
The Bitfinex report says that up to 800,000 ETH, worth about $2.4 billion, have been withdrawn from crypto exchanges since the beginning of January.
According to the analysts, ETH is being withdrawn from exchanges to hold or use it for the longer term hit. In any case, the decline in supply puts upward pressure on the price.
“This significant reduction in Ether reserve balance on exchanges is very positive for the asset and could represent the strongest supply shortage for the asset since the Shapella upgrade,” Bitfinex added.
In the past, altcoins tended to catch up after Bitcoin and Ethereum surged.
However, Ethereum has slightly underperformed many major altcoins, including Solana (SOL), in recent months. The two largest cryptocurrencies on the market are now taking the lead again.