Cryptocurrency research firm K33 Research pointed out that as the price of Bitcoin entered a consolidation range, capital rotation is creating a “mini altcoin season”. The head of research at cryptocurrency service provider Matrixport also mentioned the increase in activity on the Ethereum network, laying the foundation for a bullish outlook for ETH.
According to a report released by K33 Research on Tuesday, as the price of Bitcoin (BTC) gradually narrowed between $34,000 and $36,000, funds began to rotate into altcoins, creating a “mini altcoin season”. This is a typical behavior pattern in the cryptocurrency market, where traders take profits after a significant rebound in Bitcoin and invest funds into smaller, riskier coins. At the same time, K33 pointed out that funds flowing into Bitcoin-related funds are also supporting the price of Bitcoin.
Markus Thielen, the head of research at cryptocurrency service provider Matrixport, stated in a report released on Monday that the income in the Ethereum ecosystem is bottoming out and possibly indicating a trading bottom for Ethereum (ETH). Data from Token Terminal shows that Ethereum’s weekly income (from network transaction fees) has risen to over $30 million for two consecutive weeks, higher than the annual low of $12 million set in early October. Thielen suggested that as long as Ethereum’s weekly transaction fees remain above $30 million, strategically bullish trading may be valuable. Based on a price chart shared by Thielen, Ethereum recently broke through the upper boundary of a converging triangle and may have the potential to reach a target price of $3,000.
Thielen had previously been bearish on Ethereum in September, citing deteriorating network income and user activity. In fact, Ethereum hit a seven-month low in early October, relative to Bitcoin, also reaching a 15-month low. Since then, with a significant market rebound, Ethereum has risen by about 20%, with a trading price of around $1,870 before deadline.
Ethereum serves as the foundation for many DeFi (decentralized finance) protocols and decentralized exchanges. Blockchain analysis company IntoTheBlock pointed out that funds rotating from Bitcoin to altcoins help stimulate user activity on Ethereum. According to IntoTheBlock’s data, Ethereum settled $250 billion in asset transfers on the network last week, the highest amount since the US regional bank crisis in mid-March, and higher than the $105 billion at the end of August. With the surge in activity on Ethereum, on-chain data shows that the amount of ETH burned has exceeded the newly added supply in the past week, shifting the token from inflation to deflation after two months.
Lucas Outumuro, the head of research at IntoTheBlock, believes that the rise in on-chain activity indicates an improvement in the fundamentals of the cryptocurrency market.