How Summer Is Turning Into A Short-Lived Altcoin Season

Ethereum Classic (ETC), Filecoin (FIL) and Lido DAO (LIDO) have dominated the altcoin sector as they outperformed Bitcoin and other big cryptocurrencies. The first crypto by market capitalization recorded its best month in 2022 but is still far from the average monthly return from these tokens.

According to Arcane Research, altcoins have seen an average performance of 40% over the past month as the crypto market has seen a “classic relief rally.” July was a historic green month for digital assets.

During this period, the emerging asset class experienced expansion in two important sectors, decentralized finance (DeFi) and non-fungible tokens (NFTs). As seen below, the rally was particularly positive for mid-cap cryptocurrencies.

Bitcoin Altcoin Altcoins ETC 1 . Chart
Source: Arcane Research

This rally in the market has translated into a decline in the market share of bitcoin and stablecoins, which indicates an increase in risk appetite for cryptocurrency investors, and more strength for Ethereum. Arcane Research noted:

Ether’s lack of strength relative to Bitcoin last week was reversed this week, with Ether increasing its market share by 0.43 percentage points, while Bitcoin lost 0.22 percentage points. Notably, bitcoin and stablecoin are losing market share this week (…).

Ethereum could be important for understanding the current price action. The cryptocurrency has a provisional publication date for “merging,” the event that will combine the implementation layer (Proof of Work) and its consensus layer (Proof of Stake).

Altcoins such as Lido Dao and Ethereum Classic may benefit from the imminent transformation of the blockchain. The former cryptocurrency surged as more users wanted to share their ETH and participate in the Ethereum (2.0) consensus model to receive rewards.

Ethereum Classic saw a positive performance as it could become a safe haven for ETH miners. This sector is facing inevitable destruction as ETH’s new consensus model will validate transactions with a different mechanism.

ETH price is moving sideways on the 4 hour chart. source: ETHUSDT TradingView

Merger Will Provide Altcoins With More Upside Momentum

In this sense, until the launch of the mainnet “The Merge,” altcoins may continue to extend their upward trajectory. The data from a pseudonymous user sheds light on the significance of this event and why it could inject new capital into this ecosystem, driving up the price of Ethereum and the altcoin sector.

The user claims that this cryptocurrency will become environmentally, socially and governance-friendly (ESG). This will give new institutions the confidence to bet on the long-term success of Ethereum. the user He said:

Regardless of your personal thoughts about ESG, if you want mainstream crypto-asset adoption to control the narrative around emissions and sustainability, it is essential. Bitcoin decided to ignore the problem; Ethereum’s launch itself from PoW should prove positive for both assets.

Leave a Comment

Your email address will not be published.