ETH Hits New Highs, Multiple On-Chain Data Suggests Ethereum May Lead a Larger Altcoin Season

Recently, Ethereum has delivered impressive price performance, continuously refreshing historic highs. According to OKX market data, as of April 29, 2021, Ethereum price reached a high of $2,774.81, setting a new all-time record, currently maintaining at $2,772.28, with a daily increase of 3.41%.

Previously, after Bitcoin set an all-time high of $64,846.90 on April 14, it failed to maintain its upward momentum and weakened, falling below $47,000 at its lowest point. Although it has gradually climbed back above $54,000, it still needs to recover $10,000 to reach its previous high.

Meanwhile, Ethereum has shown a completely different trend. After digesting the impact of Bitcoin's decline, Ethereum took the lead in rebounding and rising steadily. After successfully recovering its losses on April 27, Ethereum has refreshed its all-time high for three consecutive days.

The ETH /BTC exchange rate climbed to around 0.05, marking a record since August 13, 2018. Due to Ethereum's strong performance, its 30-day price correlation with Bitcoin has reached a more than two-year low.

Some speculate that the direct catalyst for this round of Ethereum's surge may be related to the European investment bank's plan to issue €100 million in bonds on Ethereum, which has triggered "bullish Ethereum institutional adoption." Of course, longer-term supporting factors include improving Ethereum fundamentals, the flourishing on-chain ecosystem such as DeFi, NFT, etc., the rapid development of Ethereum investment tools like ETFs, continuously declining Ethereum holdings on exchanges, and lower gas fees.

Cryptocurrency analyst Altcoin Sherpa predicts Ethereum will continue to outperform Bitcoin in the coming weeks, with a target price of $3,000. Many analysts have expressed similar views, believing there is no reason to stop Ethereum from breaking through this target level.

Ethereum Rises to 32nd Largest Global Asset, Investors Tend to HODL

Bloomberg reported on Tuesday (April 27), citing anonymous sources, that the European Investment Bank (EIB) plans to issue €100 million in two-year bonds on Ethereum for the first time using blockchain technology.知情人士称此次交易的经办行包括高盛、桑坦德银行和法国兴业银行。

European Investment Bank (EIB) plans to issue €100 million two-year bonds on Ethereum for the first time using blockchain technology

Actually, this is not the first time banks have issued bonds on blockchain. In August 2018, the World Bank launched the blockchain bond Bondi, which was issued and managed on a private Ethereum blockchain operated by the World Bank and Commonwealth Bank of Australia.

Since then, Santander took it a step further. In September 2019, Santander directly issued $20 million in bonds on Ethereum. It is reported that Santander used ERC-20 tokens on Ethereum to represent the $20 million bonds, which were later settled with another set of tokens held in a separate account.

Banks using Ethereum or Ethereum technology for bond issuance has sparked heated discussion in the community about institutional Ethereum adoption. Some view this as bullish for Ethereum institutional adoption. Following this news, Ethereum rose to a historic high of $2,774.81.

OKX market data shows Ethereum has achieved 5 consecutive days of gains on the daily chart. Calculated from the low of $2,163.00 on April 25 to $2,774.81 on April 29, Ethereum's maximum 5-day gain has reached 28.29%. In comparison, Bitcoin's maximum 5-day gain was 14.96%.

Due to Ethereum's consecutive strong rally, ETH /BTC reached 0.05030, setting a new high since August 13, 2018.

ETH/BTC hits new high

Comparing Bitcoin and Ethereum trends, Ethereum's one-month gain is 58.44%, while Bitcoin's is -4.36%. The chart below shows that when Bitcoin was consolidating at the beginning of the month, Ethereum gradually "decoupled" from Bitcoin and started rising. By mid-to-late month, when Bitcoin experienced a significant decline, Ethereum was also affected and fell, but quickly rebounded to recover losses and set new highs.

Bitcoin falls, Ethereum rebounds

Into The Block tweeted that Ethereum's 30-day price correlation with Bitcoin has reached its lowest point in over two years, dropping to -0.18.

Ethereum Bitcoin lowest point

As Ethereum broke through to new highs, its total market cap also reached a historic high. Infinite Market Cap data shows that as of April 29, Ethereum's total market cap was $319.56 billion, rising to 32nd place globally, surpassing PayPal and platinum. Ahead of Ethereum are well-known brands like Nestlé, Disney, and Procter & Gamble. If Ethereum's upward momentum remains unchanged, it is expected to surpass them soon.

Ethereum surpasses well-known brands

Recently, Ethereum holdings on exchanges have also reached a nearly two-year low. The chart below shows that as Ethereum's price rises, Ethereum on exchanges is continuously flowing out. On March 28, Glassnode data showed exchanges held 14.9541 million Ethereum. One month later, exchange Ethereum holdings decreased to 14.0272 million, a reduction of 926,900, or a decline of 6.20%.

Ethereum holdings decrease

Ethereum flowing out of exchanges means Ethereum holders tend to hold rather than sell, representing their optimism about Ethereum's price prospects. Ethereum HODL Waves also support this view. On April 17, Ethereum held for 1 week to 1 month accounted for 14.54%, while those held for 1-3 months accounted for 12.27%. By April 28, the former dropped to 7.22%, while the latter increased to 19.94%, showing short-term traders tend to HODL Ethereum.

Short-term traders tend to HODL Ethereum

OK Link data shows the Ethereum 2.0 staking contract balance has reached 4.0428 million, meaning 3.50% of the current Ethereum supply has been staked in the Ethereum 2.0 contract.

Additionally, whale addresses holding over 10,000 Ethereum have shown significant growth. As of April 28, this number reached 1,148, an increase of 49 from 1,099 on April 10.

Whale addresses holding over 10,000 Ethereum show significant growth

In the short term, reduced circulation in the secondary market and users' tendency to HODL rather than sell lays the foundation for Ethereum's further rise.

Ethereum May Lead a Larger Altcoin Season

On April 21, we published an article "Canada Approves World's First Ethereum ETF: Can Ethereum Take the Baton from Bitcoin to Lead the Second Half of the Bull Market?" In this article, we pointed out that Canadian regulators approved three Ethereum ETFs in one day—Purpose Investments' Ethereum ETF (ETHH), Evolve's Ethereum ETF (ETHR), and CI Global's Ethereum ETF (ETHX).

According to official disclosures, as of April 29, Purpose's ETHH assets under management have reached $49.82 million, and Evolve's ETHR assets under management are $13.02 million, showing significant growth.

We previously analyzed that the launch of Ethereum ETFs provides retail and institutional investors with a compliant investment channel, allowing traditional financial market investors to participate like investing in traditional assets. The successful launch of Ethereum ETFs, on one hand, enhances traditional investors' recognition of Ethereum, and on the other hand, simplifies their investment path. With clearer regulatory compliance and more investors entering, quality assets like Ethereum will gain more market opportunities.

Affected by Ethereum's strong performance, Grayscale Ethereum Trust has returned above water in the past two days, while Bitcoin Trust has been underwater for 57 consecutive days since showing a negative premium on March 2. Besides the booming Ethereum ETFs, other Ethereum derivatives like futures and options have also hit new highs recently.

Bybt data shows that as of April 29, Ethereum contract open interest reached $8.304 billion, a 65.12% month-over-month increase.

Ethereum contract open interest reaches $8.304 billion

Ethereum options open interest reached $4.285 billion, up 119.07% from $1.956 billion a month ago. The increasing maturity of Ethereum derivatives market also promotes Ethereum's development and growth.

Ethereum options open interest rises

JPMorgan released its "North American Fixed Returns Strategy" report on April 27, mentioning "Why Ethereum Is Outperforming the Market." Eugene Ng, Head of Business Development Asia at Gemini, tweeted: "When Wall Street banks start paying attention to altcoins like Ethereum, altcoin season isn't far away."

J.P.Morgan

Indeed, TradingView shows Bitcoin's market cap dominance has fallen to 49.82%, a new low since July 24, 2018. The lowest point of Bitcoin market cap dominance in the previous altcoin season was around 35%, around January 2018.

Bitcoin, altcoins

During this period, Ethereum's market cap dominance has risen to 14.65% according to CoinMarketCap. OK Link data shows Ethereum DeFi total value locked reached $88.28 billion, and on-chain stablecoin circulation broke through $54 billion. Additionally, Ethereum wallet MetaMask disclosed 5 million monthly active users, only 6 months since surpassing 1 million active users. Recent reductions in Ethereum transaction fees will further drive on-chain ecosystem development.

We clearly see signs of celebration among DeFi, NFT, and various altcoins led by Ethereum. Feixiaohao data shows 24-hour average gains in sectors like DEX and NFT are both above 10%, demonstrating the market's high enthusiasm for altcoins.

Additionally, OK Link's Grayscale holdings show Grayscale has recently increased its holdings of altcoins.

Grayscale single asset trust funds

Subsequently, with the launch of hot topics like Layer 2 and Web 3.0, perhaps a larger altcoin season is already on the way.

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