Key Points
- Ethereum’s Total Value Locked (TVL) has surged by 73.78%, signifying strong altcoin engagement.
- Capital is shifting into other altcoins, including Render [RNDR], Fetch.ai [FET], and Fantom [FTM].
Ethereum’s ascent beyond $3,900 could potentially alter market dynamics and propel altcoins to new heights.
Following Bitcoin’s record-breaking peak, Ethereum has been outperforming it. This has led to speculation that Bitcoin’s dominance may be waning.
When this occurs, Ethereum’s price typically improves. However, Ethereum is not always the sole beneficiary of this flip. Often, profits from Ethereum and Bitcoin are invested into other altcoins.
Capital Rotation and Altcoins
An analysis of on-chain data from Santiment indicates that capital is being invested in other cryptocurrencies such as Render [RNDR], Fetch.ai [FET], and Fantom [FTM].
This conclusion was reached after evaluating whale transactions valued over $100,000. These large transactions have been happening since March 5th.
Transactions recorded in the last 24 hours have been particularly large, suggesting that the much-anticipated altcoin season may have arrived.
ERC-20 Tokens and Ethereum’s TVL
Altcoin season refers to a market boom when other cryptocurrencies outperform Bitcoin. Interestingly, the aforementioned cryptocurrencies are all ERC-20 tokens.
ERC tokens are fungible assets created on the Ethereum blockchain. This suggests a high interest in Ethereum and other assets linked to the network.
If capital continues to flow into these assets, other tokens built on Ethereum might follow. The Total Value Locked (TVL) of Ethereum was $55.30 billion according to DeFiLlama, marking a 73.78% increase in the last 30 days.
TVL is a measure of a protocol’s health. A decreasing TVL indicates a lack of liquidity inflow, possibly due to market participants’ lack of trust in the blockchain’s ability to yield good returns.
Conversely, a rising TVL indicates that participants perceive the project to be trustworthy, leading to a surge in capital flow and improved network health. This is currently the case with Ethereum.
If participants continue to bridge assets into Ethereum, the TVL might approach its previous all-time high.
Implications for Altcoin Prices
A rise towards $106 billion could also impact Ethereum’s price. If this occurs, Ethereum could surpass $5,000 at the peak of the bull market.
Other altcoins might also benefit. For instance, FET, which has experienced a 377% increase in the past 90 days, might trend higher. FTM’s price might also increase towards $3, while RNDR’s price could also rise.
