Altcoin window reopening? Watch these tokens
ETH/BTC rate surges 26% as Ethereum stages a rebound
Ethereum has been weak in this cycle, as the data shows. Since September 2022, the ETH/BTC ratio has fallen from 0.085 to a low of 0.018, a drop of as much as 77 %. Ethereum’s weak performance over the past three years has been attributed to many factors, including a lack of innovation, the Ethereum Foundation’s conservative stance, and failure to keep up with market rhythms, among others, so it is hard to single out one cause, and we will not go into detail here.
However, recently, Ethereum has surged in a way that anyone can see. In one week, the ETH/BTC rate rose from 0.0186 to a high of 0.02485, an increase of 33 %, showing momentum toward reclaiming the title of altcoin king. At the same time, Bitcoin’s market dominance (BTC.D) fell from a four-year high of 65.3 % to 62.2 % in one week, indicating that altcoin liquidity is gradually returning.
Looking at the bigger picture, with Bitcoin once again breaking 100,000 and both ETH and altcoins recovering, which tokens are gaining attention, and where might their potential target price levels be?
Approach 1: Identifying ETH ecosystem tokens
Why has Ethereum been strong recently? Many in the market attribute this to the recent Pectra upgrade. What exactly does the Pectra upgrade entail?
- Account Abstraction (EIP-7702): Allows EOAs to temporarily function as smart contract wallets during transactions.
- Layer 2 data storage capacity enhancement: In 2024, Dencun’s upgrade introduced Blobs as an efficient data-storage solution for L2 rollups. The EIP-7691 proposal then recommends raising the target count to six and the maximum to nine, thereby expanding the data-storage ceiling and further improving throughput and network scalability. This measure is expected to lower data-storage costs and, in turn, drive down L2 transaction fees.
- Validator Flexibility: Allows large stakers to integrate validators, reducing the network burden, especially suitable for institutional investors.
Ethereum has already gone through multiple upgrades, and I believe this recent spike isn’t strongly linked to the upgrade itself. It’s more of an emotional rebound after extended pessimism, prompting a renewed recognition of its value and driving the latest rise.
Regardless of the reason for the increase, the price is strong. For trading opportunities, besides buying Ethereum, one can also consider coins that have a smaller market cap but are closely linked to it. The table below consists of examples of related coins.
Approach 2: Spotting high-performing tokens (MA140)
This approach is to search for altcoins with stronger recent trends. When the price surpasses the MA 140, it indicates that the current price is above the average of the last 140 days, suggesting more capital is willing to flow into these tokens. As the market recovers, we anticipate that the previously strong coins are more likely to benefit from liquidity overflow bonuses, thereby further boosting their prices. Below, we list examples of higher market cap coins that have surpassed MA 140.
Conclusion
In summary, while Ethereum's recovery has brought a new wave of momentum to the market, we should remain cautiously skeptical. Whether Ethereum's rise is driven by a genuine fundamental shift or simply an emotional oversold rebound is still uncertain. The liquidity recovery in altcoins does not necessarily signal the start of a full bull market, but rather a short-term rotation of capital and arbitrage.
In terms of strategy, the following principles can be considered:
- Focus on mainstream assets: Ethereum remains the top choice for capital risk management. Prematurely overexposing to small altcoins without confirming a major trend could increase risk.
- Prioritize strong structures: As mentioned earlier, selecting assets that have surpassed MA140 and are supported by solid fundamentals or narratives has a higher success rate than randomly picking undervalued tokens.
- Gradual entry and stop-loss placement: While there are signs of market recovery, volatility remains high. A gradual approach with technical stop-loss points is advisable to avoid emotional decisions. Stagger positions and use technical stop-loss points to avoid emotional trading.
- Beware of false breakouts and liquidity traps: Especially with smaller market-cap tokens or those with high FDV, once market sentiment wanes, price corrections can be sharp.
Both Ethereum ecosystem tokens and strong altcoins present opportunities, but it is important to remember that this is not a bull market where one can blindly invest. Cautious optimism and flexibility are key to navigating this rebound.
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