Analysts are debating whether ETH is set to break free from the effect of Bitcoin’s price
As Bitcoin proceeds in its struggle to escape a months-long consolidation band, many Ether bulls are asserting a”decoupling” is occurring–a prophesied unhitching of the price action of ETH from that of Bitcoin–but it seems equally plausible that the sector is simply enjoying a brief”alt season”.
The term”alt season” refers to the concept that while the macro moves of Bitcoin, the largest cryptocurrency by market cap, tend to broadly dictate those of other cryptocurrencies, altcoins often outperform Bitcoin during specific periods of low BTC-related excitement.
A pseudonymous on-chain analyst, dilutionproof, speculates that Bitcoin’s consolidation and recent absence of upside volatility may be putting away impatient traders searching for fast cash gains: “Traders and investors with a high time preference get bored by the low volatility and start to look at altcoin markets, leverage — or in this case both”.
Alt season looks likely
7-day price charts for the four largest cryptocurrencies. Supply: CoinMarketCap
Further support for its alt season debate rather than a true decoupling stems from comparisons between 7-day cost graphs. ETH is definitely behaving differently into BTC, however the similarity of ETH’s cost moves into people of DOGE (and BNB into a lesser extent) stand in opposition to the decoupling theory.
DOGE is a coin which publicly admits it is a joke, and was never intended to be a critical investment (and really, has hardly any way of real-world applications ), and its latest rally was sustained largely by GameStop-style retail investment on the rear of Elon Musk’s jokey support and TikTok memes.
The decoupling debate rests on the notion that decoupling is a rational and organic process as a result of investors discovering that Ether is of higher value than Bitcoin. Ether’s similarity to Dogecoin’s movements, however, may well signal that the present rally is more likely to function as a hype-induced and profit-seeking one, as hypothesised by dilutionproof.