Crucial Ethereum On-Chain Data Suggests a Top For Altcoins is Forming

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  • Volume on Ethereum blockchain is rising faster than Bitcoin for the last three months, according to data fetched by Santiment.
  • The second-largest cryptocurrency is leading a pack of top 100 altcoins with better on-chain metrics than that of Bitcoin.
  • Observers note that a swift rise in altcoin volumes forms a local price top.

Ethereum, the world’s second-largest cryptocurrency by market capitalization, is witnessing rapid growth in its volume and daily active addresses.

According to data aggregator Santiment, the top altcoin’s daily transactional throughput via its blockchain has surged by more than 20,000 percent since March 27, 2020. In comparison, Bitcoin’s on-chain volume increased by close to 17,500 percent.

Santiment also reported a similar spike in the number of daily active addresses. They refer to digital wallets that debit/credit cryptocurrency tokens on a day-to-day basis. The portal noted that Ethereum’s active wallets rose by just below 20,000 percent since March 27.

At the same time, Bitcoin’s surge in active wallets fell shorter than that of Ethereum.

Altcoins Outrun Top Cryptos

The aforementioned three-month period also saw altcoins (barring Ethereum) ranking higher on their on-chain metrics.

Santiment reported that the top 100 altcoins by market capitalization reported higher volume than Bitcoin and Ethereum. The red wave in the chart below represents the transactions throughput via altcoins’ blockchains that unitedly surpassed the top two tokens.

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Altcoin volumes outrun Ethereum and Bitcoin. Source: Santiment

Santiment noted from previous fractals that a steadily rising volume in the altcoin market typically prompts these tokens to form a top. The portal was also referring to Ethereum – also an altcoin.

“When altcoin volume begins rising swiftly, local tops have tended to form,” it said on Friday. “In spite of the avg. altcoin volume rising faster than ETH, the [daily active addresses] rise for Ethereum has outpaced the [altcoins]. This could be a sign of long-term bullishness for ETH.”

Ethereum Paves the Way

Santiment’s analogy drew inspiration from a common perception that equates rising on-chain activity with the increasing demand for cryptocurrency.

Meanwhile, a limited supply of these altcoins ensures that their underlying rates would head higher as long as more people transact value via their blockchains.

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Ethereum price chart showing it trading 76% higher on a year-to-date timeframe. Source: TradingView.com

Ethereum price has surged by 76 percent on its year-to-date timeframe, becoming one of the most profitable altcoins into 2020. The gains have partially followed Ethereum’s increased usage in stablecoins and decentralized finance (DeFi) projects.

Ryan Watkins, research analyst Messari, discussed it elaboratively in a report published in May 2020.

He noted that stablecoins now account for 80 percent of their total value settled on Ethereum, adding that it would settle more than $530 billion stablecoin transactions by the end of 2020.

Meanwhile, according to the latest readings from DeFi Pulse, the DeFi projects have locked about $3.1 million worth of Ethereum as collateral. It attests that the number of lenders looking to utilize ETH to earn yields are rising.

“ETH, being the native asset of Ethereum, is by far the most trust-minimized asset available on the Ethereum blockchain, and it is for this reason that ETH is the reserve asset for Ethereum financial system (DeFi), collateralizing many of the most popular DeFi applications today,” said Mr. Watkins.

That ensures higher volumes and more active addresses for the cryptocurrency. Meanwhile, its technological influence on top altcoins would mean that their adoption would rise in tandem, as well.

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