While Bitcoin has rallied significantly since Trump's election, Ethereum has seen relatively small gains. In a related note, Ethereum's historical circulating velocity and transaction growth may provide some hints about the altcoin's season rally.
Velocity is calculated by dividing the total amount of coins moved in a year by the total supply, indicating how quickly coins circulate in the market. Past cycles show that when we see a parabolic rise, we also see an increase in circulation velocity, which reflects the growth of DApps and DeFi on the Ethereum network, resulting in more users and transactions.
However, current velocity is low, at about 7 times the total supply, and network transaction growth is sluggish. One reason for this is the emergence of faster and cheaper network competitors like Solana, Tron, TON, Sui, and Aptos.
However, Ethereum holds the second position in crypto market capitalization and serves as a major collateral asset for institutional investors after Bitcoin. Therefore, an increase in Ethereum's price is necessary to boost lending and leverage, and the liquidity generated through this could signal the start of an altcoin season rally. In summary, the altcoin season rally is likely to begin with liquidity created through Ethereum DeFi, and will be confirmed by increased network transactions and velocity.
Written by MAC_D
