Altcoin Season Begins as Ethereum [ETH] Rallies, LINK Records 16.6% Weekly Gains

Ethereum [ETH] has recently demonstrated its strength as the second-largest cryptocurrency by market capitalization, seeing notable gains. Over the past 24 hours, ETH surged by nearly 10%, reaching a trading price of $3,374 at the time of writing.

Ethereum's recent strength, as the second-largest cryptocurrency by market capitalization, has brought about a 10% surge in its price over the past 24 hours. This surge, reaching a trading price of $3,374 at the time of writing, signals potential bullish activity in the broader altcoin market.

CryptoQuant analyst Mac.D has highlighted the beginning of an altcoin season in a post on the QuickTake platform, pointing to Ethereum's circulating velocity and transaction growth as indicators of this rally.

Historically, during altcoin market rallies, the circulating velocity—a measure of how quickly coins circulate in the market, calculated by dividing the annual coin movement by the total supply—tends to rise. Despite the currently low velocity levels, at around seven times the total supply, Ethereum's role as a primary collateral asset for institutional investors is expected to play a crucial part.

According to the analyst, a rise in ETH's price could stimulate DeFi liquidity and confirm the onset of an altcoin season.

This recent strength in Ethereum's performance comes within a broader narrative. While Bitcoin has outpaced Ethereum in recent rallies, largely due to its institutional appeal and role as a store-of-value asset, Ethereum's role as a backbone for decentralized finance (DeFi) and a top choice for institutional collateral positions it for substantial influence.

However, challenges remain, with competition from faster and cheaper blockchain networks, such as Solana, Tron, and Aptos, presenting hurdles for Ethereum to overcome. Yet, as Ethereum's transaction growth and velocity improve, it is expected to drive liquidity creation, benefiting the altcoin ecosystem.

A closer look at one of the prominent altcoins, Chainlink, further supports the altcoin season thesis. LINK has recorded a 16.6% increase in the past week, bringing its trading price to $15.26.

This growth aligns with Ethereum's rising activity and suggests broader altcoin momentum. Key metrics bolster this case: LINK's active addresses—a measure of retail interest—have surged, increasing from below 2,000 in October to over 5,000 by 21st November, according to Glassnode.

Furthermore, Chainlink's derivatives data also shows bullish signs, with a 7.76% increase in LINK's open interest, now valued at $294.88 million, according to data from Coinglass.

Additionally, there has been a 0.86% increase in LINK's open interest volume, reaching $726.97 million. These metrics suggest heightened investor activity and confidence in LINK's near-term performance.