Despite the price surge experienced lately, said crypto analyst Dan Gambardello Ethereum [ETH] and Cardano [ADA] have not made any big moves to confirm the long-awaited altcoin season. Gambardello mentioned this in a YouTube session he had with his subscribers on February 19.
So far, average altcoin holders appear to be making massive gains, as Santiment, a leading blockchain analysis firm, reported. According to the company’s observations, many altcoin portfolios have seen substantial gains, with most crypto projects showing bullish performances.
Said realized gains began since the market turned bullish in mid-October 2023, according to Santiment, indicating that these massive gains were accrued on a “medium to long-term time scale.”
Observed Potential Risk
Despite these gains, Santiment has issued a warning note to investors, pointing to “overbought” levels in the market. The blockchain analysis firm noted the following:
“Apart from a few lagging altcoins, the vast majority of crypto projects have generated profits for the average wallet on a medium to long-term time scale. This means that our model indicates a lot of ‘overbuying’ signals.”
Although Santiment revealed that this does not necessarily imply an imminent market correction, historical data indicates a higher risk of opening new positions in such circumstances.
In particular, the company’s analysis suggests that altcoins experiencing a rally of more than 4 months are particularly susceptible to increased risk, as indicated by elevated MVRV levels.
On Monday, Sentiment posted on X that “Based on average trading returns, many assets have seen understandably high profits since markets began booming all the way back in mid-October, 2023…”
The market value to realized value, also known as the MVRV metric, is a crucial tool for assessing risk in the crypto market. This metric compares the current market price of a cryptocurrency to the average price at which the last transaction occurred on the blockchain. A high MVRV ratio indicates that a significant portion of the market is profitable, which could indicate overvaluation and a higher risk of a market correction.
Market Participants Have Eyes on ADA and ETH
According to Santiment’s result, the weighted sentiment of ADA was 0.918. ETH, on the other hand, also had positive weighted sentiment. Recently, the metric was 0.918. The metric shows the perception that average market participants have about a project.
Therefore, these readings suggest that the majority of traders were optimistic about the Ethereum and Cardano ecosystems. If this sentiment remains as it is, buying pressure could appear for cryptocurrencies.
If this is the case, the price of ADA could rise towards $1. Also, the price of ETH. prediction above $3,000 could happen.
Anticipating the Altcoin Season
Amid discussions about altcoin performance, crypto analyst Dan Gambardello has floated ideas about the potential for a “breakout” altcoin season. Gambardello suggests that Cardano (ADA) and Ethereum (ETH) could lead that season, provided Bitcoin (BTC) dominance begins to decline.
Drawing from previous market cycles, Gambardello highlights historical patterns where ADA and ETH led the charge before other altcoins joined the uptrend.
Gambardello emphasizes the importance of monitoring Bitcoin dominance when assessing the likelihood of an altcoin season. While altcoins like ADA and ETH may show promising signs, Bitcoin’s dominance remains a crucial factor influencing market dynamics.
Meanwhile, the altcoin market capitalization has retreated marginally from its recent high above $900 billion, and currently sits slightly below this mark.
By Leonardo Perez
