As the cryptocurrency market is showing signs of bullish continuation on Jan. 15, Raoul Pal, the CEO of Real Vision Group and an avid Bitcoin (BTC) investor, is optimistic about the price of Ether (ETH). Pal also says he’s looking to add “higher risk alts.”
Is an altseason coming?
Following Bitcoin’s rally above $42,000, many alternative cryptocurrencies, or altcoins, have indeed performed strongly, which is historically in line with altcoins performing well in Q1.
The rally of altcoins has in part been led by the momentum of Ethereum. After ETH surpassed a major resistance level at $600, it continued to rally above $1,000.
ETH is now close to reaching its all-time high above $1,400, rising 60% in the first two weeks of 2021. Pal wrote:
Possibly due to the improving market sentiment around ETH, altcoins have also performed particularly well in the past week.
As Cointelegraph reported, large-cap altcoins, such as Polkadot (DOT) and Cosmos (ATOM) have seen large gains against both Bitcoin and the U.S. dollar so far in January.
At the same time, decentralized finance (DeFi) tokens, such as Aave, Yearn.finance, and SushiSwap heavily outperformed both Bitcoin and Ether in the last two weeks with data confirming a continuous rise in sentiment and social media activity in recent months.
Meanwhile, the uptrend of DOT and ATOM could be driven by the frenzy around DeFi tokens, considering that the demand for alternative blockchain networks has increased.
The Ethereum blockchain network has become increasingly congested as of late, as the user activity on DeFi protocols significantly rose to push up fees in the process.
Protocols like Aave, SushiSwap, and Synthetix saw rapid growth since November, propelling Aave and Synthetix to billion-dollar market caps.
Wangarian, a capital allocator at the DeFi-focused fund Defiance Capital, told Pal:
What’s next for ETH and altcoins?
On Jan. 7, in a tweet thread, Pal said that he believes Ether could achieve $10,000 to $20,000, if it follows the same cycle as Bitcoin.
Pal pinpointed Metcalfe’s law, which states the effect of a telecommunications network is proportional to the square of the number of connected users of the system, to support a bull case for Ether. He wrote:
Although there is no specific correlation between Ether and the rest of the altcoin market, if Ether grows to a trillion-dollar blockchain protocol, major projects developed on top of Ethereum could grow proportionally.
Most notably, DeFi tokens would likely benefit the most from Ethereum’s network effect and rapid growth if it grows at the pace of Bitcoin in 2016.