As is the cryptocurrency market show signs of bullish continuation on January 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 wants to add “ higher risk alts. ”

ETH / USDT 4-hour price chart (Binance). Source: TradingView.com

Is there a new season coming?

After Bitcoin’s rally above USD 42,000, many alternative cryptocurrencies, or altcoins, have indeed performed strongly, which is historically in line with altcoins that performed well in Q1.

The altcoins rally was driven in part by the momentum of Ethereum. After ETH surpassed a key USD 600 resistance level, it continued to rise above $ 1,000.

ETH is now close to hitting its all-time high above USD 1,400, up 60% in the first two weeks of 2021. Pal wrote:

By the way, ETH is up 60% in the first 14 days of the year. I think it performs better all year round but I still own a lot more BTC but added to ETH. The next stop is higher risk alts … but much much smaller. More risk = smaller size. “

Possibly because of the improving market sentiment around ETHaltcoins have also done particularly well over the past week.

Such as Cointelegraph reported, large-cap altcoins such as Polkadot (DOT) and Cosmos (ATOM) have so far posted big gains against both Bitcoin and the US dollar in January.

Aave, YFI, Sushi daily sentiment versus tweet volume. Source: TheTie

At the same time, decentralized financial (DeFi) tokens such as Aave, Yearn.finance and SushiSwap have significantly outperformed both Bitcoin and Ether over the past two weeks, with data confirming a continued rise in social media sentiment and activity in recent months .

Meanwhile, the upward trend of DOT and ATOM could be driven by the frenzy surrounding DeFi tokens as the demand for alternative blockchain networks has increased.

The Ethereum blockchain network has become increasingly congested in recent times as user activity on DeFi protocols has significantly increased to drive up fees in the process.

BTC vs. ETH (Orange), DOT (Blue), AAVE (Yellow), YFI (Purple) year-to-date. Source: Tradingview

Protocols such as Aave, SushiSwap and Synthetix have seen rapid growth since November, propelling Aave and Synthetix into multi-billion dollar market caps.

Wangarian, a capital distributor with the DeFi-focused fund Defiance Capital, told Friend:

“In all seriousness, Decentralized Finance will surprise you when you face the negative bias of altcoins. High Quality: $ AAVE $ SNX $ UNI $ YFI. “

What’s next for ETH and altcoins?

On January 7, Pal said in a tweet thread that he believes Ether could reach $ 10,000 to $ 20,000 if it follows the same cycle as Bitcoin.

Pal pointed to Metcalfe’s law, which states that 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:

“Oops … ETH looks exactly like BTC – Metcalfe’s law seems to be key to the price for both ETH and BTC … But ETH’s market cap is growing faster than BTC at the same point (from the first 1 million active addresses). ‘Oh shit, really? Is ETH identical to BTC in pricing structure when it had the same number of active addresses ?? But, but I thought it was a crappy shitcoin ???.’ ‘

While there is no specific correlation between Ether and the rest of the altcoin market, major projects developed on top of Ethereum could grow proportionally if Ether evolves into a trillion dollar blockchain protocol.

DeFi tokens, in particular, would likely benefit the most from Ethereum’s network effect and rapid growth as it grows at the pace of Bitcoin in 2016.