Altseason refers to a short time frame when capital shifts from Bitcoin to altcoins, leading to a notable and rapid rise in the prices of most cryptocurrencies. Altcoin season, commonly known as 'Altseason', is characterized by massive gains and high volatility. It's essentially a festive time for cryptocurrency traders.
During a relatively brief period—typically weeks or months—the values of altcoins soar as investors move their funds from Bitcoin to other coins. As prices begin to climb, FOMO—fear of missing out—investments come into play, creating a cascading effect that further drives altcoin prices to extraordinary levels for a limited time.
What causes an altseason?
Usually, after Bitcoin undergoes a substantial price increase, it tends to stabilize and move sideways for a while. This situation persuades investors to search for more profitable opportunities. They often exchange their Bitcoin for Ethereum and other promising altcoins, decreasing Bitcoin's share of the total crypto market and triggering an Altseason.
History of past altseasons
Previous alt season events have significantly increased various altcoin values, with some achieving exponential rises in relatively brief timeframes.
Noteworthy alt seasons include the trends of 2017-2018 and 2020-2021. Let's examine them more closely.
2017-2018
This altcoin season was driven by a substantial reduction in Bitcoin's market dominance, which dropped from 86.3% in late 2017 to a low of 38.69% at the beginning of 2018. During this time, Bitcoin's price fell from a then-historic peak above $20,000 to below $6,000 just a few months later.
The rise of altcoins surpassing Bitcoin occurred as the initial coin offering (ICO) market was booming in 2017-2018. Many blockchain projects launched ICOs to gather funds by creating tokens.
2020-2021
The altcoin season of 2020-2021 emerged during the coronavirus pandemic, prompting retail investors and crypto enthusiasts to seek opportunities beyond Bitcoin. This led to the emergence of contemporary meme coins, with Dogecoin and Shiba Inu achieving unprecedented growth.
Non-fungible tokens (NFTs) also stimulated altcoin markets, enhancing overall sentiment within the dApp sectors. During this period, Bitcoin's market dominance dropped from 70% to 38%, while the total market capitalization held by altcoins doubled from 30% to 62%.
How to tell when altseason has started
The opportunity to invest in upcoming altseason coins is thrilling for cryptocurrency enthusiasts, as it often leads to considerable price increases.
Nonetheless, recognizing the start of an altcoin season requires a solid grasp of market cycles and trends. Let's look into some key indicators that could signal the onset of a new altcoin season.
- Increase in altcoin dominance
A major sign indicating the start of an altcoin season is a clear rise in altcoin dominance within the total cryptocurrency market. Altcoin dominance refers to the combined market cap of all cryptocurrencies except Bitcoin, represented as a percentage of the total market capitalization of the cryptocurrency sector.
- Rising trading volumes
A spike in trading volumes for various altcoins is a notable indicator of the beginning of altcoin season. Increased trading volumes reflect heightened activity in the crypto market and growing investor interest in altcoins, resulting in enhanced liquidity and price fluctuations.
When is the next altcoin season coming?
Predicting the exact timing of the next altcoin season is challenging due to the cryptocurrency market's unpredictable nature. Regulatory changes and macroeconomic factors can affect the timing and length of altcoin seasons.
One crucial element that could ignite the next altcoin season is the U.S. Federal Reserve's interest rate cuts. Markets experienced a surge with lower interest rates, prompting investors to move their capital away from banks in search of higher-yielding investments.
Strategic Bitcoin Reserve
Donald Trump's recent election win has notably influenced the cryptocurrency market, with Bitcoin achieving a historic high of $81,028.40. Mr Trump's supportive stance on cryptocurrency, including proposals for a strategic Bitcoin reserve and increased mining activities within the U.S., has strengthened market confidence. These events hint at a favorable climate for cryptocurrencies, indicating the start of the next altcoin season in 2025.
How to take advantage of altcoin season
It’s important to identify potentially lucrative opportunities before the altcoin season starts. Here are some key points to consider.
- Research and diversify your portfolio
Take the time to analyze and meticulously identify the best altcoins to purchase. Exploring various altcoins can help mitigate risk and enhance potential returns, ensuring you don't concentrate all your investments in one.
- Time your entries and exits
Consider using technical analysis instruments like support and resistance levels and the relative strength index (RSI) to determine optimal entry and exit points.
These can serve as effective indicators during altcoin seasons and assist you in tracking price trends and market sentiment before you decide to invest.
Get new Altcoins early
Participating in presale events for new altcoins can provide early access to promising projects at lowered prices.
Key takeaways
An altcoin is any cryptocurrency other than Bitcoin. They are typically more volatile than Bitcoin and present high-risk, high-reward scenarios.
When Bitcoin's dominance—the proportion of the total cryptocurrency market share represented by Bitcoin—drops sharply, it stimulates investments in altcoins, leading to an Altseason.
Forecasting an Altseason is not an exact science and isn't formally announced at a specific time or date.
Altseasons can occur multiple times within a year and are often condensed into a relatively short timeframe.
Selling your altcoins before the Altseason concludes is essential for optimal gains. Altcoin prices can fall as fast as they rise.
Numerous Altseasons have occurred in the past decade, all commencing right after a decline in Bitcoin dominance. The more significant the drop in BTC dominance, the more substantial the subsequent Altseason.
As we approach a potential altcoin season, securing your assets becomes critical. History has shown that bull cycles often increase hacking and phishing attempts, making asset protection essential. For instance, during the 2021 bull run, the amount of stolen funds jumped by 357.2% quarter-on-quarter to $0.47 billion.
Cold wallets, like Tangem, are among the safest ways to store cryptocurrencies, especially during high-volatility periods. With Tangem, your altcoins are protected against cyber threats, ensuring your investments are safe from online attacks.
Prepare ahead and get a Tangem Wallet to securely hold your altcoins and make the most of the upcoming opportunities in the altcoin market.
FAQ
1. What is the altcoin season index?
The Altcoin season index measures the relative performance of altcoins against Bitcoin over a set period, typically 30 or 90 days. A high index score indicates an "altcoin season," where most altcoins outperform Bitcoin.
This index helps investors understand when the market trend favors altcoins over Bitcoin, which is useful for identifying profitable trading windows.
2. How do I predict an altcoin season?
Predicting an altcoin season involves analyzing market cycles, sentiment, and historical performance.
Indicators such as Bitcoin dominance, trading volume shifts, and capital flows into smaller coins often precede altcoin seasons.
Other predictive methods include monitoring the Altcoin Season Index, on-chain data, and technical indicators that suggest growing interest in altcoins.
3. What is the Altcoin season index chart?
An Altcoin Sseason index chart visually represents how altcoins perform relative to Bitcoin over time. Spikes in the chart indicate periods when most altcoins outperform Bitcoin, suggesting an altcoin season. By studying the chart, you can track trends and assess when shifting focus from Bitcoin to altcoins may be profitable.
4. What is the Altcoin season cycle?
The altcoin season cycle typically follows Bitcoin's price cycles. When Bitcoin's dominance peaks or starts declining, interest often shifts to altcoins, especially as traders seek higher gains in smaller-cap assets. Understanding this cycle helps you anticipate phases of market euphoria and potential corrections.