The improvement of sentiment in the crypto industry and the growth of Bitcoin, as a rule, are harbingers of the altcoin season. In 2023, Bitcoin grew 2.3 times, which was facilitated by the imminent appearance of spot ETFs in the United States and several high-profile SEC court failures.
Crypto investors are trying to track the beginning of the altseason since the profitability of coins with low capitalization often overlaps with higher risks (especially when forming an investment portfolio). One of the signs of the transition period is the increased volume of altcoin trading, which currently accounts for 60% of total turnover.
Among altcoins, Solana is of the greatest interest to investors. Solana confidently leads American crypto exchanges, having almost reached a turnover of $15 billion in the spot market by the end of 2023. However, Ethereum is still inferior to other international platforms.
In November, after a year of oblivion, interest in this coin sharply increased after the application of the Ethereum spot ETF by the investment giant BlackRock. Consequently, the financing rate increases dramatically. A few things help us predict the altseason, such as:
- The growth in interest in altcoins led to a decrease in the share of Bitcoin from 54% to 52% in November. However, this trend may be reversed if positive factors are not implemented or do not have the expected impact. JPMorgan analysts published a skeptical report the other day, in which they went through the expectations of investors:
- The appearance of spot ETFs will only lead to a flow of capital from current investment products into them (for example, Grayscale Bitcoin Trust) but will not create new demand.
- The cases lost by the SEC will not lead to an increase in loyalty to crypto regulation as the regulatory framework is formed, and the approach will only become tougher.
The effect of halving is unpredictable, and the reduction in remuneration has already been considered in the price.
Altcoins are crypto tokens that are not Bitcoin. Since Bitcoin was the first cryptocurrency to be developed and placed, it earned itself the status of a pioneer, and the fact that every other token except Bitcoin is called an "alternative" demonstrates the superiority of Bitcoin in the market.
What is AltSeason?
Altseason is a period when the growth rates of altcoin quotes are ahead of the Bitcoin index. The growth of altos reinforces the increase in the total balance of Bitcoin in crypto exchanges. Traders send coins to their exchange accounts for rapid trading.
For example, BTC has risen by 25%, while ten altos have grown by 10-1000%. On average, this period lasts three months, and it occurs one to several times a year.
The altseason index is the ratio of Bitcoin capitalization to the capitalization of all cryptocurrencies. This index is measured as a percentage that ranges from 40 to 70%, on average.
The main indicator of the onset of the altseason is the stagnation or fall of the BTC quote. Currently, altcoins show historical highs. Another factor is that the altseason follows the beginning of the crypto-winter, so analysts use both terms in a close relationship.
The altseason does not last long as investors fix profits through future transactions. Therefore, the number of BTC in circulation is growing, and the sale of altos leads to a drop in their indices.
A vivid example of the altseason from December 2017 to January 2018.
Altcoins are all cryptocurrencies, not Bitcoins. In other words, all crypto-coins, except Bitcoin, are called "alternative" coins (coins) or altcoins.
The altseason is a "golden" time for many traders and investors, during which you can increase your deposit tens, hundreds, and even thousands of times, but in fact, the vast majority of traders "flirt,” catch FOMO, and do not have time to fix profits, after which they get big losses, after a sharp collapse in the value of many tokens at the end of the altseason. In such a situation, you do not need to act impulsively; it is better to mentally prepare in advance and take a wait-and-see position until the next altcoin season (HODL strategy will help).
To prepare for the altseason, accounts can be registered on the best cryptocurrency exchanges using the referral links of crypto exchanges from our blog (they give many bonuses, discounts on trading commissions, and additional privileges for traders).
When Does the Altseason Start and How Long Does it Last?
When altseason comes, altcoins tend to outpace Bitcoin and the dollar.
If you are looking for early signs of the onset of the alt-season, pay attention to the following:
- The dynamics of price changes of leading altcoins, for example, Ethereum (ETH).
- Keeping an eye on the dominance of BTC in the market (if the dominance of Bitcoin falls, many altos begin to "shoot").
- Pay attention to when The market value of all altcoins quickly exceeds the total market value of all cryptocurrencies, including Bitcoin.
Despite the abundance of various signs, the altseason comes unexpectedly and with lightning speed. The main thing is not to lose your head or earn it carefully.
The AltSeason Index is an indicator of the arrival of the altseason in the cryptocurrency market.
The index is formed as follows: if 75% of the 50 largest cryptocurrencies by capitalization showed better results in value growth than Bitcoin over the last season (90 days), this is the altcoin season. When compiling the index, stablecoins (Tether USDT and others) and asset-backed tokens (e.g., WBTC) were excluded from the TOP 50.
The altseason can last a week, a month, or even several months (usually this is not a very long period of time, after which a strong decline in the altcoin market comes immediately). The duration of each altseason was unique and difficult to predict.
It is almost impossible to prepare for the altseason because it always comes unpredictably and can be quite short. The main thing is to have time to sell altcoins on time, fix profits, and stock up fiat money or stablecoins before the next altseason arrives, or to buy Bitcoin.
Bitcoin's Dominance Over Altcoins
By the end of October 2021, BTC capitalized $1.15 billion. Simultaneously, the entire cryptocurrency market is estimated at $2.61 billion. Approximately 44% of capital is concentrated in Bitcoin.
However, investors are sometimes misled. If the exchange rate is growing rapidly, then the dominance, on the contrary, decreases. These conclusions were based on historical events.
- At the end of 2017, Bitcoin updated its historical maximum to $19,666. However, the dominance index gradually decreased until it reached a minimum of 36% on January 13, 2018.
- Subsequently, the bullish (rising) trend was replaced by a bearish (falling) one, and a prolonged depreciation of the exchange rate began. This period was called the "cryptowinter". The BTC rate fell until the end of 2018 when it was fixed in the range of $3000–$4000. Meanwhile, the dominance index, on the contrary, has increased.
- In March 2021, the situation was repeated. Bitcoin began to set new value records, but the dominance index declined.
Thus, the growth of the BTC exchange rate has a positive effect on the capitalization of altcoins. Its dominance can be determined using the following formula:
Asset Capitalization / Market Capitalization
With access to simple statistics, the share of all altcoins can be determined quickly. A different formula was used for this calculation:
100 — (BTC capitalization/market capitalization).
Which Strategy is Better for Choosing During the Entire Season?
Altseason offers traders the opportunity to invest in promising altcoins in order to gain potential benefits from the success of several assets. Traders can use technical analysis tools to determine possible moments of entry and exit from transactions.
- Graphic models
- Volume analysis
By analyzing price charts and identifying key support and resistance levels, traders can make informed decisions about their trading operations. Studying the activities of large investors, also known as "whales,” is an effective way to predict market volatility. By monitoring addresses with large balances, one can obtain an idea of their purchase and sales patterns. By analyzing the transactions carried out by whales, traders and investors can identify potential market trends and anticipate price movements. To avoid mistakes when choosing an asset for purchase, conducting a thorough analysis of the project is also recommended.
Opportunities and Risks in the Altseason
Despite the fact that altseason provides market participants with many profitable opportunities, it also involves certain risks that traders should be aware of. The altcoin season is usually accompanied by increased market volatility, and sharp price movements can lead not only to significant profits but also to significant losses. Traders are advised to exercise caution, set stop-loss orders, and effectively manage risks to protect their capital.
Moreover, altcoins with low market capitalization often face the problem of low liquidity during the altseason. This can make it difficult to execute transactions at the desired prices, cause slippage, or increase trading costs. However, understanding the dynamics of altseason, tracking market sentiment, and using appropriate trading strategies can help market participants navigate this exciting and dynamic period.