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Published on: Aug 27, 2024
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Altcoin season is a phrase referring to a period when the performance of altcoins tends to outperform that of Bitcoin.
➔ Altcoin season is a period when the performance of altcoins tends to outperform that of Bitcoin.
➔ During an altcoin season, altcoins grow better than Bitcoin in terms of price and market cap.
➔ If the performance of 75% of the top 50 altcoins surpasses that of Bitcoin over a specific period, it is an altcoin season.
American entrepreneur Arthur Hayes recently forecasted that the next altcoin season would arrive once Bitcoin (BTC) and Ethereum (ETH) reach the price marks of $70K and $4K, respectively.
If it happens, it will be a long-awaited opportunity for the trading community to spread its wings. In addition, it will be another extended period for the crypto industry to stop living in the king coin’s shadow and grow on its own. To understand the concept of altcoin season, we must first know what an altcoin is. Here is a quick explanation:
Bitcoin, the first cryptocurrency, debuted in 2009. In fact, it became so popular that the terms Bitcoin and crypto became synonymous. The success of Bitcoin encouraged other decentralised finance (DeFi) developers to launch their crypto projects.
These cryptocurrencies which emerged as alternatives to Bitcoin came to be known as altcoins.In short, all cryptocurrency except Bitcoin, such as Ethereum, Solana (SOL), and Dogecoin (DOGE), are referred to as altcoins.
After a decade and a half of its debut, Bitcoin is the largest cryptocurrency and is known as the king coin. But altcoins are posing a serious challenge to the dominance of Bitcoin.
Recommended Read: Bitcoin Dominance
One such phenomenon is the altcoin season or altseason. Altcoin season is a phrase referring to a period when the performance of altcoins tends to outperform that of Bitcoin. Let's learn about the concept in detail.
We already mentioned that Bitcoin is the largest crypto which occupies more than 50% of the overall market cap of the crypto industry. The phenomenon is known as Bitcoin dominance which explains the degree to which Bitcoin holds the dominant position in the entire crypto market in terms of market cap.
For years, Bitcoin dominance was as high as 95%. 2015 saw the birth of Ethereum which later emerged as the second largest cryptocurrency. But it couldn’t challenge the dominance of Bitcoin significantly. It's 2017 that marked the first altcoin season as the year witnessed a boom of initial coin offerings (ICOs) of several altcoins such as Cardano (ADA).
During an altcoin season, altcoins grow better than Bitcoin in terms of price and market cap. These conditions generally lead to a bull run in the market. Investor confidence grows beyond the confines of Bitcoin during an altcoin season as the market cap of altcoins exceeds that of Bitcoin. But it is not a full proof way of realising gains by investing in altcoins as traders should consider other factors too before they invest.
Now, can you measure the intensity of an altcoin season? Is the season hold or cold or no? Some crypto analysts have devised an altcoin season index to assess whether we are witnessing an altcoin season or not. If yes, the index also measures the intensity of the season.
If the performance of 75% of the top 50 altcoins, except stablecoins and asset backed tokens, surpasses that of Bitcoin over a period of 90 days, it can be considered an altcoin season. Some people consider it an altcoin season even if they witness such a phenomenon for a month or so. However, 90 days is generally considered to be a better period for it to be called an altcoin season as per experts.
So, is it altcoin season now in 2024? Let's find out.
Blockchain Center is a platform that analyses whether it’s Bitcoin season or altcoin season. Currently, we are witnessing Bitcoin season with a figure of 22%. When the figure reaches or exceeds 75%, we will witness altcoin season.
There are a few crucial factors which cause an altcoin season:
Bitcoin dominance is a metric that indicates the degree to which Bitcoin holds the dominant position in the entire crypto market in terms of market cap. It is measured as the ratio of Bitcoin’s market cap to the market cap of the entire crypto market.
A rise in Bitcoin dominance shows that traders are betting on the relative safety of Bitcoin, instead of other assets. A fall in Bitcoin dominance shows that traders are exploring altcoins too and are willing to take a risk. This phase can potentially lead to an altcoin season.
A general trend in Bitcoin’s price movement is that it first rises before stabilising at a high price mark for a long period of time. At this point, it is not possible for new market entrants to purchase BTC; therefore, they opt for altcoins. This leads to a surge in the price and market cap of altcoins, potentially leading to an altcoin season.
If alternative projects in DeFi, meme coins, NFTs etc. emerge which lead to coin price breakouts for the corresponding tokens, it can lead to an altcoin season. Earlier, most blockchains only offered crypto as an alternative to traditional finance (TradFi). When DeFi projects debuted around 2020, they also offered an opportunity to develop decentralised applications (dApps) on blockchains.
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A surge in the interest around NFTs in 2021 was led by a desire for owning distinct and original digital art. It was like being an art collector but digitally and rather modestly. Lately, there has been a lot of interest in Solana-based meme coins like doghifhat (WIF) and Bonk (BONK). The market has been speculating whether the trend will lead to another altcoin season.
A bull run in the crypto market can lead to an altcoin season as more and more traders flock to try their luck with low-cost altcoins. A crypto bull run, coupled with the same in the stock market, can lead to coin price breakouts for the altcoins. Such a condition can also potentially result in an altcoin season.
We look at a few indicators that help us know if we are witnessing an altcoin season. Crypto traders, in particular, should pay attention to these indicators to assess whether there is a time for portfolio diversification or not.
As altcoin dominance grows in the broader crypto market, an altcoin season is not far away. As of now, altcoin dominance and Bitcoin dominance are nearly the same, each around 50%. If the former grows significantly soon, we might witness an altcoin season. We will then see investors shifting some of their capital from Bitcoin to altcoins to realise higher gains.
If there is a growing interest in altcoins, we also see a surge in trading volume over extended periods of time. In such a situation, we also witness a rise in a lot of factors such as market activity, investor interest, liquidity, and volatility. So, keep an eye on the trading volume of altcoins. If there is a surge, there is a possibility of a strong altcoin season.
Sometimes, an altcoin or a few altcoins experience a sudden price uptick due to different reasons such as a new feature, an update or growing investor interest. It can lead to other altcoins too following suit, leading to an altcoin season.
For instance, we saw a sudden interest in WIF, BONK and other meme coins. Since these meme coins are based on Solana, even SOL saw a sudden appreciation in its value. In such situations, altcoins often break through key resistance levels and reach new heights. Such a cycle is also an indicator of an upcoming altcoin season.
Image: Alt Season- The Progress Behind It, by Cryptomaniaks
You must have understood by now that Bitcoin and altcoins compete to maintain their dominance in the crypto market. We call it Bitcoin season when Bitcoin’s price shows an extraordinary appreciation, and the king coin dominates the crypto market at the expense of altcoins.
For instance, the multifold growth in Bitcoin’s price and market cap following the launch of spot Bitcoin ETFs in the U.S. led to a Bitcoin period early this year. Altcoins didn’t show such a surge in value during this period.
On the other hand, we call it altcoin season when the price and market cap of altcoins show a broader appreciation than Bitcoin. 2017 was an altcoin season as this is when a lot of altcoins debuted in the crypto market, giving investors a chance to dip their toes into an alternative market. Generally, Bitcoin season is characterised by a stable crypto market and altcoin season is characterised by a volatile crypto market.
We already mentioned that the first altcoin season coincided with the launch of ICOs of several altcoins in 2017. We have had a few more long altcoin seasons in the latter years as more investors began flocking to altcoins. Let's go through the history of previous altcoin seasons to understand the phenomenon in detail:
2017-18 marked the first altcoin season as Bitcoin dominance plummeted from over 85% in late 2017 to around 30% in early 2018. During this period, the price of Bitcoin dropped from over $20K to below $6K within a few months. The market cap of the overall crypto market grew exponentially from around $30 billion in 2017 to over $600 billion in 2018 as the period saw an emergence of several altcoins that achieved all-time highs.
Image: Altcoin Season 2017-18, by Blockchain Center
As Bitcoin dominance dropped from 70% to 40% in early 2021, retail investors began to look for altcoins. This interest led to another long altcoin season, with the market share of altcoins rising from 30% to 60% within a year. The altcoin projects which saw maximum gains during this season were DeFi projects, non-fungible tokens (NFTs), and meme coins.
Recommended Read: Meme Coins Defined
The altcoins which surged the most during the 2021 altcoin season included SOL, DOGE, Polygon (MATIC), Shiba Inu (SHIB), and PancakeSwap (CAKE). Thanks to the altcoin rally, the total market cap of the crypto industry rose from barely above $800 billion in early 2021 to as much as $2.8 trillion towards the end of 2021.
Image: Altcoin Season 2021, by Blockchain Center
We know you are itching to ask: Is it an altcoin season now in 2024? Will we see an altcoin season later in 2024?
But there are no easy answers to the above questions. There are a lot of factors we need to consider while we assess when we can expect the next altcoin season. The crypto market is volatile and unpredictable. This year, we have seen the introduction of spot Bitcoin and Ethereum ETFs in the U.S. which led to strong price rallies. But the market couldn’t maintain the momentum and often plummeted.
Hayes recently forecasted that the next altcoin season would arrive once BTC and ETH reach the price marks of $70K and $4K respectively. Hayes is the co-founder of crypto derivatives platform BitMEX. He wrote an essay titled “Water, Water, Everywhere,” saying that the twin rally towards the end of 2024, fueled by dollar liquidity, would lead to an altcoin season.
However, you can’t trust any prediction blindly. Remember to keep all the fundamentals in mind such as the factors and indicators behind altcoin season and you will know if the altcoin season is incoming.
You can take advantage of altcoin season when it finally arrives and realise gains by following these tips:
Focus on diversifying your crypto portfolio during the next altcoin season. It’s a good time to put your eggs in different baskets; so, choose among different altcoins, meme coins, DeFi, gaming and metaverse tokens etc. Portfolio diversification is the best way of risk management as losses on some altcoins can be covered with gains on other altcoins.
Always plan your trading positions. Make use of technical analysis tools to recognise entry barriers, maximum heights and risk points so that you know when to enter and exit your positions. This way, you can realise maximum profits at least risk.
The debut of new altcoins offers exciting presale opportunities to the trading community. Look out for upcoming ICOs, research those projects, and invest in altcoins with a huge potential. Presale generally offers upcoming altcoins at discounted rates, so make sure you take advantage of new altcoins.
Learn about Cryptocurrency Investment Strategies for Beginners
Trading during altcoin season is hardly a bed of roses. So, what are the risks of trading during altcoin season?
Altcoins experience a high level of price volatility. This is a serious issue, given the entire crypto market is volatile all the time. Though the uptick can bring you exponential gains, the downtick can spiral into a huge loss. High volatility can lead to artificial price inflation, leading to potential price bubbles and crashes. We suggest you deploy the necessary risk management strategies such as diversification while trading altcoins. Only invest what you can afford to lose in the market.
Be cautious of scams and rug pulls amid an abundance of altcoins that keep floating in the crypto market. There are several pump-and-dump altcoin schemes one needs to be cautious of. Look out for artificial trading activity or unnecessary social media noise around an altcoin and research well before investing in such an altcoin.
Though the Fear of Missing Out (FOMO) is good for projects, it’s never a prudent strategy to invest due to FOMO. Such a phenomenon often leads to artificial price hikes. Such altcoins yield unbearable losses for the traders if they experience a downtick in their prices.
Altcoin season is a period of time when the performance of altcoins outperforms that of Bitcoin in terms of price and market cap.
If the performance of 75% of the top 50 altcoins, except stablecoins and asset backed tokens, surpasses that of Bitcoin over a period of 90 days, then it’s an altcoin season.
The key factors behind altcoin season are:
• Waning Bitcoin dominance
• Emergence of alternative crypto projects
• Bull run
The main indicators of altcoin season are:
• Altcoin dominance
• A surge in altcoin trading volume
• Sudden uptick in altcoin prices
Altcoin season is inversely related to Bitcoin season. If it’s altcoin season, Bitcoin’s market cap remains low. If it’s Bitcoin season, altcoins’ market cap remains low.
Leading American entrepreneur Arthur Hayes has forecasted that the next altcoin season would arrive towards the end of 2024 once BTC and ETH reach the price marks of $70K and $4K respectively. But don’t trust any prediction blindly. Trust the fundamentals and you will know when the next altcoin season in 2024 is arriving.
The best ways to take advantage of the altcoin season include:
• Portfolio diversification
• Plan your trading positions
• Altcoin presale
Most common risks you encounter while trading during altcoin season are:
• Volatility
• Scams such as rug pulls and pump-and-dump schemes
• FOMO
This article is for informational purposes only and not intended as investment or financial advice. It contains opinions and speculations that are subject to change without notice.
The author and publisher disclaim any liability for decisions made based on the content of this article. Readers are advised to conduct their own research and consult a financial advisor before making investment decisions.
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