Key Takeaways
- Altcoin season occurs when altcoins outperform Bitcoin, creating opportunities for traders to capitalize on market shifts.
- It typically follows Bitcoin’s price stabilization, leading to increased trading volumes and market attention on smaller coins.
- Key indicators of altcoin season include Bitcoin dominance decline, growing altcoin market cap, and increased trading volumes.
- While profitable, altcoin season presents risks like shilling, rugpulls, and extreme volatility, requiring careful trading strategies.
If you’re familiar with the crypto ecosystem, you’ve probably encountered the term altcoin season. But what exactly does it mean? Before diving into this, let’s first revisit what an altcoin is.
In the simplest terms, altcoins refer to any cryptocurrency other than Bitcoin. Some popular examples include Ethereum (ETH), Litecoin (LTC), and Solana (SOL). These coins serve different purposes within their networks, from enabling smart contracts to providing faster, cheaper transactions. But they all fall under the umbrella of altcoins.
Now, the crypto market tends to move in cycles, and one of these cycles is what traders call altcoin season. The phase refers to a period when altcoins outperform Bitcoin, gaining a larger share of the overall crypto market. Considering that altcoins account for approximately 10% of the entire crypto market, understanding how to navigate the altcoin season can give traders a significant edge.
In this article, we’ll explore the meaning of altcoin season, indicators to spot it, examples from past cycles, and key factors to remember when trading altcoins.
What Is Altcoin Season?
Altcoin season, often abbreviated as alt season, is a period when altcoins see a rapid increase in price and market dominance, outpacing Bitcoin. During this time, investor interest and sentiment shift from Bitcoin to altcoins, creating opportunities for higher returns.
The phenomenon usually occurs when Bitcoin’s price stabilizes or moves sideways, meaning it doesn’t experience significant gains or losses. As Bitcoin’s price becomes less volatile, traders look for profit elsewhere, which drives the demand for altcoins. The rise in altcoin prices leads to a surge in trading activity, making it a highly anticipated time for seasoned traders.
Understanding Altcoin Season
To understand altcoin season, you first need to grasp how the broader crypto market operates in cycles. Like traditional markets, cryptocurrencies go through phases of bullish (upward movement) and bearish (downward movement) trends. As the dominant cryptocurrency, Bitcoin usually leads the charge in any crypto bull market. However, once Bitcoin’s price reaches a certain point and stabilizes, traders shift their attention to altcoins.
Bitcoin season is the phase where Bitcoin outperforms altcoins, pulling in most investments. Altcoin season comes next, as traders look to diversify their portfolios, expecting higher returns from smaller-cap coins. The cyclical relationship between Bitcoin and altcoins forms the backbone of crypto market dynamics.
Altcoin season is not an official term but rather a market sentiment. Traders watch for certain indicators to signal when the season is approaching. Recognizing these signals allows them to capitalize on the unique opportunities of the period.
Learn how to read crypto charts to prepare for any trading season.
Altcoin Seasons Past Examples
Altcoin seasons aren’t new; they have occurred at several key points in crypto history. Let’s explore three notable examples.
Late 2017 – Early 2018
One of the most famous Altcoin seasons occurred during the crypto boom of late 2017. As Bitcoin reached its then all-time high of nearly $20,000, investors turned to altcoins. Ethereum rallied from under $300 to more than $1,400, while other altcoins like Ripple and Litecoin also saw massive gains.
However, as with all market cycles, what goes up must come down. The altcoin surge was followed by a significant crash in 2018, leaving many investors nursing losses.
Early 2021
The next notable altcoin season came in early 2021. Bitcoin’s price stabilized after reaching $40,000; once again, altcoins became the center of attention. The altcoin season was driven by the rise of decentralized finance (DeFi) tokens and non-fungible tokens (NFTs), with coins like Chainlink (LINK) and Uniswap (UNI) seeing exponential growth.
The 2021 season was also characterized by increased retail interest, thanks to the media coverage and institutional investments in cryptocurrencies.
2024
Fast forward to 2024, and the cycle repeats with the onset of an altcoin season. With Bitcoin’s price fluctuating in a relatively narrow range, investors are turning their eyes to altcoins like Solana, Avalanche, and Polkadot. Moreover, the resurgence of interest in AI-driven tokens has fueled the altcoin fire.
Altcoin Season Key Indicators
How do traders know when altcoin season is setting in? While there isn’t a foolproof way to predict it, there are several reliable indicators that traders look for:
- Bitcoin Dominance Decline: Bitcoin’s dominance in the crypto market typically decreases during altcoin season. When this happens, it’s a strong signal that traders are shifting their attention to altcoins.
- Altcoin Market Capitalization Growth: Altcoins’ total market capitalization grows as more money flows into them. Monitoring the altcoin market cap is a good way to gauge the start of altcoin season.
- Increased Altcoin Trading Volumes: A sharp increase in trading volumes for altcoins is another signal that altcoin season may be starting. The increase often accompanied by positive market sentiment and media attention around specific coins.
- Bitcoin Price Stabilization: As mentioned earlier, when Bitcoin’s price becomes less volatile, it often triggers a rotation into altcoins, signaling the beginning of altcoin season.
Crypto Trading During Altcoin Season
With more market activity focused on altcoins, there are several notable trends to watch for:
- Increased trading activity
- Increased crypto arbitrage
Let’s break them down.
Increased Trading Activity
During altcoin season, trading volumes surge as investors rush to capitalize on price movements. Exchanges report higher-than-average trading activity, especially for smaller-cap coins with potential big gains.
Increased Crypto Arbitrage
Altcoin season also opens up more opportunities for crypto arbitrage, where traders profit from the price differences between altcoins on different exchanges. As market volatility increases, the chances of quick profits through arbitrage also grow.
Risks to Be Aware Of
While altcoin season can be profitable, it’s also filled with risks. Here are some of the major challenges to keep in mind:
- Shilling
- Rugpulls
- FOMO
- Volatility
Shilling
Shilling, or promoting coins intending to drive up prices artificially, becomes more common during altcoin season. Be cautious of influencers or anonymous accounts hyping up certain coins without substantial backing or technology. Explore the detailed explainer on top cryptocurrency scams and how you can avoid them to prepare for any crypto season.
Rugpulls
Rugpulls, where developers abandon a project after collecting investors’ money, also increase during altcoin season. Before investing, make sure to research any project thoroughly.
FOMO
Fear of Missing Out (FOMO) can lead to impulsive investment decisions. Altcoin season’s rapid price movements might tempt you to jump into trades without proper research. Always keep your emotions in check.
Volatility
The crypto market is already known for its volatility, but it can be even more extreme during altcoin season. Prices can spike one day and crash the next, making it essential to stay cautious.
Closing Thoughts
Altcoin season is like catching the perfect wave—timing and preparation are everything. It’s an exciting time packed with potential gains, but you need to stay sharp and avoid being swept away by hype. Keep a close eye on market indicators, make informed decisions, and remember that a smart strategy always beats impulsive moves.
Whether you’re riding this wave for the first time or you’re a seasoned pro, the key is to trade wisely.
