Altseason

Altseason denotes a recurring trend in the cryptocurrency market wherein the prices of specific altcoins experience notable surges in comparison to Bitcoin. The primary objective during this phase is for altcoins such as Ethereum, Solana, Dogecoin, Cardano, Litecoin, and others to establish dominance in the crypto market.

The inaugural crypto altseason became apparent in 2017 when Bitcoin's dominance plummeted by over 45%. Consequently, it paved the way for other cryptocurrencies to expand their presence in the digital realm, leading to increased values for altcoins. Altseasons, like other market trends, are influenced by a multitude of factors and can vary in their timing and intensity.

• Altseason is a trend in the crypto market characterized by the rise in the prices of alternative cryptocurrencies, known as altcoins, in relation to Bitcoin.
• The first notable altseason occurred between February 25 and June 19, 2017, during which Bitcoin's dominance dropped significantly. 
• According to some analysts, the initiation of an altseason is signaled if 75% of the top 50 altcoins have performed better over the past 90 days.
• Other common indicators of an altseason include monitoring Bitcoin dominance, assessing the total market capitalization of altcoins, and considering market events and investor sentiment.

Altseason is a popular season within the crypto market, referring to a period of the altcoins. It signifies a phase in which the prices of alternative cryptocurrencies (altcoins) experience substantial increases compared to Bitcoin. It results in a shift of market dominance from Bitcoin to altcoins, which can lead to significant profits for investors holding these assets. It is important to clarify that Bitcoin doesn't go dormant but instead faces a relative underperformance during these periods.

For instance, between February 25 and June 19, 2017, Bitcoin's market dominance dropped from 86.3% to 38.69%, marking a nearly 48% decline, as indicated in the altseason chart. This shift sets altseason apart from Bitcoin, which is primarily characterized by its market capitalization.

The path to altseason doesn't follow a fixed formula like the mentioned moon, altseason, and salt season. Instead, it is influenced by a complex interplay of market dynamics, including supply, demand, and various events. Altseasons can occur multiple times, and their timing and intensity vary.

Typically, Bitcoin holds the largest share of the cryptocurrency market, but altseasons emerge when investors anticipate greater returns from altcoins. They might transition from Bitcoin to altcoins during such phases, redistributing their investments within the digital space. This shift in market dominance from Bitcoin to altcoins is a crucial characteristic of an altseason.

It is worth noting that not all altcoins experience significant price surges during altseasons. Solid fundamentals and other factors play a crucial role in determining which altcoins perform well. Some cryptocurrency traders use indicators, but there isn't a universally accepted altseason index. While altseasons are relatively short-lived compared to Bitcoin's long-term stability, they remain a favored opportunity for investors to adjust their strategies and diversify their portfolios.

Some indicators and metrics determine the path to altseason in the crypto market. Let us look at them:

#1 - Identification of Bitcoin Trend 

The foremost step to identify an altseason trend is via a dominance chart. It simply means which particular crypto rules the market. So, if the Bitcoin dominance chart falls, it indicates an altcoin phase. Likewise, if it is still rising, it is nonexistent. 

#2 - Market Performance of Altcoins 

Apart from the bearish trend of Bitcoin, investors look for altcoins as a powerful indicator for altseason. If the total market cap of altcoins surpasses Bitcoin, it indicates a phase for altcoins. Besides, traders can use historical and analytical tools to determine the trade volume of these coins. 

#3 - Price Movement of Ethereum 

Out of all altcoins, Ethereum is a key driver for their performance. Despite the rising market cap, it is crucial to identify the potential leads in the market. Thus, if Ethereum separates and moves ahead of BTC, the altseason has already started. 

#4 - Market Sentiments and Events 

Another important parameter of this altcoin season is the network applications and projects released in this space. Thus, if a new crypto token or DeFi project is initiated, it probably pumps the existing altcoins. However, the only factor involved is the benefit hidden for the growth of the altcoins network. 

#5 - Altseason Index 

Traders can also use the altseason index, which uses the top 50 altcoins to determine the season. It consists of an arrow with Bitcoin and Altseason, which moves as per the market. So, if 75% of the altcoins performed better in the past 90 days, it indicates an altcoin season; otherwise, it does not. 

Let us look at some real-time examples of altseason to comprehend the concept better:

Example #1

Suppose Rozz, Kevin, and Stavin are a group of crypto enthusiasts within the market. Rozz collaborates with a financial institution and launches a decentralized finance (DeFi) product on the Ethereum platform. As a result, in a few days, the prices of altcoins, including ETH, starts rising. Likewise, in the next week, the FOMO (fear of missing out) effect occurs, and the rest of the investors, including Kevin, withdraw their Bitcoins. Hence, the funds are drawn back, resulting in a downward BTC trend. In contrast, altcoins see a considerable spike. 

However, in this altseason, Stavin does not withdraw his tokens. Instead, he reaps enormous profits and gains from investing in Ethereum coins. 

Example #2

According to an analysis as of August 2023, the cryptocurrency market is showing signs of an approaching altseason (a period of outperformance for alternative cryptocurrencies, or altcoins, relative to Bitcoin and Ethereum). The analysis suggests that the combined market capitalization of altcoins is forming a bullish inverse head-and-shoulders pattern, a well-regarded technical analysis indicator. This pattern is typically seen as a potential precursor to a bullish trend reversal.

In the case of the inverse head-and-shoulders pattern, the asset forms three price troughs, with the middle one being the lowest. Confirmation of a bullish trend change occurs when the price rises above the neckline, which connects the peaks between the lows. In this context, the neckline is estimated to be near the $300 billion market cap level. If the altcoin market's capitalization surpasses this threshold, it could indicate the start of an altseason.

However, it is important to note that market conditions can change rapidly, and this analysis may not be the sole determinant of future market trends.

Although the altcoin season brings profits to the trader, the market has a particular impact. Let us look at some events:

1. Excitement and engagement: During an altcoin season, there is an increased trader activity and investment every day due to the potential for substantial profits. The excitement can be driven by the anticipation of altcoins outperforming Bitcoin and attracting higher returns.
2. Portfolio diversification: Altcoin seasons often prompt crypto investors to diversify their portfolios by investing in a broader range of cryptocurrencies beyond Bitcoin. This strategy aims to capitalize on the price surges of different altcoins.
3. Volatility: Altcoin seasons are characterized by high volatility and price fluctuations. This volatility can lead to significant price swings within short periods. Traders should be aware of the increased risk and potential impact on their portfolios.
4. Innovative projects: Altcoin seasons can coincide with the launch of innovative blockchain projects and applications. These projects expand the scope of altcoins and create new investment opportunities. Investors often seek out promising projects to support.
5. Unregulated market and fraud: The cryptocurrency market remains largely unregulated in many jurisdictions, making it susceptible to fraudulent activities and scams. Cybersecurity threats and fraudulent schemes are a risk, especially during periods of high market activity. Investors should exercise caution and conduct thorough due diligence.

This has been a guide to Altseason and its meaning. Here, we explain it in detail along with its indicators, examples, and impact. You can learn more about it from the following articles –

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