Key Insights
Bitcoin is nearing a major turning point, and an Altcoin season could be near.
Altcoin seasons happen when Bitcoin's dominance dwindles, and Altcoins start to outperform the flagship asset.
Investors should consider staying informed and diversifying their portfolios when investing.
Know which Altcoins have solid fundamentals and invest only money you can afford to part with.
The crypto market is known for being more volatile than traditional finance.
One of the most prominent examples of this volatility is the so-called Altcoin—or Alt Seasons.
The term “alt season” is simply a market phase in which the Altcoins (or cryptocurrencies other than Bitcoin) start to outperform the flagship cryptocurrency.
They overtake Bitcoun in terms of price gains and market dominance—in the end, Bitcoin could have little to no price gains, with major Altcoins printing double digits.
Understanding how to identify this phenomenon can be highly rewarding for investors if done correctly.
Here’s a breakdown of everything to know:
What Altcoin season means, how to spot it, and strategies to buy the right “alts” during this crucial time.
What Is Altcoin Season?
As mentioned earlier, Altcoin season happens when most Altcoins see massive price increases compared to Bitcoin.
Bitcoin's dominance typically dwindles as investors pull funds out and splash capital on other cryptocurrencies during this time.
Some of the biggest benefits of this phenomenon are mostly well-established projects in the defi, Game-fi, or, in this case, AI sectors.
Other beneficiaries are often the memecoins and new tokens with solid fundamentals.
It is important to note that while Altcoin seasons can bring massive profits, they can also be risky due to the volatility of Altcoins.
How to Identify the Beginning of Altcoin Season?
Most times, Altcoin seasons come with signs—sometimes, however, they do not.
Spotting the start of an Altcoin season requires a careful balance between skill and luck.
In terms of skill, here are a few telltale signals to keep an eye out for:
1. Bitcoin Dominance Declines
Bitcoin dominance is simply Bitcoin's share of the total crypto market cap.
Most times, when Bitcoin’s dominance drops massively—typically below 50% to 40%, a massive Altcoin season could be close.
Bitcoin’s dominance chart
Source: CoinMarketCap
At the time of writing, CoinMarketCap data shows that Bitcoin’s dominance currently sits at around 59%.
2. Altcoin Market Cap Growth
Another telltale sign is when the combined market cap of Altcoins rises rapidly. This phenomenon typically signals that investor interest in Altcoins is growing, and prices could skyrocket soon.
3. Outperformance of Altcoins
During the Altcoin season, Altcoins often outperform Bitcoin in terms of percentage gains. Comparing price movements between Bitcoin and popular Altcoins like Ethereum, Solana, or Cardano can help identify this trend.
4. Hype and Sentiment
Social media buzz is a big sign of an incoming Altcoin season. When searches for Altcoins skyrocket and community excitement around specific projects grows, it could be a sign of an incoming shakeup.
Altcoin season hype
Source: Twitter
Is Altcoin Season Approaching With BTC Nearing All-Time Highs?
Historically, Altcoin seasons often come after a massive Bitcoin rally.
When Bitcoin breaks a new all-time high, it often consolidates for a while and then cools off.
Most of the capital in cryptocurrency is then taken out by institutional investors and poured into Altcoins.
As of now, Bitcoin is showing strong momentum, and it may soon test the $100,000 mark.
This means a cool-off is imminent, and an Altcoin season could be around the corner.
Currently Bitcoin season
Source: CoinMarketCap
Data from CoinMarketCap shows that Bitcoin is currently in its rally/consolidation phase.
This means that the first sign of a Bitcoin cool-off could be the trigger for an Altcoin season.
Top Strategies to Buy Altcoins During Altcoin Season
Altcoin season can be highly profitable if done right. Here are a few tips for navigating this tricky part of trading.
1. Diversify Your Portfolio
Avoid putting all your funds into a single Altcoin or Altcoin class.
Instead, diversify into multiple projects across several niches. This way, you are exposed to lesser risk and poised to make more gains.
Consider some top Altcoins in niches like DeFi, NFTs, and gaming. AI is also a great niche to look into.
2. Focus on Strong Fundamentals
Research Altcoins with solid use cases. These tokens should have strong development teams and active communities.
Altcoins with real-world applications are more likely to retain their value even after the hype has faded.
3. Monitor Trends and Sectors
Specific sectors tend to gain more attention during the Altcoin season.
What’s hot at the time of your investment? Memecoins like Dogecoin and Shiba Inu dominated the previous Altcoin season, while DeFi and Layer 2 solutions dominated the one before.
DYOR and then make informed decisions.
4. Set Realistic Goals
Know when to exit the market. While there might be a temptation to hold on to trades for longer than necessary, it is important to set clear profit-taking targets beforehand.
Deciding when to sell your positions in advance will save you from sudden market downturns.
5. Use Technical Analysis
If you have the skills, study price charts and things like trading volumes.
These help to identify entry and exit points when combined with indicators like moving averages or the RSI.
6. Stay Updated
Altcoin markets move quickly, and staying informed is very important.
Follow the right Twitter or YouTube channels—or any other social media platform of your choosing.
Monitor investor sentiment and join relevant communities.
Risks to Consider During Altcoin Season
While taking profits can be exciting, being aware of the risks also helps.
Be aware of volatility. Altcoins can swing wildly in price within a short period, which can be a big problem if trades are not timed correctly.
Some Altcoins may gain value due to hype, not necessarily good fundamentals. Know which is which and trade accordingly.
Because of their low trading volume, it might be difficult to enter or exit positions with lesser-known Altcoins. Understand this before placing a trade.
Finally
Altcoin seasons are great for crypto investors to cash in on big gains.
Understanding its dynamics and which indicators to watch can be the difference between a profitable trader and a nonprofitable one.
With Bitcoin nearing a significant turning point, the start of an alt season may just be around the corner.
Remember to DYOR and never invest money you cannot afford to lose.
