What is Altcoin season? Why is Altcoin Season important and how to identify when the Altcoin season is happening to change positions and seek profits.
BTC is approaching its all-time high price; whether Altcoin Season is truly approaching or not, let's explore the term and the topic mentioned above through the article below!
What is Altcoin season?
Altcoin season is the period when altcoins (coins/tokens other than Bitcoin) experience strong and outstanding growth with "growth margins ranging from several tens of % to several dozen times or even hundreds of times" depending on the market's FOMO. This is also seen as a golden period that allows most retail investors to reap "huge profits" from the price explosion of the altcoins they hold.
Typically, after BTC undergoes a continuous price increase, creating a new ATH, a significant price correction occurs. This is also when the market transitions into the Altcoin Season as money flows from Bitcoin into Altcoins and prices rise despite all BTC's price fluctuations thereafter.
Why is Altcoin season important?
The volatility and price increase of Bitcoin are seen as extremely lucrative in the investment field. Especially, Altcoins in the Crypto field can provide tremendous profits that can increase assets several times, or even dozens, hundreds, or thousands of times, and it is not difficult for Altcoins to actually perform this way. Therefore, recognizing that Altcoin Season is approaching can change the position of retail investors, bringing incredible profits to them. Thus, according to Trading Insight, Altcoin Season is very important.
Signs that can be recognized and used to identify when Altcoin Season is approaching.
Bitcoin's Dominance index is on a declining trend.
Bitcoin Dominance is approximately the percentage ratio of Bitcoin's market capitalization divided by the total cryptocurrency market capitalization. Bitcoin is the coin that represents Crypto, leading the entire market growth, while the BTC Dominance index measures Bitcoin's influence. To track where the current money flow is active, if DOM is high, it means the market is being attracted by BTC and vice versa. Therefore, we can use BTC Dominance combined with other factors and monitor market capitalization to predict the trends and direction of the Altcoin market in the short/medium term.
Market capitalization fluctuates and tracking indicators Total 2-3 also increases
If only Bitcoin's dominance index (Bitcoin Dominance) decreases while total market capitalization does not increase, this could be a "fake signal" for Altcoin Season; conversely, if Market Cap rises while Bitcoin's dominance index (Bitcoin Dominance) does not decrease, it should not be considered Altcoin season.
Additionally, it is necessary to monitor indicators such as Total 1, Total 2, Total 3 for clearer determination.
Total 1 is an index that measures the total market capitalization of Crypto.
Total 2 is an index that measures the total market capitalization of Crypto excluding Bitcoin.
Total 3 is an index that measures the total market capitalization of Crypto excluding Bitcoin and Ethereum.
We can rely on Total 2 to assess the growth of Altcoins and Ethereum. Total 3 represents the dominant capitalization of Altcoins indicating the Altcoin Season.
Only tracking indicators like the Altcoin Season Index
This index is evaluated based on the top 50 coins with market capitalization; if over 75% of coins show good price increases, it will assess whether the market is in Altcoin season. It is also a reference indicator, so it is not decisive.
Altcoins are positioned for growth and it may indeed be that Altcoin season is approaching.
According to Jafer, Bitcoin's rise could bring altcoins into focus, as altcoin prices often react to Bitcoin's performance. He stated: "When Bitcoin accelerates, it can spark new interest in altcoins, especially those with unique technology or specific use cases." Jafer highlighted sectors in the altcoin market that could benefit from this attention and influx of capital, including decentralized finance (DEFI), Layer 2, or blockchain gaming.
The main drivers of the market: Institutional interest and regulations
Jafer pointed out two main factors affecting the cryptocurrency market: the growing interest of institutions in Bitcoin and the changing regulatory landscape. Institutional investors are increasingly considering Bitcoin for their portfolios, a move that could stabilize cryptocurrency and boost market confidence. Jafer explained: "The involvement of institutions can help sustain Bitcoin prices and combined with favorable legal developments, this could create a positive environment for altcoins."
Strong momentum as Bitcoin approaches all-time highs
Excitement is rising around a potential "altcoin season" across the cryptocurrency market. In a recent live broadcast of ETMarkets, Anush Jafer, Head of Content at Mudrex Research, shared insights on how Bitcoin price volatility could shape the broader cryptocurrency landscape and create opportunities for altcoins.
Jafer emphasized Bitcoin's resilience in climbing to previous highs, a journey that has reignited discussions about its role as a market driver.
Jafer noted that "When Bitcoin reaches these levels, the impact on the entire cryptocurrency market is very significant," indicating that Bitcoin's strength often triggers a reaction across the market. Historically, Bitcoin price increases have been followed by altcoin price increases, known as "altcoin season," when alternative cryptocurrencies attract attention and draw in new capital.
"Before participating in Altcoin Season, investors need to pay attention to thoroughly analyzing the market and not following the crowd. Although the strong growth of altcoins during this period can yield attractive profits, risks must also be considered, as the cryptocurrency market remains highly volatile and unpredictable. Clearly define your investment goals, thoroughly research each coin, and only invest in altcoins with sustainable growth potential."
Summary:
Based on the data provided by Trading Insight, we hope to provide you with additional perspectives on Altcoin Season to better prepare your knowledge and understanding. Get ready for a new Altcoin Season. Altcoin Season can help you earn substantial profits, but it can also lead many investors to buy at peak prices. Therefore, prepare yourself with a calm and steady mindset. Equip yourself with knowledge and be ready. Hope for a prolonged Altcoin Season. Trading Insight wishes you successful investments.
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