During Bull Runs, most of the attention and capital is directed towards Bitcoin. It is perceived by investors as the “main” cryptocurrency, and its growth often serves as a kind of indicator for the entire market. When Bitcoin starts to grow significantly, large capitals are invested in it as a more stable asset, leaving altcoins such as Ethereum, Cardano or XRP on the sidelines.
If we consider the reasons why altcoins remain on the sidelines in the early stages of the Bull Run, we can note:
Institutional Investment Focus: Institutional investors such as large funds, banks, and corporations choose Bitcoin as “digital gold” — a safe haven asset compared to more volatile altcoins. That’s why demand for Bitcoin is much higher in the early stages of the Bull Run.
Increased Correlation with Bitcoin. During periods when Bitcoin shows significant growth, many altcoins temporarily lose correlation with its movement. Investors focus on the main assets and their attention shifts away from altcoins, which do not have the same appeal to new market participants.
Risks and Caution for Newbies: New investors are coming to Bull Run, primarily choosing Bitcoin as a more well-known asset. Altcoins can seem too complex for newbies to understand, especially considering that some of them focus on highly specialized projects and technologies.
When does altcoin growth start?
Altcoins start to get their share of attention when Bitcoin's growth peaks and begins to stabilize. This process is known as "alt season" and can be caused by several factors:
Bitcoin growth stabilization or decline. When the Bitcoin price slows down or stabilizes at a certain level, investors who have secured profits from Bitcoin growth begin to look for diversification opportunities. They invest in altcoins, counting on their potential growth.
Increased interest in other blockchain projects. In the later stages of Bull Run, attention shifts to platforms and projects that provide unique opportunities - smart contracts, DeFi (decentralized finance). This contributes to the growth of altcoins, especially those associated with Ethereum and other ecosystems.
Altcoins Rise After Profit-Taking on Bitcoin. When Bitcoin starts to slow down, many traders and investors start to take profits and move funds into smaller assets that can grow in price faster due to their relative cheapness. This process contributes to the active growth of altcoins.
Media and market sentiment. By the end of the Bull Run, the media begins to actively cover the successes of the cryptocurrency market, and more information appears in the news about the profitability of not only Bitcoin, but also other tokens. Investors who did not have time to "jump on the Bitcoin train" turn their attention to altcoins, hoping for their growth.
Signs of the beginning of the altseason
To understand when altcoins will start to grow, it is worth paying attention to the following signs:
Bitcoin Dominance Declines. When Bitcoin's market share begins to decline, it indicates a growing interest in altcoins. The alt season usually begins when Bitcoin's dominance reaches 40-50%, indicating a shift in capital allocation to other assets.
Increased Altcoin Trading Volumes: When altcoin trading volumes start to increase, it often indicates an influx of new investors, which can also be a sign of an upcoming rally.
DeFi's Rise in Popularity: Platforms related to decentralized finance and NFTs tend to attract a large number of new users and investors, which contributes to the growth of altcoins focused on this niche.
Examples of past altseasons
When analyzing past Bull Runs, certain patterns can be noticed:
2017 Bull Run: In 2017, the alt season began about a few months after Bitcoin’s meteoric rise. After Bitcoin peaked in December, altcoins like Ethereum and Ripple began their rapid rise as investors actively switched to them.
Bull Run 2021 In 2021, after Bitcoin hit records in the spring, altcoins, especially DeFi and NFT-based ones, began to gain popularity and showed significant growth in the second half of the year.
