What is “Altcoin Season” and How Does It Happen?
Altcoin season is a special period in the cryptocurrency market when altcoins experience significant increases in their market value, often achieving growth rates that outpace Bitcoin. This phenomenon is not a coincidence but rather the result of the interaction of several factors that lead to a shift in liquidity and interest towards altcoins.
After a significant rise in Bitcoin’s price or its stability at high levels, investors start looking for new investment opportunities. This is where altcoins come in, often with lower prices than Bitcoin, making it more likely to make big profits. The teams behind these currencies take advantage of this momentum by launching aggressive promotional campaigns highlighting their project updates or announcing new partnerships, which attracts more investors looking for high returns.
Behind the scenes, the market dynamics begin to change. As investors feel that the gains from Bitcoin are limited, liquidity begins to flow into altcoins. Large investors, known as “whales,” take advantage of this opportunity by shifting a large portion of their funds into these coins, sending prices skyrocketing. These moves are often fueled by rumors and chatter on forums and trading groups, where interest in a particular altcoin group is growing.
The season usually starts when Bitcoin shows some stability or slight weakness in trading volume. The emergence of altcoins that perform strongly initially ignites the market and causes investors to look for similar coins that may show similar gains. As prices rise, the fear of missing out (FOMO) effect increases as more people start buying in the hope of catching the bull run.
But there is a hidden and dangerous side to this season. Behind the scenes, elaborate speculative strategies are being run, with large investors placing huge buy orders on certain currencies, then gradually selling them as prices rise. This creates a huge gap between early entrants and late losers. The sudden sell-offs often cause huge crashes, resulting in huge losses for investors who did not get out in time.
To avoid losses during the altcoin season, you should be aware of the nature of this phenomenon. Do not rely on rumors only, but look for coins with strong projects that provide real solutions in the market. Keep an eye on the movement of Bitcoin constantly, because any sudden change in it can quickly end the season. The most important thing is to have a clear plan when to enter the market and when to exit it.
Waves within the altcoin season
The altcoin season does not happen as a random process, but rather consists of several successive waves, as liquidity and interest move between different groups of altcoins. Each wave follows the other logically based on market dynamics, as investors look for the best opportunities based on the performance and developments of different projects.
The first wave usually starts with large, stablecoins like Ethereum (ETH) $ETH , Binance Coin (BNB) $BNB , and Solana (SOL) $SOL . These coins are the first choice for investors looking for less risky investments during the beginning of the altcoin season. Thanks to their relative stability and project strength, these coins attract liquidity before others and serve as a launching pad for the rest of the waves.
After the major currencies stabilize, the second wave begins to emerge, represented by decentralized finance (DeFi) platforms. Projects like Aave and Uniswap stand out for their role in providing solutions such as lending, borrowing, and earning returns on deposits. This shift is driven by investors’ desire to achieve higher returns through projects that demonstrate tangible functional value and open new horizons for blockchain applications.
As the market heats up and investors grow, the third wave is taking off, focusing on gaming and metaverse projects. Coins like Axie Infinity and Sandbox are booming at this stage, standing out for their use in virtual worlds and blockchain-based games. These projects show practicality and appeal to a wide range of users interested in a new experience that combines technology and entertainment.
Finally, as the season progresses, the fourth wave emerges, highlighting new technologies such as artificial intelligence and innovations in blockchain infrastructure. Layer-2 coins, which enhance the speed and cost efficiency of blockchain networks, become the focus. At this stage, the focus shifts to projects that offer advanced and promising technical solutions that promise long-term improvements to the cryptocurrency ecosystem.
Each of these waves is part of a natural cycle within the altcoin season, where liquidity and interest move from one category to another in a sequential manner. If you want to take advantage of this phenomenon, it is important to monitor the early signals of each wave and determine the ideal time to enter and exit the market.
How does altcoin season end?
Just as altcoin season begins gradually, it ends in a similar manner that reflects shifts in market dynamics. The end often signals a return to Bitcoin dominance, with altcoins retreating after a period of high activity.
One of the telltale signs of the end of the altcoin season is the return of Bitcoin dominance. When liquidity starts to shift back to Bitcoin after being concentrated in altcoins, it indicates that the market is preparing for a new round of Bitcoin dominance. This phenomenon is most evident when Bitcoin Dominance starts to rise after having seen a decline during the altcoin season.
Declining altcoin trading volumes are another strong indicator that the end of the season is approaching. When liquidity begins to decline and interest in alternative projects decreases, it reflects a shift in investor sentiment, who may become more conservative. This period often coincides with increased risk and losses for investors who enter the market at a later stage.
Additionally, an increase in uninformed speculation is a strong signal that the end is near. If investors start buying weak or worthless coins just because of the “hype,” this is often a sign that the market has reached its peak. At this point, altcoins start to lose momentum, leading to a sell-off that hastens the end of the season.
These factors combined show that the end of the altcoin season is not a sudden event, but rather the result of a gradual change in liquidity flow and investor behavior. Understanding these dynamics can help you make better decisions and exit the market in time to avoid losses.
What's next after the altcoin season?
After the altcoin season ends, liquidity gradually returns to Bitcoin as the safest investment asset in the market. This often coincides with a correction wave, where the prices of many altcoins drop significantly. At this point, avatars and NFTs become popular on social media, such as moon birds, indicating the peak of speculation in the market.
With market correction, only altcoins with strong projects and real value survive. This opens the way for investors to take advantage of long-term opportunities in projects with promising potential.
Eventually, the market returns to balance, re-prioritizing Bitcoin and other currencies, preparing for new rounds of volatility.
Saif Abusrour
#write2earn #bitcoin