Altcoin season, also known as altseason, typically occurs when the prices of alternative cryptocurrencies soar significantly higher and outperform Bitcoin. Typically, a surge in market activity, trading volume, and overall bullish sentiment toward altcoins summarize the beginning of the altcoin season. It is important to note that altcoin season is not a fixed event and can vary in duration and intensity.
While altcoin season can offer investors lucrative profit opportunities, it does come with increased risks and market volatility. In order know what the best altcoins to buy are, you will need to fully understand the various dynamics of altcoin season, its triggers, and general indicators.
History of Previous Altseasons
Previous altcoin seasons have witnessed remarkable surges in various altcoin prices, with some experiencing exponential growth within relatively short periods. Examples of notable altseasons include the bull runs of 2017-2018 and 2020-2021.
These historical precedents serve as valuable reference points for understanding the dynamics of altcoin seasons and their potential impact on the cryptocurrency market. Let’s take a look at them in more detail.
2017-2018
This altcoin season was spurred by a huge drop in Bitcoin dominance, going from 86.3% in late 2017 and then falling to a low of 38.69% at the start of 2018. During that period, the price of Bitcoin went from a then-record high above $20,000 to trading under $6,000 a few months later.
The surge in altcoins outperforming Bitcoin came as the initial coin offering (ICO) market was in full swing in 2017-2018. Many blockchain projects launched ICOs to raise funds by issuing their own tokens. These include EOS, which raised over $4 billion, making it one of the most successful presales in history. Tezos was another strong-performing altcoin during this period after raising $232 million for its ICO.
2020-2021
The altcoin season of 2020-2021 came during the coronavirus pandemic and as retail traders and crypto degens looked for investment opportunities outside of Bitcoin. This resulted in the birth of modern meme coins, with Dogecoin and Shiba Inu recording historic levels of growth. Since then, we’ve seen several “memecoin supercycles,” where the meme coin sector far outperforms the rest of the market.
Non-fungible tokens (NFTs) were also boosting the altcoin markets, helping to increase sentiment around the wider crypto and blockchain market. During this time, Bitcoin dominance plunged from 70% to 38%, while the market value held by altcoin doubled from 30% to 62%.
Signs That a New Altseason Has Begun
After seeing examples of previous cycles, you may be asking, “When is the next altcoin season?” Getting to invest in next altseason coins is an exciting prospect for cryptocurrency enthusiasts, as it often leads to significant price gains.
However, identifying the onset of an altcoin season requires a strong understanding of market cycles and trends. Let’s explore some key signs that may signal the beginning of a new altcoin season.
Increase in Altcoin Dominance
One of the primary indicators that signal the start of an altcoin season is a noticeable increase in altcoin dominance within the overall cryptocurrency market. Altcoin dominance refers to the collective market capitalization of all cryptocurrencies, excluding Bitcoin, expressed as a percentage of the total cryptocurrency market cap.
According to CoinGecko, Bitcoin’s market dominance stands at 50.15% of the total market capitalization. When altcoin dominance begins to rise, it suggests that crypto investors are increasingly allocating capital to alternative cryptocurrencies, indicating a potential shift in market sentiment towards altcoins and the beginning of altcoin season.
Rising Trading Volumes
Another significant sign of the start of altcoin season is a surge in trading volumes across various altcoins. Increased trading volumes indicate heightened crypto market activity and investor interest in altcoins, leading to greater liquidity and price volatility.
By monitoring trading volumes you can gain valuable insights on sentiment in the market and the strength of an emerging altcoin season. The Tether (USDT) stablecoin usually has the highest trading volume due to it being used as an exchange currency, followed by Bitcoin and then Ethereum.
