In the cryptocurrency market, "alt season" (short for "altcoin season") refers to a period when alternative cryptocurrencies (altcoins) significantly outperform Bitcoin (BTC) in terms of price appreciation and market dominance. During this time, investors see a "boom" in altcoin prices, often leading to explosive gains for various tokens.
Key Characteristics of an Alt Season Boom:
Bitcoin Dominance Drops:
Bitcoin typically holds the largest market share in crypto. During an alt season, its dominance decreases as capital flows into altcoins.
Altcoin Prices Surge:
Altcoins, especially mid-cap and low-cap ones, experience rapid price increases, often outperforming Bitcoin in percentage gains.
Increased Retail Interest:
New and experienced investors alike flock to altcoins due to the potential for high returns, fueling the rally further.
Market Speculation:
Many altcoin projects may see price increases not necessarily tied to utility or development but rather to speculative trading and hype.
Diverse Sector Growth:
Often, specific sectors (e.g., DeFi, NFTs, or Layer-2 solutions) see concentrated growth during an alt season as market narratives evolve.
Causes of Alt Seasons:
Bitcoin Consolidation or Stability:
When Bitcoin’s price stabilizes after a rally, investors look for opportunities in altcoins.
Hype Around Emerging Sectors:
Developments like the rise of DeFi (Decentralized Finance), NFTs (Non-Fungible Tokens), or Web3 technologies often drive alt season.
Retail Adoption:
A surge in retail investors buying smaller-cap coins for higher potential returns can trigger an alt season.
Liquidity Rotation:
Institutional and large-scale investors may rotate capital from Bitcoin into altcoins seeking higher returns.
Risks During Alt Season:
High Volatility:
Prices can rise and fall sharply, leading to significant losses for poorly-timed investments.
Scams and Pump-and-Dump Schemes:
The speculative nature attracts bad actors who exploit inexperienced investors with fraudulent projects.
