As an investor or cryptocurrency enthusiast, you might have encountered the term “altcoin season” or “Alt-SS.” Altcoin season refers to a period in the cryptocurrency market where alternative cryptocurrencies, other than Bitcoin (BTC), experience significant price surges and outperform the market. This blog post will explore what altcoin season is, how it differs from Bitcoin’s performance, and the key signs to identify it.
What is Altcoin Season?
The cryptocurrency market cycle stage, known as “altcoin season,” also known as “Alt-SS” or “alt season,” is when alternative cryptocurrencies become more well-known and draw more investor interest. These digital assets generally experience significant price increases compared to Bitcoin during the altcoin season.
Although Bitcoin has long been seen as the dominant force in the cryptocurrency market, Altcoins provide distinctive features and prospects for investors. They offer ground-breaking solutions for various sectors, including gaming platforms, non-fungible currencies, decentralized finance, and more. The altcoin season allows traders and investors to expand their portfolios beyond Bitcoin.
How is Altcoin Season Different from Bitcoin Performance?
Understanding how altcoin season differs from Bitcoin’s performance is crucial when identifying this market phase.
- Market Dominance: The relative market domination of Bitcoin and the altcoin season is a significant factor in determining the performance of each. The market share of all cryptocurrencies owned by BTC alone is referred to as Bitcoin supremacy. The dominance of Bitcoin typically declines during altseason as investors shift their capital to alternative cryptocurrencies.
- Price Movements: While bull markets can result in price gains for both altcoins and bitcoin, altcoins typically exhibit more pronounced upward moves during altseason than bitcoin. This is so because many small-cap coins are more volatile in price than Bitcoin due to their lower levels of liquidity.
- Trading Volume: Another characteristic that sets altcoin season and Bitcoin performance apart is trading volume. As more investors enter the market in search of new possibilities during altseason, the trading volume of alternative cryptocurrencies often rises. This increase in trade volume is a clear sign of more interest in and activity related to altcoins.
Example:
2017
27/11/2017
- BTC. D: 57.8 – 61.8%
- TOTAL2: 100-131B
11/12/2017
- BTC. D: 67 –> 59%
- TOTAL2: 125B – 244B.
25/12/2017
- BTC. D: 48 –> 42%
- TOTAL2: 232B – 339B
(the following week peaked at TOTAL2 (Alcoin’s marketcap) of 475B and BTC.D fell to 49%)
The biggest and craziest altcoin season was in 2017, and here are some historical breakdowns of the numbers we can observe.
That’s when BTC reached 20k but then dropped significantly. Money flowed from BTC to ETH and other altcoins, causing competition among coins to skyrocket. “ x10, x20, x100, 200….”
And from there, AD summarizes the necessary and sufficient conditions for a large alt season (ALT SS). These conditions are as follows:
- BTC must experience a very strong rise to reach a sufficiently high price threshold (which may be a new peak of a cycle).
- After BTC stops rising, it will plummet to about half or two-thirds of its peak price, followed by sharp increases or decreases.
- Once Mr. BTC inexplicably stops fluctuating, it will slowly rise again. At this point, the “sts” indicators of the coin (ALT/BTC pair) sharply increase as they compete to jump.
This is the price increase process of ALT SS in 2017. If we compare it to similar market movements, it is still not considered a major alt season; rather just a mini alt season (small or medium).
Are you waiting for an ALT SS in the near future?
This is the price increase process of ALT SS 2017. Compared to similar market movements, it is still not a big alt season, just a mini alt season (small or medium).
Are you waiting for an AlT SS in the near future?
Key Signs of Altcoin Season
Now that we have an understanding of what altcoin season entails and how it differs from Bitcoin’s performance, let’s explore the key signs to identify this market phase:
1. When Bitcoin is enjoying a bull market run
Altcoin seasons often occur after a period of consolidation for Bitcoin. Consolidation refers to a phase where BTC experiences relatively stable price movements within a specific range, indicating indecision among traders. Once Bitcoin breaks out of this consolidation phase, it often paves the way for altcoins to rally.
For instance 2017, Bitcoin experienced a consolidation phase from April to early May before entering into an altseason. During this period, the total cryptocurrency market capitalization grew from around $25 billion to over $70 billion, indicating a significant influx of capital into alternative cryptocurrencies.
2. Increased Altcoin Market Capitalization
During altseason, there is usually an increase in the overall market capitalization of alternative cryptocurrencies. This surge signifies growing investor interest and capital inflows into altcoins as traders seek higher returns beyond Bitcoin.
For example, during the peak of the previous altseason in early 2021, the total altcoin market capitalization reached over $1 trillion, showcasing substantial growth compared to previous periods.
3. Rising Trading Volumes for Altcoins
A significant indicator of altcoin season is a surge in trading volumes for various alternative cryptocurrencies. As mentioned earlier, increased trading volumes suggest heightened market activity and greater participation from traders and investors.
One noticeable sign of altcoin season is a surge in trading volumes for various alternative cryptocurrencies. According to data from CoinMarketCap, during previous altseasons, daily trading volumes for popular altcoins like Ethereum (ETH), Litecoin (LTC), and Ripple (XRP) significantly increased compared to their average trading volumes outside of an altseason.
4. Outperformance of Altcoins Compared to BTC
Altcoin season is characterized by significant price rallies in specific alternative cryptocurrencies that outperform Bitcoin in percentage gains. These coins may attract attention due to new partnerships, technological advancements, or increased adoption within their industries.
For example, during the second half of 2020, altcoins like Chainlink (LINK), Cardano (ADA), and Polkadot (DOT) experienced substantial price surges, with some recording over 200% gains while Bitcoin’s price remained relatively stable.
5. Positive Sentiment Surrounding Altcoins
Market sentiment plays a crucial role in identifying altseasons. For instance, during the altcoin season in early 2021, there was a surge in positive sentiment towards altcoins due to factors such as increased institutional interest, growing adoption of DeFi protocols, and the emergence of NFTs. Social media platforms like Twitter and online forums were buzzing with discussions about potential investment opportunities in alternative cryptocurrencies.
Conclusion
Investors have a special chance to investigate alternative cryptocurrencies and maybe increase their returns during altcoin season. Investors can allocate funds wisely during this particular market phase by being aware of the key indicators of the altcoin season, including phases of consolidation for Bitcoin, rising altcoin trading volumes, rising altcoin market capitalization, and positive sentiment toward these digital assets.
It is significant to remember that investing in alternative currencies entails risks, including high volatility and ambiguous regulatory environments. Before making any investment selections, conducting in-depth research about individual projects, examining market trends, and speaking with financial advisors is essential.
Always be cautious while investing in cryptocurrencies; only invest money you can afford to lose. Investors may locate possibilities for long-term gain within the dynamic world of alternative cryptocurrencies with rigorous investigation and comprehension of the market dynamics throughout an altseason.
