“Altcoin” is a shortened and simpler version of “alternative coin.” Any cryptocurrency other than Bitcoin is referred to as an alternative coin. Because Bitcoin was the first cryptocurrency, all future coins are referred to as Bitcoin counterparts. When non-Bitcoin tokens and currencies routinely outperform Bitcoin, an altcoin season begins. Bitcoin is the most valuable currency in terms of market value and daily trading volume. The most important criterion to keep a closer eye on when determining an altcoin season is Bitcoin supremacy.
What is Altcoin Season?
Altcoin season, in essence, refers to the market phase in which altcoins, or cryptocurrencies other than Bitcoin, begin to make significant gains and can double, treble, or even tenfold in value in a short span of time. Throughout altcoin season, Bitcoin tends to remain relatively constant, allowing altcoins to acquire pace and make upward swings.
The expression has now become associated with digital assets rising to the moon, and it is frequently used by crypto fans, YouTubers, analysts, and others to generate hype.
There are valuable tools for the crypto community, such as the Altcoin Season Index, that help save time and track the market’s progress.
The index measures the performance of the top 50 cryptocurrencies by market cap over the last 90 days. If at least 75% of them outperformed Bitcoin, then the market is experiencing an alt-season.
The indicator shows the percentage of market sentiment that falls between Bitcoin and altcoin seasons on a scale. The tool is commonly used by crypto investors to decide whether or not to shift their cash into or out of Bitcoin.
Why Does it Happen?
While it’s tough to identify the exact cause of an altcoin boom, there are various factors that have a role.
Transferring funds from Bitcoin to another cryptocurrency is one scenario. After a significant price increase, the price of Bitcoin tends to become more steady. As a result, investors seeking more appealing investment options may consider selling their Bitcoin for altcoins such as Ethereum or Tether. This way of swapping Bitcoin for altcoins might lead to an altcoin boom in the future.
Changes in trends, such as NFTs and DeFi, which integrate cryptocurrencies, may also be responsible for the occurrence. In 2020, for example, DeFi gained traction. In 2021, it was NFTs. Web 3.0 is gaining traction, and so are Web 3.0 tokens.
The blockchain industry is constantly inventing and changing, rather it is the haven’t ever expansion that has resulted in the current pool of cryptocurrencies with compelling use cases. Some cryptocurrencies may garner greater attention than Bitcoin due to the industry’s ever-changing structure.
When Does it Happen?
So, if there was an easy answer, everyone would be making millions, right? Altcoin season doesn’t always happen at the same time, but it usually happens after Bitcoin has a run of its own. During this period, as money pours into Bitcoin, altcoins fall behind because they do not acquire as much value versus Bitcoin as they do against the dollar.
After Bitcoin has completed its run and is steady, altcoins begin to be revalued based on Bitcoin’s current value, which typically reveals areas where altcoins have space to develop. Profits from Bitcoin, along with strong market mood, provide for an excellent moment to invest in altcoin ventures, resulting in a significant increase in value.
How Can We Make the Most of the Altcoin Season?
This, of course, is dependent on your prior crypto experience as well as your risk tolerance. If you are not a day trader or a crypto trader in general, meaning you mostly keep your assets, altcoin season will have little impact on you because you would be simply following the market’s ebbs and flows.
There are several methods to profit from cryptocurrency season if you’re really into day trading, Trading cryptocurrency, holding long and short positions, and other financial risky activities are common. Of course, this implies that you must conduct research on various cryptocurrencies, learn about technical analysis, and accept any risks associated with attempting to profit from cryptocurrency trading.
If you can do all of that, you have a good chance of making altcoin season a success for you, However, you could jump in at the wrong time and quickly lose your shirt; all options must be considered. Finally, while most people like to observe altcoin season from the sidelines, it is always an exciting time to be a crypto fan.
How to Know if Altcoin Season is Coming?
There’s also no assurance that any decline in Bitcoin’s price will result in an altcoin boom. For an altcoin season to occur, certain market criteria must be met.
Bitcoin’s market share is dwindling.
The indicator calculates the market capitalization of Bitcoin as a proportion of the entire cryptocurrency enterprise value. As a result, if the value of Bitcoin falls, so does its proportion of the whole cryptocurrency industry.
When Bitcoin loses its supremacy, altcoins often gain market share and benefit as a result.
The Bitcoin Dominance Index, for example, may be used to track the present state of Bitcoin’s dominance. There are many comparable tools, but they all work on the same principle: the larger the Bitcoin dominance percentage, the greater Bitcoin’s effect on the market and vice versa.