Altcoin Season is the market period when Altcoins are likely to bring in large profits. So what is Altcoin Season, and what are the signs that Altcoin season is coming? Let's find out in the article below.
What are altcoins?
Altcoin stands for “Alternative Cryptocurrency,” meaning alternative cryptocurrencies to Bitcoin. In fact, whether the intention is to replace Bitcoin or not, any coin that comes after Bitcoin is called an Altcoin. Even Token belonging to the Blockchain of Ethereum or Polkadot are still counted as Altcoins.
Altcoins appeared after Bitcoin, marking the explosion and diversification of the cryptocurrency market. Each Altcoin is developed with its own features and purposes, providing more options for users than Bitcoin.
What is Altcoin Season?
Altcoin Season or Altseason is the time when cryptocurrencies other than Bitcoin (Altcoin) grow strongly, with profits that can be x2, x3, even x10 times in a short time. This term appeared around 2016 - 2017, when Altcoins emerged and brought big profits to investors.
During Altcoin season, when Bitcoin prices decrease or go sideways, investors turn to Altcoins, helping these currencies increase in price significantly. This is the period when Altcoins have outstanding growth, bringing great profit opportunities to investors.
Historical Altcoin Season
2017 – The first Altcoin boom season:
- After Bitcoin's strong growth, investors began to look for new opportunities and Altcoins became the focus.
- Ethereum (ETH) rose to second place, ushering in an era for innovative blockchain projects.
- Typically, Litecoin (LTC), Dash (DASH), IOTA (MIOTA),... recorded thousands of percent growth.
2018 – Market recovery and potential Altcoins:
- After the shock of 2017, the market gradually recovered and potential Altcoins began to gain attention.
- Projects focusing on practical applications such as Cardano (ADA), EOS (EOS), Peg (Peg) attract investors.
- However, the growth momentum is not as strong as in 2017 and the market still has many potential risks.
2020 – DeFi explodes and Altcoins rise:
- The emergence of decentralized finance (DeFi) opens a new era for Altcoins. DeFi projects such as AAVE (AAVE), Maker (MKR),
- Compound (COM) exploded, attracting a large amount of investment Capital .
- DeFi -related altcoins such as Chainlink (LINK), Uniswap (UNI) recorded impressive growth
2021 – Brilliant Altcoin season:
- Continuing the growth momentum from 2020, the Altcoin market exploded strongly in 2021.
- Ethereum (ETH) reaches a new ATH, affirming its leading position in the blockchain field.
- Binance Coin (BNB), Polkadot (DOT), Solana (SOL) are outstanding Altcoins with galloping growth.
Signs that Altcoin Season is coming
Bitcoin's Dominance Index decreased
Bitcoin Dominance represents the Capital ratio of Bitcoin compared to the entire cryptocurrency market. When this index decreases, it shows that Capital from Bitcoin is moving to Altcoins or that Altcoins are being purchased more than Bitcoin. For example, if Bitcoin's Capital is 1,000 billion USD and the total Capital of Altcoins is 500 billion USD, Bitcoin Dominance will be 66.66%. When this ratio decreases, it is an important sign of Altcoin Season.
Total market Capital increased
The increase in market Capital combined with the decrease in Bitcoin Dominance is a clear sign of Altcoin Season. If only Bitcoin Dominance decreases but total Capital does not increase, it may be a false signal. Both of these factors need to happen at the same time to confirm an Altcoin season.
Bitcoin is flat after a strong increase
After strong price increases, especially after Halving, Bitcoin often moves sideways. This is the time when Capital shifts to Altcoins because Bitcoin no longer brings large profits.
Cash flow shifts to Altcoin
There will be three scenarios for shifting Capital flows in the market:
- Scenario 1 : Money flows into Bitcoin, then moves to Altcoin Top, then Mid-cap and Low-cap.
- Scenario 2 : Money flows into Mid-cap and Low-cap first, then moves to Altcoin Top and finally to Bitcoin.
- Scenario 3 : Large Capital flows into the entire market from Bitcoin to Altcoin and Low-cap.
Some other signs
ICO and IEO sales movements, positive investor sentiment, and the growth of DeFi are also additional signs of Altcoin season. Frequently seeing Bitcoin and many Altcoins continuously increase in price is also a sign of Altcoin Season.
By combining the above signs, you can recognize and take advantage of opportunities from Altcoin Season.
Benefits and risks of Altcoin Season
Benefit
- High profitability : If the project is not too poor quality, there is a high possibility that the Altcoins you invest in will increase in price thanks to excited market psychology.
- Large growth margin : Small- Capital Altcoins can easily increase in price by 5x, 10x or even more in an Altcoin season, while large- Capital coins or Bitcoin take longer to price increase. Many investors have increased their assets hundreds of times after one Altcoin season.
Risk
Investing in Altcoin Season is not always profitable : Many people believe that investing in Altcoin Season will be profitable, but in reality this is not the case. The cryptocurrency market is easily manipulated by “sharks”. According to statistics, during the period when Bitcoin increased in price from 3,000 USD to 12,00 USD, most of the profits belonged to large investors with Capital of tens of millions of USD or more, while small investors often Losing money because of buying high and selling Dip.
"Trash" Altcoins flood the market : Altcoin Season is an opportunity for Altcoins with small Capital to rise, but not all Altcoins have real value. Many experts believe that up to 90% of Altcoins are trash and not worth investing in. The price increases of these Altcoins are often the result of pump and Dump strategies, making investing in them very risky. You should carefully check the quality of the project, development team, investors and other information before deciding to invest.
Altcoin Season may end sooner than expected : No one can predict exactly how long Altcoin Season will last. If the Altcoin season ends earlier than expected, investors may be stuck with Capital withdrawn. Therefore, you should know when to stop and take profits when you have reached your expected goal. Remember that taking profits is never a mistake.
summary
Altcoin Season is a time when investors find investing in Altcoins more valuable than Bitcoin. Although Altcoin season can help many people become billionaires quickly, you should not invest all your assets without understanding the market, because investing without understanding is no different from gambling. Always be careful when making investment decisions and good luck.
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The article What is Altcoin Season? Signs that Altcoin season has arrived first appeared on CoinMoi day.
