Altcoin season has now become a common slang used in the cryptocurrency world. In fact, it is one of the most used in the past few months as more altcoins gained traction in the market. So if you have been hearing altcoin season everywhere and don’t know what it means, this post will show you all you need to know about altcoin season and when to identify one when it comes.
What Exactly Is An Altcoin Season?
This is a term usually used to describe that season in the market when altcoins tend to be outperforming Bitcoin. It is a season when bitcoin seems to be losing its dominance in the market to other cryptocurrencies – even the low-cap ones.
The season is usually preceded by a spike in the price of Bitcoin which happens for a period of time before it eventually falls. This fall gives an edge to other altcoins in the market to thrive and take over the market. So, one unique pointer to show us if we are in an altcoin season is to check the dominance of Bitcoin in the market.
There are some more factors and indicators, and we will be talking about a few of them in the latter section of this post. That way, you will be able to know when an altcoin season is close and how to prepare well to make the most out of it.
But First, What Causes Altcoin Seasons?
Before we look at some pointers that show whether we are in an altcoin season or not, it is wise to first consider what might be responsible for the season in the first place. While there may be a couple of factors that cause altcoin season, the generally accepted idea is that it usually comes after a Bitcoin bull run.
At that time, investors make lots of gain from BTC and when the price eventually start coming down, they divert their gains into smaller altcoins to make even more gains from their assets. The cumulative effect of this, however, shoots up the price and popularity of many altcoins in the market while leaving Bitcoin to keep dropping in value.
How Do You Know When An Altcoin Season Is Close?
When the altcoin season index is up
There is a tool called the altcoin season index which is specifically designed to measure the dominance of bitcoin in the market. When the index shows that 75% of the top 50 altcoins in the market are outperforming Bitcoin in the last three months, then it shows we are already in an altcoin season. So are we presently in one? Based on the last report, we are presently below 75% which means we are not in an altcoin presently. But we are definitely closer than ever.
The influx of new trends in the market
Yes, when there is an influx of new trends into the market, it can cause an altcoin season to break out. New tokens and trends threaten the dominance of Bitcoin in the market. And presently, there are a couple of them already in the market. Think non-fungible tokens (NFTs) and decentralized finance (DeFi). These two were instrumental to the popularity of most altcoins in 2021.
Bitcoin bull run
Like we earlier said, sudden optimism about Bitcoin can lead to a spike in its price and could also be an indicator of an altcoin season coming. When there is a prolonged bitcoin bull run, it will eventually end in a drop in its price, and that time more eyes are shifted to altcoins.
When there is an increase in the price of altcoins in the market
Are you already noticing a sudden spike in the price or market cap of some altcoins? That’s an indicator that an altcoin season is coming. When some big players in the altcoin community, such as Ethereum, Ripple, and Binance Coin increase in price, the gains investors make from such coins are usually diverted into smaller altcoins, causing an overall strength of the altcoin market. That is obviously a sign that an altcoin season is around the corner.
Trading prediction now focusing more on altcoins rather than bitcoin
This is another indicator of an altcoin season. During such a season, traders begin to make more predictions on altcoin trading pairs over BTC pairs. It shows that traders are losing interest in Bitcoin and getting more interested in altcoins.
What Should You Do In An Altcoin Season?
Every investor is looking for the avenue to make huge gains from their investments. So when an altcoin season is coming, a wise investor should think of how to make the most out of the season. So when an altcoin season is here, below are some things you should consider doing to make the most out of it:
- Prepare well for it: this is the best advice for an altcoin season. When you notice the crypto cycle is about to come, position yourself well by putting good strategies in place.
- Know and understand what to look out for: There are many factors that will tell you if an altcoin season is close or already here. Pay attention to those signs to know just when to swing into action about your investment.
- Buy more altcoins: Identify some altcoins you know will bring good gains. Buy more of them ahead of the season when their prices are low and sell when the price goes up.
- Don’t be greedy: The best time to buy any cryptocurrency is not when the price is high. Don’t be tempted to want to buy at this time thinking the price will continue to remain high. It may not work that way. And that may cause you to lose all your investment if the price eventually falls.