Altcoin season is one of the most awaited periods by investors.
Is altcoin season approaching? Altcoins – can be interpreted as alternative coins (tokens). These are all cryptocurrencies except Bitcoin, and when their season comes – it becomes alt season. Many of them can grow by a hundred percent or even thousands of times during this season.
In this article we will understand:
What is an altcoin?
What should be considered when buying altcoins?
What is the “alt season” and how is it known to arrive?
This article is produced by Crypto News 24 and is for educational purposes only. We hope that the material will help you better understand and study the cryptocurrency market.
What is an altcoin?
Altcoins are all coins except Bitcoin. Historically, BTC launched first and other cryptocurrencies followed, so assets that emerged after bitcoin became known as “alternatives.” Technically, the entire industry is based on bitcoin: if it falls, alts usually lag behind it. Bitcoin is a measure of market stability and depends on average temperature fluctuations in the crypto industry.
Some of the most popular altcoins in the market are DOGE, ADA, XRP, LUNA and of course ETH. The first alt in the history of the industry was Namecoin (2011). Although it is no longer very popular, the token is still alive.
Conventionally, altcoins can be divided as follows:
Stablecoinr: assets pegged to the value of fiat currencies (USDT, USDC, BUSD);
DeFi tokens: used in applications related to decentralized finance (UNI, 1INCH, CRV, AAVE);
Fan Tokens: Sports teams, F1 drivers, musicians, etc. They are assets created for
Memcoins; are entities with a humorous feature that are not tied to a project (DOGE, SHIB);
PoW tokens: are assets that use the Proof-Of-Work protocol (LTC, ZCash, XMR, ETC) for their operation;
Staking: Assets that use the Proof-Of-Stake protocol (NEAR, ADA, AVAX, ATOM, etc.).
Altcoin prices in the market gain value depending on more projects. Now let's see what the alt season is made of and how it should not be missed.
Altcoin season: reasons and impact on the market
Altcoin season is when altcoins rise faster than Bitcoin. During this period (usually short), altcoin investors make huge profits. We can compare this to the work of a florist; Florists only make good profits on special occasions like February 14 (Valentine's Day) and March 8 (International Women's Day).
Altcoin season comes when Bitcoin is already showing quite strong growth and investors start moving their profits from BTC to other currencies to maximize their profits. Due to massive capital inflow, volume begins to flare up to show massive and intense growth.
How do we know that the altcoin season has started?
Everything was thought of before us. There are special services that provide alternative season measurements. According to them, it can now be understood that it has "started" or at least is about to start. We also recommend that you follow altcoin news frequently.
Bitcoin dominance
The Bitcoin dominance index is the share of BTC capitalization from the capitalization of the entire cryptocurrency market. The higher the index, the more money there is in Bitcoin compared to all other altcoins and vice versa. This is what Bitcoin dominance looks like from 2014 to today:
As you can see in the chart, Bitcoin has been losing position sharply since 2017. Technically, the alt season occurred from April 1, 2021 to August 9, 2022, when the Bitcoin dominance index dropped below 50% (the base value by which you can determine that the alt season has arrived) (based on the alternate season index). This also gives us answers to questions like when is the bull season?
Altcoin season index: how to count and what does it mean?
The alternate season index is probably the easiest way to tell if we are in an alternate season. It looks like this:
At the same time, the value “88” does not refer to capital allocation: it means that 88% of altcoins have grown more than BTC in the last 90 days. If the value rises to 75% or above, it means we are experiencing a subseason. If the value drops below 25%, Bitcoin season comes when money from altcoins flows back into Bitcoin. There are sites that show these values, you can leave a comment to learn about these sites. You can write to us by clicking the Add Comment button at the bottom of the article. We will send the site to everyone who comments.
What should be considered when choosing an Altcoin?
When choosing bottoms for trading, we recommend adhering to the following indicators:
Market cap: just because the project is currently valued at a high price, this does not mean that it is a very important altcoin: you should pay attention to historical metrics, such as whether the market cap has fallen before. If it has fallen, the demand for the token decreases. You can check the cryptocurrency market metric on a specific cryptocurrency analysis (CoinMarketCap) page.
Technology behind the project: Developers of the hundreds of projects that emerged after Bitcoin do not introduce anything original, only a few solve real problems. For example, Ethereum solves the challenges faced by Bitcoin: it is more energy efficient and its market cap is growing faster than Bitcoin. All this costs money, which users pay in the form of “gas” – commission. In contrast, Polygon solves the problem of high Ethereum commissions.
Project Goals: A project with a clear goal and implementation plan is a good sign.
Examine the project team: if the project team is anonymous, this should at least raise the alarm. In addition to the team and its leader, the project must have a strong community: the more it shines in the media, the better for investors.
Tokenomics: An equally important factor when choosing a cryptocurrency is the token. You need to find out how many assets are in circulation, how many more will be released, and when they will be released. For example, if only 10% of the total supply of a cryptocurrency is mined, the launch of new coins in the future will put more pressure on the price than if the coin had 90% currently available for supply.
In addition to all this, you also need to follow the daily transaction volume. By the way, create an account not only on Binance, but also on lesser-known exchanges. For example, the GMT Play-2-Earn token was initially listed only on Huobi, Gate.io, and a few other exchanges with smaller cash flows. Additionally, not every altcoin investment advice available on the market is in your best interest, so be sure to do your own research.
Which assets increased the most in past altcoin seasons?
Take one of the brightest subseasons in recent years (year 2021), here are some of the top earners:
Gala (GALA) +10891.26%;
Axie Infinity (AXS) +10598.52%;
Solana (SOL) +7998.67%;
Fantom (FTM) +7155.14%;
Polygon (MATIC) +6805.13%;
Rari Governance Token (RGT) +5491.43%;
Terra (LUNA) +5071.23% (well, it was);
Dogecoin (DOGE) +3855.02%;
PancakeSwap (CAKE) +2963.16%;
The Sandbox (SAND) +1896.16%.
*Data taken from coinmarketcap.
Subseason 2021 lasted until June, making it the longest season since 2017. In 2017, the golden period of altcoins lasted from April to July, and the alt season index remained at 100 for a long time.
Conclusion
Let's summarize our topic:
Altcoin season is the period when altcoins gain a lot of value in the market;
Altcoins (alternative coins) are all cryptocurrencies other than Bitcoin. Yes, Ethereum is also considered an altcoin;
The main indicator of the alternative season is the weakening of Bitcoin dominance. You can check this measurement using a special service (we give the site link to our readers who left comments);
The reason for altcoin season is that there is a flow of capital from Bitcoin to altcoins as investors look to make profits;
No one can say for sure which altcoins will grow in the next alt season. But this is a good chance to make some quick money, so do your own research (DYOR): the crypto industry provides enough tools for this;
It is not a fact that in the new subseason the same coins will grow as in the previous season.