Altcoin season, in other words, means the season of the Altcoins. In order to deal with this concept, it is better to be acquainted with the concept of Altcoins first. Then we will introduce if we want to summarize the concept of Altcoin, we can say that all digital currencies that have been introduced after Bitcoin are called Altcoin. The word Altcoin is a combination of the two words Alt or Alternate and Coin. In general, any digital currency other than Bitcoin is called Altcoin.
If you have enough experience in trading in the context of digital currencies, you know that the digital currency market is always volatile. In fact, to describe the market of this currency code, words are used, which in this article we are going to describe one of them: altcoin season.
What is the altcoin season?
Altcoin stands for “Alternative Coin” and refers to all digital currencies except Bitcoin such as Litecoin, Ethereum, Dodge Coin, Ripple, etc. After Bitcoin became the first digital currency on the market, it had a major problem, and that was its limited number. In order to overcome this limitation, altcoins came to the market indefinitely, and each of them tried to make financial transactions faster and with a lower fee, or to implement a project in the field of defense. The altseason is a time in the digital currency market where these alternative cryptocurrencies tend to outperform the king of cryptocurrencies, Bitcoin.
Therefore, any period in the market in which most altcoins grow more than bitcoins can be called a penultimate season. This period is also usually marked by a decrease in the proportion of bitcoin dominance over the entire digital currency market compared to before the start of the season.
What is Bitcoin Dominance?
Bitcoin dominance literally means dominance. Dominance is a type of index. Taking into account the entire cryptocurrency market, the percentage of capital held by Bitcoin is the same as dominance. As bitcoin’s dominance increases, so does the market for bitcoin. In such a situation, the capital leaves the altcoins, so it is quite logical that the probability of falling in altcoins is high. Therefore, with the decrease of bitcoin dominance, the market attention to bitcoin decreases and the capital goes to altcoins, which causes a significant increase in the price of altcoins compared to bitcoins. Then the penultimate period begins at this time. Therefore, bitcoin dominance analysis is important for cryptocurrency investor. In addition to analyzing currencies for investment, be sure to consider domain analysis.
What causes altcoin season?
The length of an altseason is usually the result of a new trend in the cryptocurrency industry that leads to the creation of a large number of new cryptocurrencies. For instance, in 2017, the increase in initial coin offerings (ICOs) of digital currencies provided a new way for startups to raise capital, even when they had no useful product.
Many new cryptocurrencies entered the market, and with the increase in prices, the Altcoin market had a strong trend. It is crucial to note that more than 90% of the projects launched that year were fake and many investors lost their capital, which led to the 2018 bear market for digital currencies.
Rapidly in 2020, increasing public interest in decentralized financial space (DeFi) and non-fungible tokens (NFT) led to the birth of more digital currencies. The idea behind DeFi is to offer financial products that run independently of a central manager. New cryptocurrencies are being created to empower such products, while some projects even have 2-3 tokens for their users.
At this moment, there are more than 10,000 digital currencies, and bitcoin has a dominance of about 45%. Many Altcoins performed very well at the start of the bitcoin rally, which began in 2020. While there have been periods of peak performance of altcoins throughout the history of the crypto industry, the price of altcoins is still highly dependent on bitcoin. Any sharp increase in the price of bitcoin often has a similar effect on altcoins, but not at the exact time. In addition, any rapid decline in the price of bitcoin leads to large declines in the market for altcoins, and they usually experience more severe declines in terms of percentage than bitcoins.
How to take profit from the altcoin season?
It is difficult to predict the end of the altcoin season. This makes it difficult to estimate the selling time of your altcoins. However, there are certain symptoms that you can follow, such as:
Determine in advance what percentage of you want to get out of your investment when you reach a certain return. This avoids frustration when the price of Altcoin drops.
Pay attention to technical indicators
There are thousands of indicators that all tell you different things. Make sure you select a number of indicators that you can rely on. How many of these indicators indicate a decline in the market? Then try transferring some of your altcoins to a stable coin like Tetra so that you can invest flexibly again after the price drops.
Altcoins may have a market share during an uptrend. The past has shown that coins never increase indefinitely. Try to make a profit during a parabolic move; otherwise, you may be disappointed at the end of the line.
Do not be greedy
This often happens. An investment has just reached its peak and you think: What if the price doubles again? In such a moment, it is better to put your money somewhere. It makes sense to (gradually) withdraw at least part of your profits. Digital currencies and technical analysis are still a matter of speculation. That is why you should always do your research and try to figure out which strategy works best for you.
How long is altcoin season?
According to past records of altcoin season cycles, the duration of these events take some time between one to three months. In the following paragraphs, we will take a short review on past altseasons:
December 2017 to January 2018
Near the peak of Bitcoin performance in 2017, many new tokens were launched thanks to Atrium’s smart contract capabilities. Many investors were looking for big profits in Bitcoin, while others entered the Altcoin market for fear of losing such profits. Many Altcoins reached their all-time highs with big jumps that never reached 2021 levels. Despite the fact that Bitcoin regained its 2017 ceiling 100% and even more. At the height of the Altcoin season in 2018, bitcoin dominance fell by about 36 percent, which has never been so great.
December 2020 to April 2021
This season may be much longer than the previous one, yet the price jumps that occurred in the previous period were stronger, but still this period follows almost the same pattern as in 2018 and many new ciphers in a few weeks. In addition, launched a few months ago and reached high prices. Since the new 70% dominance, bitcoin dominance has now fallen below 50% and could even fall below 40 again.
The above examples are the longest periods of the Altcoins season. However, there have been “mini-seasons”, including in May 2018 and April 2019.
In general, alteason refers to the period when the price of altcoins or other digital currencies has increased significantly compared to Bitcoin. In order to prepare for a season, we need steps that include identifying the beginning of the season, and second, we need to look at the rising prices of currencies. Now how to identify the onset of penis season, we must first examine the bitcoin dominance. In fact, Alt Seasons occur when you see a decrease in bitcoin’s dominance.
Moreover, it can be said that the decrease in bitcoin dominance is due to the sale of bitcoins by investors. They can sell bitcoins to convert them to Fiat currencies or buy/sell altcoins. No one knows about the next chapter of altcoin season, and in short, the more time it takes to happen the more it lasts.