What is 'Altseason' & how do I make the most of it? - Crypto Simple (2024)

Altcoin season, or ‘Altseason’, is the home of face-melting gains & high volatility. It’s pretty much Christmas for crypto traders.

Within a brief period (usually a few weeks or months), the prices of altcoins (all coins besides Bitcoin) skyrocket as investors move their money out of Bitcoin and into other cryptocurrencies.

Once prices start to rise, FOMO investment kicks in, causing a snowball effect which drives altcoin prices even higher to astronomical (and often overvalued) heights for a short period of time.

Many investors can make the majority of their profits for the year during an Altseason if they are able to sell their altcoins before Altseason ends and prices fall back to earth (as money is moved back into Bitcoin).

Put simply, Altseason begins when altcoins start to outperform Bitcoin (when prices of alts rise in comparison to Bitcoin), and Altseason ends when Bitcoin outperforms altcoins.

However, this does not mean that when Bitcoin’s price goes down alts automatically go up.In fact, historically, Bitcoin has tended to lift altcoins when it rises and also bring them down after a major crash, with the price of Bitcoin and altcoins often being closely correlated. Previous bull markets have generally seen Bitcoin enjoy an uptrend before altcoins join the wave and head for the moon.

How to take advantage of Altseason?

Top tips for navigating Altseason

What are the main reasons people buy altcoins?

What is Bitcoin dominance?

How does Bitcoin dominance relate to Altseason?

What does it mean for Altseason when Bitcoin dominance decreases?

How does Bitcoin’s actual price (not its dominance) affect the price of altcoins?

What is the Altcoin Seasons Index?

Why does Altseason see such huge gains?

When is the top of Altseason/the bull market?

If Bitcoin’s price goes up will altcoins also go up?

Why are altcoins dependent on Bitcoin?

What to look out for to predict an Altseason

What is Ethereum’s relationship to Altseason?

Can altcoins lift Bitcoin?

What is an example of Bitcoin Dominance influencing Altseason?

What have previous Altseasons and bull runs taught us?

What is the Bitcoin Rainbow chart?

• Altseason is both an exciting and emotional time. If you’re a new investor, proceed with caution. Separating your investment decisions from your emotions is a tried-and-tested strategy for mitigating risk and maximising profits.
• Having a solid exit strategy prepared will decrease the chances of you HODLing your alts through the peak only to see them fall when Altseason comes to an end.
• Depending on your commitment level, spreading yourself too thin by investing in lots of altcoins can be confusing and difficult to keep track of. A bit of diversification is always good but don’t invest in more coins than you can keep track of!
• Accept that you cannot be involved in every pumping altcoin. Choose your best picks and stay up to date on the relevant news and market movements.
• Be sure to take profits on the way up to ensure that you realise most of your gains before prices come back down again. If you get a sizeable gain, you may want to reduce your position before the inevitable price correction!
• Using your profits from Altseason to reinvest into Bitcoin while it is at a good price (and vice versa) is a popular strategy.
• Risk management is the best way to make the most out of Altseason, given the sheer number of investment opportunities that will arise. Never risk so much that you won’t be able to keep playing – there can be multiple Altseasons in a year!
• The key to taking advantage of Altseason is to have your money in altcoins before Altseason begins, or just as it is beginning. Pay close attention as prices begin to rise, and make sure you sell out from most of your positions before Altseason ends and prices fall as quickly as they rose – don’t worry about trying to sell at the very peak, just take profits on the way up and be ready for things to end as quickly as they begun!

1. To increase their Bitcoin holdings – many investors’ strategy is simply to amass as much Bitcoin as they can. Often this means moving their money out of Bitcoin and into altcoins before Altseason begins, and then selling those altcoins for Bitcoin around the peak of Altseason.
2. To hold for the long term – although many altcoins have yet to prove their value and longevity in the market, over time some will inevitably see exponential gains. Given the fact that some altcoins can provide incredible utility to the market, their appreciation over a number of years can be significant if things go well for them. 100X gains is not uncommon in the world of altcoins and holding long-term is a common strategy.

Bitcoin Dominance is the percentage amount of the total crypto market share/cap (all the money in crypto) that belongs to Bitcoin. Basically, it represents how many people in the market are currently buying and holding Bitcoin compared to other altcoins.

Bitcoin Dominance increases when more people buy or simply hold Bitcoin. When investors sell Bitcoin, Bitcoin Dominance falls, often causing an Altseason. You can find the Bitcoin Dominance chart here.

Bitcoin dominance is one of the key metrics traders use to know when to buy/sell their altcoins.

Stocking up on altcoins when Bitcoin dominance is in an uptrend isn’t an ideal strategy as people are generally more willing to buy and hold Bitcoin rather than altcoins, meaning they will likely be selling altcoins (driving the price of them down).

Holding Altcoins at such a time would result in both a loss and a significant opportunity cost. Not only do you lose money holding altcoins when Bitcoin dominance is going up (money flowing into Bitcoin), but you also lose the opportunity to make money by holding Bitcoin as its price is rises.

Bitcoin Dominance decreases when more and more people offload Bitcoin (usually by trading BTC for altcoins or fiat currency).

The best time to be holding altcoins is when Bitcoin dominance is decreasing, and money begins flowing into alts.

Generally, Altseasons have occurred in the past when Bitcoin dominance has had a decline, with the biggest Altseasons (when alts go to the absolute moon in a very short period of time) occurring when Bitcoin’s dominance has experienced the sharpest decline.

However, it is important to note that these two seasons are not black and white. There are still plenty of gains to be made in altcoins even when it isn’t an official ‘Altseason’, and with more money and interest flowing into the space than ever before, it is possible that future bull runs/Altseasons will diverge from past historical patterns.

While past patterns have suggested that Bitcoin’s dominance and performance in relation to altcoins is a fairly reliable way to predict the start of Altseason, it does not mean that a rise in Bitcoin’s price means a decline in the price of altcoins.

In crypto, Bitcoin is king and if you zoom out you will see that Bitcoin’s price movements are usually closely correlated and followed by the rest of the market. In 2018, Bitcoin experienced a crash and all other cryptocurrencies followed suit shortly after. Usually, Bitcoin will undergo a big move to the upside and then the alt market will follow soon after.

The Altcoin Season Index is a helpful (but not exact) tool to see where we are in relation to Altseason. According to the Altcoin Season Index, if 75% of the Top 50 altcoins performed better than Bitcoin over thelast season (90 days),it is Altcoin Season.

They also give an indication of where we are in terms of an Altcoin Month or Year, with an easy to interpret graph that shows the general long-term trends of previous Altseasons.

Altcoin season is not something that’s officially announced at a certain time or date. Nobody knows for sure when it’s upon us, nor when it will end. All we have are certain indicators that can help us know if we have entered Altseason.

FOMO and the snowball effect play a big part. Part of the reason Altseason sees such a dramatic rise in prices is because many new investors see prices beginning to rise, and immediately invest out of FOMO.

This creates a snowball effect which pushes prices higher and higher until they are overvalued and in a bubble. When people realise they are riding a precarious rollercoaster that may crash at any moment, they begin to sell. This causes panic which leads to more mass selling and the price plummeting back down to earth, bringing Altseason to an abrupt end.

The million-dollar question that no-one can really answer. While crypto markets follow cycles which can be predicted based on past market movements, every bull run is different and it is incredibly difficult predict the very top of Altseason, or any bull run for that matter.

Given the fact that no-one really knows exactly when the top of the bull run or Altseason will be, it is wise to take profits along the way as your portfolio gains value. Dollar-cost-average selling (DCA) can be useful to minimise the impact of the market’s volatility while you invest.

A major reason that altcoin’s and Bitcoin’s prices are so highly correlated is that many altcoins are purchased with Bitcoin. Bitcoin is often bought before the purchase of an altcoin, pushing the price of both coins up.

Similarly, if someone wants to cash out on an altcoin, many exchanges require you to first sell that altcoin for Bitcoin, and then sell the Bitcoin for cash, which pushes both prices down at the same time.

Another reason the prices are highly correlated is simply because they’re in the same asset class and things that are in the same asset class tend to go up and down together.

‍Ethereum, seen as the second most trusted cryptocurrency and the silver to Bitcoin’s gold, is at the heart of the altcoin market. The start of bullish moves for Ethereum is often the start of Altseason, especially with so many alts and DeFi projects being built on top of the Ethereum Blockchain.

Generally, after Bitcoin rallies upwards and consolidates, Ether’s price will also need to break out before altcoins can see a sizable rally.

Not really. Bitcoin rarely gets boosted by altcoins.

Generally, once altcoins have pumped and claimed dominance from Bitcoin, the steps in to take back the bulk of the crypto market share, marking the end of Altseason.

On December 9, 2017, Bitcoin Dominance had gone from 69% to 37% in the space of just 35 days (which means it went from owning 69% of the total crypto market share to 37% in just over a month).

Looking at the Altcoin market cap chart, December 9 coincides exactly with the beginning of the largest Altseason that crypto had ever seen. The sharper the decline in Bitcoin Dominance, the bigger the spike in Alts.

History also repeated itself on March 30, 2018 when a sharp decline in Bitcoin Dominance from 50 to 38 in 40 days led to a significant increase in the Altcoins market cap.