There is a lot of talk about the altcoin season, also known as altseason, coming back to markets soon. Crypto experts have their various opinions on when exactly we will see it return. In the meantime, however, this helpful article will give you the basics of altseason so you can spot the indicators and prepare your portfolio.
What is altcoin season? Understanding Altseason
Altcoin season is a period when money flows out of Bitcoin and into altcoins. It results in a significant and rapid increase in their value. The Altseason happens when Bitcoin dominance decreases. It refers to the percentage of Bitcoin’s total cryptocurrency market share. This leads to an increased investment in other cryptocurrencies, called altcoins.
Altseason is a rewarding but rare period for crypto traders. The season offers a big opportunity for potential large returns. By capitalizing on the price movement, it is possible to earn a large profit. It also helps diversify your portfolio.
Suggested reading: 7 Tips to Diversify Your Portfolio Today
Moreover, altcoins have the potential to outperform Bitcoin (BTC). So you should stay informed and seize the moment. This might be your opportunity in your crypto trading journey.
What are the indicators of the Altseason?
It is important to understand what drives Altseason. By understanding the factors behind it, you can plan your strategies better. That is how you make the most of Altseason in trading and investment.
Here are 4 key indicators of Altseason:
1. Bitcoin dominance chart (BTCD)
The most common way to look for altseason signs is by looking at the Bitcoin dominance chart. When Bitcoin dominance starts to decrease, it means more people are selling Bitcoins. This can be a sign of the start of Altseason, where altcoin prices rise sharply. But when Bitcoin dominance increases, there might be a low chance for the Altseason to happen.
2. The market capitalization of altcoins (TOTAL2)
The market capitalization of altcoins is the total value of all altcoins combined. You can analyze and compare historical data with current market conditions. There, you can find similarities in the patterns. It often follows previous market cycles. These patterns involve periods of both growth and decline. Thus, you can make predictions on future trends.
3. Ethereum separating from Bitcoin
Another way to predict the upcoming Altseason is by watching the Ethereum (ETH) price movement. The performance of Ethereum is what drives the entire altcoin market. The key indicator is when ETH starts to separate from BTC. It is an obvious sign when BTC’s value is declining while ETH’s is increasing.
4. Market sentiment
It is usual that traders often get carried away when trading. Even after making calculations, the market movement may sway their emotions. As a result, there are many cases where traders make irrational trades.
Traders can get over-excited about making profits when the market goes up. But when it goes down, they often panic sell. To avoid this common mistake, you can check the market sentiment indicator.
Some examples of the providers are Crypto Fear and Greed Index. But, they do not directly show the altcoin season. It is only used to broaden your understanding of what to expect from the cryptocurrency market.
Understanding the Altcoin season index
The Altcoin season index is a tool that helps us determine our position concerning Altseason. The index shows the historical trends in a graph over monthly and yearly periods. It also provides insights into whether Altseason is currently happening or not. We can consider Altseason is underway when the performance of other coins is 75% better than Bitcoin in the last 90 days.
Best altcoins for Altseason
To decide which altcoins that’s best to invest in, you should do your analysis and research. There are some factors you can take into account before making investments in altcoins.
- Consider the following before buying :
- market demand,
- project quality,
- technology innovations,
- and risk-reward ratio.
But you should remember that investing in cryptocurrencies involves risks. The altcoin season and market trends can change rapidly, making it highly volatile.
Here, we cover some altcoin alternative recommendations based on expert analysis and market capitalization.
Ethereum (ETH)
ETH is a utility token for executing transactions in the Ethereum blockchain platform. It operates without a central authority and enables secure and transparent transactions. Developers also use it to create smart contracts and decentralized applications (dApps). There is a debate about the classification of ETH as an altcoin. It is because Ethereum has positioned itself as a prominent blockchain for smart contracts. ETH market cap is the biggest among altcoins. The current market…
Read More: Is Altcoin Season Coming Soon?