Altcoin season is a term often used in the world of cryptocurrency to describe a period of time when the prices of altcoins tend to outperform Bitcoin. Understanding some of the possible contributing factors to the altcoin season and how to navigate this volatile market can be challenging. In this article, we delve into the ins and outs of an altcoin season.
- The term ‘altcoin season’ refers to a market cycle when altcoins outperform Bitcoin.
- Factors that can contribute to altcoin season may include an overall bullish sentiment in the cryptocurrency market; the launch of, or major updates to, altcoins; and a decrease in Bitcoin dominance.
- Altcoin season is often seen as an opportunity for traders to diversify their cryptocurrency portfolios and potentially earn higher returns.
- Find out why and when an altcoin season begins, plus how to purchase altcoins on Crypto.com.
What Is an Altcoin?
The term ‘altcoin’ is short for ‘alternative coin’. It refers to any cryptocurrency that is not Bitcoin. Thousands of altcoins have been developed since the creation of Bitcoin, and many offer unique features or are designed for specific purposes. Some examples of altcoins include Ethereum (ETH), Litecoin (LTE), Dogecoin (DOGE), and Cronos (CRO).
As alternatives to Bitcoin, altcoins can act as more than mere digital mediums of payment — they may offer different features or benefits, as well. These can include faster transaction speeds, lower fees, improving privacy, or enabling smart contracts.
Learn more about the different types of coins and tokens in this overview.
What Is Altcoin Season?
Altcoin season refers to a period of time when the prices of altcoins significantly rise and outperform Bitcoin (BTC).
Bitcoin, as the largest cryptocurrency by market cap, capitalises the lion’s share of trading volume in the cryptocurrency market. The BTC to non-BTC (or altcoin) ratio is a key metric in market analysis. It is aptly named ‘Bitcoin dominance’.
In the early days of crypto, Bitcoin’s dominance was near 100%, but with the rising popularity of altcoins, that dominance has fallen. Nowadays, when altcoins collectively gain in market cap and overtake BTC’s market cap, this can sometimes signal the start of an altcoin season.
As altcoins tend to outperform Bitcoin in this phase, it is often taken as an opportunity for traders to diversify their cryptocurrency portfolios in favour of altcoins.
In addition, altcoin season is often characterised by a general bullish sentiment in the cryptocurrency market, which can be driven by a variety of factors.
What Causes Altcoin Season?
While it is hard to define the exact cause of an altcoin season, there are several factors that can contribute to it. Here are three potential causes that ignite the trend:
Decreasing Interest in Bitcoin
As mentioned above, a decrease in Bitcoin’s dominance can contribute to altcoin season, as traders may look to diversify their holdings by buying into other cryptocurrencies, shifting the market cap to BTC alternatives.
Historically, after a significant upward trend, BTC price tends to stabilise and remain at a high level for extended periods. This can cause market participants seeking short-term returns to possibly sell their bitcoin and shift to altcoins. At the same time, the high BTC price can also be prohibitive for new crypto buyers, who may then choose altcoins instead, which would contribute to a general shift of the market cap to non-BTC currencies.
For a more in-depth view, read our article ‘What Is Bitcoin Dominance?‘
New Crypto Trends Like DeFi, NFTs, and Web3
In addition, the launch of new altcoins or updates to existing ones can create excitement and drive up demand. This is especially true if the altcoins are launched as part of a larger trend and offer unique features or solutions to problems that other cryptocurrencies have not yet addressed.
In 2020, it was the advent of decentralised finance (DeFi) that contributed to an altcoin season. In 2021, the skyrocketing popularity of non-fungible tokens (NFTs) spurred another one. And in early 2022, Web3 spurred another wave of altcoin token adoption.
Bullish Sentiment in the Wider Economy
A strong economy, bullish stock market, and overall positive sentiment in the crypto market can all also influence the popularity of altcoins. The increasing appetite for risk and higher returns during bull markets often gives even small market cap altcoins an upwind, boosting the overall market cap of altcoins.
Learn more about the four cycles of the crypto market here.
How to Know When Altcoin Season Is Starting
With the three factors discussed above in mind, a trader can look for the following signals, amongst others, that may indicate an altcoin season might be around the corner:
Bitcoin is enjoying a lasting bull run.
A lasting Bitcoin bull run can make new buyers favour altcoins, which are more affordable than BTC.
Market caps of the top altcoins are on the rise.
Keep an eye on the top 20 altcoins. If there is an upwards trend of, for example, ETH, SOL, or ADA, a wider altcoin season might be about to kick off.
New Web3 and blockchain trends are popping up.
If new trends in the space are dominating the media and social media, like discussions on Discord and Twitter, this may soon bring new altcoin launches that will elevate the market cap.
Final Words on Altcoin Season
Altcoin season can be a time in which many crypto holders diversify their portfolios. Keep up with the latest news and developments in the cryptocurrency market, as well as the wider economy. However, while altcoin season may be an exciting time to trade, remember that it’s just one part of the long-term cryptocurrency market cycle.
How to Buy Altcoins With Crypto.com
Want to buy altcoins before the next altcoin season kicks off? The Crypto.com App and the Crypto.com Exchange offer instant access to over 250 altcoins for mobile or desktop.
In the Crypto.com App
The Crypto.com App is trusted by over 80 million customers worldwide. Simply download it in the Apple Store or Google Play and complete the KYC (know your customer) identification process to access altcoins within minutes. Users can seamlessly purchase altcoins using 20-plus fiat currencies via credit card, bank transfer, or Apple Pay.
On the Crypto.com Exchange
The Crypto.com Exchange is one of the world’s fastest and most secure crypto trading platforms. To purchase altcoins on the Crypto.com Exchange, sign up and top-up your account via the Crypto.com App, bank transfer, or credit card. Users can then trade 500-plus trading pairs.
Due Diligence and Do Your Own Research
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Past performance is not a guarantee or predictor of future performance. The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price. When assessing a crypto asset, it’s essential for you to do your research and due diligence to make the best possible judgement, as any purchases shall be your sole responsibility.