Cryptopedia Archives - Altcoin Helper

A season you awaited probably more than Christmas if you are a true crypto holder is Altcoin Season. What is Altcoin Season? The term "altcoin season" refers to a time when alternative cryptocurrencies (altcoins) outperform Bitcoin. This usually happens when Bitcoin is range-bound and needs to make big price moves. During altcoin season, money tends to flow out of Bitcoin and into altcoin markets, leading to rallies in altcoins. What Causes Altcoin Seasons? There are a few key factors that can trigger an altcoin season: Bitcoin Dominance Declines Bitcoin dominance refers to Bitcoin's total market capitalization as a percentage of the overall crypto market cap. When Bitcoin dominance is high, money is concentrated in Bitcoin. As this percentage declines, it signals increased interest and money flowing into altcoins. For example, during the 2017 crypto bull market, Bitcoin dominance peaked at around 65% and then declined as the altcoin market went on a tear in the spring and summer of 2017. Bitcoin dominance bottomed out around 35% right as altcoins hit their peak. Bitcoin Trades Sideways When Bitcoin enters a period of low volatility and trades sideways with no clear trend, traders tend to lose interest and look for opportunities elsewhere. Sideways Bitcoin price action tends to coincide with altcoin liftoffs as traders rotate into altcoins, hoping for more significant gains. Major Altcoin Developments When an altcoin announces major news, such as a mainnet launch, protocol upgrade, significant partnership, or other development, it can rally that altcoin. This sort of news generates hype and attracts money from Bitcoin and other altcoins into the hot altcoin of the moment. ICO Boom During the 2017 crypto frenzy, there was a massive boom in ICO (initial coin offering) activity. Billions poured into newly launched altcoins. While many of these projects failed, the massive influx of money into altcoins significantly drove the 2017 altcoin season. Signs of an Upcoming Altcoin Season Paying attention to market signals can help investors spot an upcoming altcoin season. Some key signs include: They have increased social media chatter about low market-cap altcoins. Crypto communities start discussing hot opportunities. Significant price movements in altcoins relative to Bitcoin. Altcoins begin rallying 20-100% in a short period versus Bitcoin ranges. Volume spike across altcoin exchanges. Trading activity picks up dramatically across platforms like Binance, indicating money rotating into altcoins. Peaking Twitter and Google Trends interest in "altcoin" and related terms. It increased retail investor interest in altcoins. ICO hype begins picking up again. More projects are launching token sales. Bitcoin dominance started declining from a recent peak of 60% or higher. How to Take Advantage of Altcoin Season For crypto traders and investors, altcoin season can present lucrative opportunities. Here are some tips on making the most of it: Identify Promising Projects in the Early The key is researching and identifying promising, undervalued altcoins before they take off. Look for projects with solid fundamentals and growth drivers coming up. Get in early before the hype builds. Closely Follow Altcoin News Cycles Stay plugged into the announcement cycles of your target altcoins. Look for product launches, partnership deals, or protocol upgrades to catalyze price movement: time entries and exits around significant events. Diversify Across Multiple Altcoins Rather than going all in on one altcoin, spread your capital across a basket of promising projects. Diversification helps manage risk. Use Dollar Cost Averaging Consider dollar cost averaging by buying set amounts at regular intervals to reduce volatility risk. Avoid blowing your entire capital at once at the top. Take Profits at Key Resistance Levels Many altcoins can see 300-1000%+ gains during the season. Take profits on chunks of your position at critical technical resistance levels as a rally unfolds. Don't get greedy waiting for the top. Rebalance Portfolio As altcoins rally, their portion of your portfolio will grow. Remember to rebalance back to target allocations so you don't get overexposed. Don't Chase Pumps Avoid the tendency to FOMO buy into an altcoin that's already up 100% in a day. Be patient and wait for these rallies to cool off and accept support. The Altcoin Season Cycle Altcoin seasons follow a cyclical pattern tied to Bitcoin's market cycles. Here's an overview of how it tends to play out: Bitcoin Accumulation Phase After a Bitcoin bear market bottom, Bitcoin will enter an accumulation phase where its price trades in a range, allowing it to establish a base. This is a period of reduced volatility and confidence in crypto. During this phase, interest and money flow back into Bitcoin, constituting the early majority entering the market. However, Bitcoin's dominance remains elevated at this stage. Bitcoin Price Breakout As Bitcoin accumulates and forms a base, it will eventually break into a new bull market. Its price begins rallying and generating momentum. Bitcoin mania starts to pick up in the media, and more new entrants buy Bitcoin, accelerating the recent bull run. Money Starts Rotating Into Altcoins As Bitcoin gains traction and hits local tops in its new bull market, money starts rotating out of Bitcoin and into altcoins. Traders start taking profits from their Bitcoin positions and seeking upside in altcoins. This kicks off the altcoin season cycle. Altseason Frenzy A feeding frenzy develops around cheap, low market cap altcoins as speculators try to find "the next Bitcoin." ICOs start launching like crazy. "Get rich quick" euphoria takes over the crypto community. Newbie traders start FOMO buying coins after 100%+ run-ups. Altcoin Blow-Off Tops After several months of epic rallies, altcoins eventually tap out and top out. Savvy traders take profits. ICO mania fades large caps like Ethereum peak relative to Bitcoin. The buying frenzy evaporates. Altcoin dominance starts to decline. Bitcoin Dominance Returns In the later stages of a crypto bull market, money rotates back from altcoins into Bitcoin. This is especially true among institutions and mainstream investors focused on blue-chip crypto assets. Bitcoin regains its dominance. Most altcoins decline significantly relative to Bitcoin. Bear Market Starts Bitcoin enters a bear market as it pops from its euphoric blow-off top. Altcoins crash hard, with most declining 90%+ from their peak or dying completely. Crypto markets go cold as participants lose hope after the frenzy. The cycle starts again with a new Bitcoin accumulation phase. Key Takeaways The cyclical nature of the altcoin season provides important lessons: Altcoin run-ups are often short-lived hype cycles. Take profits on the way up; avoid getting caught holding the bag. Only invest in altcoins you've researched thoroughly. Expect altcoins to underperform Bitcoin in the long run. The frenzy doesn't last forever; stay rational and beware of FOMO. Pay close attention to market cycles and momentum. Learning from history allows us to make intelligent decisions navigating future altcoin seasons. Conclusion In summary, altcoin season refers to the phenomenon where altcoins embark on massive rallies due to rotations out of stagnant Bitcoin markets. With the proper preparation and tactics, seasoned crypto traders can hugely benefit from these boom-and-bust altcoin cycles. The key is having a diversified portfolio of promising projects to ride the altcoin waves.