What Is an Altcoin?
Altcoin Season is one of the most, if not the most, important metric for every new trader. This is where profits are made. Before we describe Altcoin Season, we must define what the altcoin really is. An altcoin, short for “alternative coin,” refers to any cryptocurrency that is not Bitcoin. Examples include Ethereum (ETH), Monero (XMR), Ripple (XRP). Altcoins often offer unique features like faster transaction speeds, lower fees, enhanced privacy, or smart contract capabilities. We have written about Altcoins, check it out.
What is an Altcoin Season?
Altcoin season is a period when altcoins experience substantial price increases and outperform Bitcoin (BTC). This period is often marked by a shift in market cap from Bitcoin to altcoins, measured by the BTC to non-BTC ratio, known as “Bitcoin dominance.” As Bitcoin’s dominance decreases, the market cap of altcoins rises, signaling the start of an altcoin season. This phase typically presents an opportunity for traders to diversify their portfolios towards altcoins and is characterized by a bullish sentiment in the cryptocurrency market.
What Causes Altcoin Season?
Decreasing Interest in Bitcoin
A drop in Bitcoin’s dominance can lead to an altcoin season, as traders diversify into other cryptocurrencies. After significant gains, Bitcoin’s price often stabilizes, prompting investors seeking short-term returns to shift to altcoins.
New Crypto Trends
Trends like DeFi (Decentralized Finance), NFTs (Non-Fungible Tokens), and Web3 can spur interest in new and existing altcoins. Exciting launches and updates to altcoins that offer unique features or address specific issues can drive demand.
Bullish Sentiment in the Wider Economy
A strong economy and bullish stock market can influence the popularity of altcoins. In bull markets, the appetite for risk and higher returns increases, giving even small market cap altcoins a boost.
How to Know When Altcoin Season Is Starting
Sustained Bitcoin Bull Run
A prolonged bull run in Bitcoin can lead to new buyers favoring more affordable altcoins. Prolonged bull run means that traders have made some profits in BTC, and are now looking for short term quick gains. That’s where Altcoins come in
Rising Market Caps of Top Altcoins
Monitor the top 20 altcoins. An upward trend in major altcoins like ETH, SOL, or ADA can indicate the onset of altcoin season. Also, monitor the BTC Dominance, if it goes below 50% that’s a huge indicator.
Emerging Web3 and Blockchain Trends
New trends and technologies dominating media and social media, such as discussions on platforms like Discord and Twitter, often herald new altcoin launches, elevating the overall market cap.
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