What is Altseason? Strategic Investment Guide for Altcoin Season

Crypto markets, like other financial markets, are characterized by cyclical movements. Within these cycles, the most striking phenomenon attracting altcoin investors’ attention is the altseason. Recently, the dynamics of this phenomenon have changed significantly, taking on a new form with stablecoin liquidity and institutional capital inflows. In December 2024, the crypto market is shaken by expectations that the Trump administration may adopt a pro-crypto stance. This development is a significant step following Bitcoin’s fourth halving and the approval of spot Bitcoin and Ethereum ETFs. Many analysts believe that the next altcoin season is just around the corner.

Understanding the Altseason Phenomenon: Definition and Core Dynamics

Altseason (altcoin season) defines a period during a bull market when the total market capitalization of altcoins surpasses that of Bitcoin. Unlike past cycles, in modern altseason periods, capital rotation has gone beyond simple Bitcoin-altcoin movements. Today, increasing trading volume of altcoins against stablecoin pairs like USDT and USDC indicates not only speculative excitement but also genuine market expansion.

This transformation is supported by the entry of institutional investors and the growing number of retail participants. Typically, altseason manifests through decreasing Bitcoin dominance, accelerating altcoin trading activity, and increased overall market participation.

Altseason vs. Bitcoin Season: Market Dynamics

During altseason, market interest shifts from Bitcoin to alternative cryptocurrencies. Factors triggering this shift include new project launches, technological developments, rising utility expectations, and speculative demand. As a result, most altcoins outperform Bitcoin and experience rapid price increases.

Conversely, Bitcoin season tends to be challenging for altcoins. Bitcoin dominance index—Bitcoin’s share of the total crypto market value—rises, indicating investor preference for Bitcoin. During bear markets or periods of uncertainty, investors seek lower risk assets like Bitcoin or stablecoins.

Evolution of Altseason Dynamics: Old and New Models

Transition from Bitcoin Rotation to Stablecoin Liquidity Model

In previous crypto cycles, the start of altseason was marked by direct capital rotation from Bitcoin to altcoins. The ICO boom of 2017 and the DeFi craze of 2020 exemplify this model. However, the current situation has changed.

Ki Young Ju, CEO of CryptoQuant, clearly highlights this shift: In modern altseasons, altcoin trading volume against stablecoin pairs plays a critical role. This reflects actual market growth rather than hype-driven speculative moves. Increasing stablecoin liquidity facilitates entry and exit for investors into altcoins, encouraging broader adoption.

Ethereum’s Leading Role and Institutional Capital

Ethereum often leads during altseason as the second-largest player. Its DeFi applications and NFT ecosystem continue to drive activity. Fundstrat analyst Tom Lee states that Ethereum’s momentum could sustain the altcoin season. Especially as institutional investors diversify their portfolios, projects like Solana and Ethereum become more attractive.

Bitcoin Dominance: Leading Indicator of Altseason

Renowned analyst Rekt Capital considers Bitcoin dominance as a critical metric for predicting altseason. Historical data shows that a sharp drop below 50% in Bitcoin dominance is a reliable signal of altseason. When Bitcoin consolidates between $91,000 and $100,000, it can create ideal conditions for liquidity to flow into Ethereum and other altcoins.

Altseason Index: Data-Driven Measurement

Blockchain Center’s Altseason Index objectively measures market trends. It tracks the performance of the top 50 altcoins against Bitcoin. A reading above 75 indicates that most altcoins are outperforming Bitcoin. As of December 2024, the index has reached 78, indicating that the market is currently in the altseason zone.

History of Altseason: Past Periods and Triggering Factors

2017-2018: ICO Frenzy and the First Major Altseason

During this period, Bitcoin dominance fell from 87% to 32%, and altcoins experienced massive growth. The ICO boom propelled new tokens like Ethereum, Ripple, Litecoin, attracting huge speculative investments. The total crypto market cap soared from $30 billion to over $600 billion. Many altcoins reached all-time highs. However, regulatory pressures and failed projects abruptly ended this season in 2018.

2021: DeFi, NFT, and Meme Coin Era

At the start of the year, Bitcoin dominance dropped from 70% to 38%. Altcoin market share increased from 30% to 62%, doubling within a year. DeFi protocols, NFT projects, and meme coins defined this period. Selected altcoins saw remarkable gains, and the market cap exceeded $3 trillion by year-end.

2023-2024 Halving Period to Present

Crypto markets surged in anticipation of the April 2024 Bitcoin halving and spot Ethereum ETF approval. However, the character of this altseason has evolved differently from previous seasons. AI projects, GameFi applications, metaverse, and Web3 tokens attract intense interest.

The AI sector stands out: projects like Render (RNDR) and Akash Network (AKT) have recorded price increases exceeding 1,000%. In GameFi, platforms like ImmutableX (IMX) and Ronin (RON) have experienced revival. Memecoins have also evolved with AI integrations and improved tokenomics.

Particularly, the Solana ecosystem has seen a notable revival, with native memecoins increasing by 945%. These developments show that altseason now extends beyond DeFi and ICOs.

Market Status at the End of 2024: Institutional Maturity and Regulatory Opening

In the final months of 2024, the crypto market is reshaping with certain trends:

Institutional Entry: Over 70 spot Bitcoin ETFs have been approved, significantly increasing institutional participation. This injects confidence into the market.

Regulatory Environment: The election of crypto-friendly lawmakers and expectations of a more favorable regulatory climate under a potential Trump administration bolster market sentiment.

Market Cap in Billions: The global crypto market surpasses $3.2 trillion, exceeding previous records from 2021.

Bitcoin’s Psychological Levels: Since November 2024, Bitcoin has approached $100,000. This symbolic threshold has significantly boosted investor sentiment.

Phases of Altseason Development: Liquidity Movements

Altseason typically unfolds in four stages:

Stage 1 - Bitcoin Dominance: Capital continues flowing into Bitcoin, consolidating its dominance. Bitcoin trading volume increases, while altcoins remain stagnant.

Stage 2 - Ethereum Acceleration: Investors begin focusing on DeFi and Layer-2 solutions. The ETH/BTC ratio rises, and Ethereum’s price appreciates.

Stage 3 - Major Market Cap Altcoins: Established projects like Solana, Cardano, Polygon achieve double-digit gains.

Stage 4 - Full Altseason: Small-cap and highly speculative projects dominate. Bitcoin dominance drops below 40%, leading to parabolic gains.

How to Detect the Start of Altseason?

Several reliable indicators signal the presence of altseason:

1. Decrease in Bitcoin Dominance: Falling below 50% indicates increased altcoin activity. Historically, sharp declines signal the start of altseason.

2. ETH/BTC Ratio: As the Ethereum-Bitcoin price ratio rises, the altcoin market generally gains strength. This rising ratio often precedes broader altcoin rallies.

3. Altseason Index: Readings above 75 suggest active altseason.

4. Trading Volume Growth: Increased trading volume in specific sectors, such as (AI tokens, memecoins, etc.), indicates market confidence. For example, memecoins like DOGE, SHIB, BONK, PEPE, and WIF have recently seen sector-wide gains exceeding 40%.

5. Social Media Activity: Hashtags, viral content, and influencer discussions signal retail interest.

6. Market Sentiment: Shifts from fear to greed are positive signs for altcoins.

7. Stablecoin Liquidity: Rising USDT and USDC trading volumes facilitate easier entry into the altcoin market.

Practical Tips for Successful Trading During Altseason

In-Depth Research: Before buying any next altcoin season coins, research the project’s fundamentals, team, technology, and real use cases. Avoid chasing hype.

Portfolio Diversification: Fundamental for risk management. Distribute investments across different sectors and altcoins.

Realistic Goals: Altseason can be profitable, but don’t expect to get rich overnight. Market volatility is high, and prices can change rapidly.

Risk Management: Use stop-loss orders wisely, maintain a healthy risk-reward ratio, and avoid excessive leverage.

Risks in Altseason

High Volatility: Altcoins move much more volatile than Bitcoin, which can lead to significant losses. Illiquid markets also have high spread costs.

Hype and Speculation: Excessive excitement can artificially inflate prices and create bubbles.

Fraud Risks: Be cautious of rug pulls and pump-and-dump schemes.

Regulatory Uncertainty: Regulatory developments can significantly impact altseason. Positive regulations boost enthusiasm, while negative news can suppress markets.

Conclusion

Altseason offers real opportunities for informed investors. By gaining knowledge, diversifying portfolios, and applying solid risk management, investors can maximize profits during this period. Understanding the complex dynamics of the crypto market is key to successful altseason investing.