The altseason, or season of altcoins, is a term used in the cryptocurrency market to describe a period in which altcoins - alternative cryptocurrencies to bitcoin (BTC) - experience a significant increase in their value and performance, frequently surpassing bitcoin itself. Altseasons are usually accompanied by trends such as DeFi, NFT or memecoins that capture attention.

1. "Altcoin Season Index" considers that there is altseason when most altcoins outperform BTC.

1. It usually follows a Bitcoin rally, when its price stabilizes and higher returns are sought.

1. A fall in the Bitcoin domain is a classic indicator of altseason.

1. Altseasons can last from weeks to months, depending on market conditions.

1. Altcoins are usually more volatile than Bitcoin, which amplifies both profits and risks.

The altseason, or season of altcoins, is a term used in the cryptocurrency market to describe a period in which altcoins - alternative cryptocurrencies to bitcoin (BTC) - experience a significant increase in their value and performance, frequently surpassing bitcoin itself.

Where does the term altcoin come from?

The term "altcoin" comes from the combination of the English words "alternative" and "coin", and began to be used in the cryptocurrency community to refer to any cryptocurrency other than Bitcoin. Its origin is linked to the emergence of the first alternatives to Bitcoin, such as Namecoin (launched in April 2011) and Litecoin (launched in October 2011), which places its probable appearance around 2011. Its origin is not credited to a single person, but rather to a term created collectively in forums such as BitcoinTalk.

The altseason is usually motivated by the desire of investors to take advantage of high-performance opportunities. Although Bitcoin is considered the main and most stable asset in the world of cryptocurrencies, altcoins, being more volatile, can offer higher returns in a short period of time. However, this greater opportunity is also accompanied by a greater risk due to the instability of these currencies.

How is the altseason defined?

The altseason is defined as a period in which altcoins, that is, any cryptocurrency other than Bitcoin, experience a more aggressive growth than the main cryptocurrency. This, in addition, is generally marked by a decrease in the dominance of Bitcoin (BTC.D), a metric that measures the percentage of the total market capitalization that Bitcoin represents.

This phenomenon usually lasts from a few weeks to months and is characterized by high volatility and opportunities for significant profits, but also by considerable risks.

When does the altseason occur?

The altseason does not have a predictable schedule, but it usually starts when investors rotate capital to altcoins. It usually follows the Bitcoin halving (every 4 years), with examples in 2017 (post-halving 2016) and 2021 (post-halving 2020).

Beyond this general form of altseason, there are a series of characteristics that traders seek to identify in the ecosystem to know whether or not a period for alternative cryptocurrencies has begun.

These are:

1. Rapid Price Increases: Altcoins in these periods usually double or triple their value in weeks, like Ethereum in 2017 with a return of 36.018%.

1. High Volatility: Prices can fluctuate drastically, with risks of rapid falls.

1. Investment Diversification: Investors move funds from Bitcoin to altcoins, looking for higher returns.

1. FOMO effect: The fear of missing something (FOMO) amplifies investments, with a waterfall effect that raises prices.

1. Emerging Trends: This period is often driven and dominated by new technologies, such as ICO's in 2017-2018 and DeFi in 2020-2021.

1. Manipulation Risk: Some altcoins can be victims of "pump and dump" schemes, especially small projects.

What factors influence the Altseason?

The factors that trigger or influence an altseason are varied and are usually combined to create the ideal conditions. These are the main ones:

1. Increase in greed: With the bullish bitcoin markets, there is usually an increase in greed among cryptocurrency traders, who seek higher returns. This ends up generating that capital moves to other market options, decreasing the dominance of bitcoin and giving prominence to altcoins.

1. Post-halving cycles: After a Bitcoin halving (every 4 years), the interest usually moves to altcoins. This event, of decrease in bitcoins issued on the network, already generates expectations in the market and historic price increases in bitcoin; so it promotes the formation of states of greed among investors.

1. Market narratives: Trends such as DeFi (2020) or NFTs (2021) generate enthusiasm and attract investment in specific altcoins.

1. FOMO (Fear of Missing Out): The fear of losing quick profits drives massive purchases in altcoins.

1. Technological development of cryptocurrencies: Updates or launches increase interest in alternative projects and their capacity for growth.

1. Favorable macroeconomic conditions: Factors such as inflation or low interest rates favor speculation in the stock markets and also in cryptocurrencies. This is mainly due to the increased appetite for the risk that investors have when they can take out loans that are not so expensive.

1. Events outside the cryptocurrency market: Regulations, institutional adoption or crises can delay or intensify the altseason. Therefore, it must be taken into account that altseasons are unpredictable and that there is no magical way to know when and how they will happen.

What indicators help to know when the altseason is?

There are several tools that help identify when an altseason may be starting. One of the main indicators is the dominance of Bitcoin (BTC.D), which measures the percentage of the total market capitalization that Bitcoin represents. When this dominance decreases, generally below 50%, it indicates that investors are moving capital towards altcoins, which is a key sign of altseason.

Another direct indicator is the altcoins seasonal index, provided by CoinMarketCap. This index shows the percentage of the top 100 altcoins (excluding stablecoins like Tether) that have surpassed Bitcoin in performance during the last 90 days. The general rule is that, if more than 75% of these altcoins are surpassing Bitcoin, it is considered that there is altseason.

The volume of operations is also a key indicator. An increase in the trading volume of altcoins compared to Bitcoin may indicate a growing interest in these currencies. This can be monitored in CoinMarketCap and CoinGecko, where the total volume of 24 hours is provided for all markets. To calculate the relative volume of altcoins, you can subtract the volume of Bitcoin from the total.

Another useful indicator is the TOTAL2 index, which represents the total market capitalization excluding Bitcoin. This can be calculated using data from CoinMarketCap or CoinGecko by subtracting the Bitcoin market capitalization from the total. Some experts point out that an altseason begins when Bitcoin's dominance reaches a local peak and TOTAL2 reaches a new all-time high.

In addition, the relative performance of altcoins compared to Bitcoin can be monitored through peers such as ETH/BTC on platforms such as TradingView. If these pairs show uptrends, it indicates that altcoins are outperforming Bitcoin, which is consistent with an altseason. However, this method is more specific to individual altcoins and does not capture the overall market as well as the aforementioned indices.

How does bitcoin behave during the altseason?

During the altseason, Bitcoin's behavior tends to be more stable and less explosive than that of its competitors. This phenomenon occurs because many investors move their capital from bitcoin to altcoins, seeking to take advantage of the quick profits they offer. As a result, Bitcoin usually enters a phase of consolidation or moderate growth, while altcoins register much more pronounced rises.

As we briefly mentioned at the beginning of this article, a key indicator of Bitcoin's behavior during the altseason is the dominance of Bitcoin (BTC.D), which measures its percentage within the total capitalization of the cryptocurrency market. In these periods, dominance usually decreases significantly, reflecting the flow of capital towards altcoins. However, this reduction does not always mean that the price of Bitcoin falls; in many cases, it remains stable or continues to rise slowly, since it is still seen as a store of value by the most conservative investors.

And it is that, in terms of price, Bitcoin tends to lateralize (move in a stable range) or to register limited increases during the altseason, in contrast to altcoins, which can experience drastic movements. This relative stability is because Bitcoin attracts investors who prefer to avoid the high volatility of altcoins. Although its growth is more contained, it remains a fundamental pillar of the market, and any sudden movement in its price, whether up or down, can influence altcoins and the development of the altseason.

Finally, during the altseason, Bitcoin exhibits lower volatility compared to altcoins, which can register extreme rises and falls. In conclusion, during this period, Bitcoin "cedes the stage" temporarily to altcoins, consolidating or growing moderately, with a reduced dominance, but without losing its key role. Its stability and general health continue to be decisive for the duration and success of the altseason, since an abrupt drop in its price could end the euphoria cycle of altcoins.

What are the differences between altseason and bull market?

The altseason and the bull market are two different concepts in the world of cryptocurrencies, although they can sometimes overlap. A bull market refers to a general period in which the prices of cryptocurrencies, including Bitcoin and altcoins (alternative cryptocurrencies to Bitcoin), are rising in a sustained way. This phenomenon is usually driven by factors such as mass adoption, positive news, technological improvements or favorable macroeconomic conditions. It also affects the entire cryptocurrency market.

On the other hand, the altseason is a more specific period in which altcoins experience a significant increase in their value, generally surpassing that of Bitcoin in terms of percentage return. During the altseason, the focus is on altcoins, which capture the attention of investors and usually offer faster and more pronounced gains than Bitcoin.

A key difference between the two is the relative behavior of Bitcoin and altcoins. In a general bull market, Bitcoin can be the leader of the rally or at least rise along with altcoins, maintaining or even increasing its dominance. In contrast, during the altseason, altcoins tend to outperform Bitcoin, which often results in a decrease in Bitcoin dominance.