Learn what you need to know about the altcoin season index and how it helps predict when altcoins outperform Bitcoin.
The altcoin season (also called alt season) index compares altcoins’ performance against Bitcoin to determine whether they have surpassed the leading cryptocurrency within a given time frame.
Bitcoin Season vs Altcoin Season
Bitcoin season describes the times when BTC’s price rises significantly and outperforms that of other cryptocurrencies. Following the introduction of multiple Bitcoin ETFs, Bitcoin initially reached its all-time high in March 2024.
Then, after the US elections, it rose to $109,079.00. According to on-chain data, the subsequent surge to its highest point further solidified its dominance, which currently stands at just over 60%.
However, the altcoin season happens when altcoins outperform Bitcoin in market capitalization and price growth. Altcoin season is marked by increased volatility and trading activity, whereas Bitcoin season is frequently linked to a more stable market environment.
Past Altcoin Seasons
Numerous altcoins have experienced incredible price spikes in previous seasons, with some seeing exponential increases quickly. Notable alt seasons happened between 2020–2021 and 2017–2018.
2017–2018
The drop in BTC’s dominance from nearly 86% in 2017 to about 39% in early 2018 was a boost for this altcoin season. Some months later, Bitcoin’s value dropped from a record high of over $20,000 to less than $6,000.
When the ICO (initial coin offering) business boomed in 2017–2018, other cryptocurrencies began to outpace Bitcoin. During this period, numerous blockchain initiatives started ICOs to raise money in exchange for their tokens.
Among them is EOS, which had one of the most profitable presales in history, raising almost $4 billion. Another altcoin that did well during this time was Tezos, which raised $232M for its first coin offering.
Also read:2020–2021
The coronavirus epidemic coincided with the 2020–2021 altcoin season when cryptocurrency enthusiasts and retail traders searched for alternatives to Bitcoin as investments. As a result, contemporary meme coins emerged, with Shiba Inu and Dogecoin experiencing historically high growth rates.
Since then, there have been multiple memecoin super-cycles in which the meme coin sector notes better performance than the overall crypto market. Additionally, the rising popularity of non-fungible tokens (NFTs) stimulated alt season during this period.
Throughout this period, the market cap of altcoins quadrupled from 30% to 62%, while Bitcoin’s dominance fell from 70% to 38%.
Indications Of a New Altcoin Season
Recognizing the start of an alt season necessitates a thorough comprehension of market trends and cycles.
- An increase in the dominance of altcoins
A noticeable rise in the altcoin dominance is one of the primary markers that mark the beginning of an alt season. The market cap of all cryptocurrencies, except Bitcoin, as a percentage of the overall cryptocurrency market cap, is known as altcoin dominance.
When altcoin dominance increases, it indicates a possible change in market sentiment toward altcoins and the start of the altcoin season. This implies that cryptocurrency investors are increasingly investing in these alternative cryptocurrencies.
- Increasing Trade Volumes
An increase in the trade volumes of different altcoins is another crucial indicator that the altcoin season has begun.
- Altcoin Season Index
Specialized indices are available on specific cryptocurrency analytics platforms to monitor and assess altcoins’ performances compared to Bitcoin. For instance, the altcoin season index analyses the data for the top 50 altcoins, including their price fluctuations.
The altcoin season is generally considered to have begun when the index is 75% or above.
Breakouts in Coin Prices
Lastly, notable uptrends in the prices of several altcoins are a good sign of the start of an altcoin season. Solana (SOL) is an excellent illustration. Its price broke out of the $200 barrier level in March 2024.
However, its price rapidly dropped and remained much below its record high of $260. Early warning signs of an upcoming altcoin season might be found by monitoring price breakouts similar to those of Solana and other bullish patterns.
Final Thoughts
Investors must exercise caution and perform thorough research to avoid losing their funds in this highly volatile market. Hence, they can profit from the next alt season.
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