What is altcoin season?Altcoin season is when the price of majority alternative coins rises. This takes into consideration the top 100 altcoins currently listed on Coinmarketcap. The term became popular when altcoins started rising in 2016 – 2017.
Altcoins are known to make quite big upward moves and many have outperformed Bitcoin. Should Bitcoin not perform as expected (moving sideways for a long period), a lot of investors tend to sell their Bitcoin for altcoins. This makes the price of altcoins go up and traders make money with altcoins. When Bitcoin has risen sharply and then becomes stagnant, it gives altcoins a chance to catch up. A general rule of thumb is that when the price of Bitcoin goes up, alts bleed and vice versa. However, it is important to remember that the dollar price of altcoins is connected to Bitcoin.
How to distinguish between altcoin season and pump and dumpThere is a big difference between altcoin season and a pump and dump so don’t get confused. A pump and dump scheme is when a group of crypto traders or a bot inflates the price of a specific coin so that those who are in on the deal can make a quick profit. It’s an artificial and misleading rise in the price of a specific coin. Whilst this is illegal on the stock market, no clear regulation is currently preventing this scheme in the crypto market.
In the event of altcoin season, the most prominent altcoins will gain value and not just a few random coins. Altcoin season doesn’t last long but still presents a profitable trading opportunity.
What triggers altcoin season?Whilst one simply cannot predict when the market will rise, you can look at the ‘Market Cap Others Dominance’ as to get an idea of when to expect altcoin season.
Check out the Marketcap Dominance Charts on Coinmarketcap.
This chart shows you how dominant Bitcoin and the altcoins are, percentage wise. It means that majority of money that is coming into the market is going into Bitcoin or the altcoins. When Bitcoin’s dominance is high, for example 70%, altcoin dominance will be lower. Should Bitcoin’s dominance decrease, altcoins may have a nice spike in price.
Back in March 2017, altcoin season took off with a blast as several cryptos increased by 50 – 100% in a matter of days. Ethereum, for example went from $10 to $1 400. It is interesting to note that right before the 2017 altcoin season kicked off, Bitcoin’s dominance was at 70%. Today, Bitcoin’s dominance is also around 70%. Will history repeat itself?
The best advice is to stock up on your favourite altcoins on AltCoinTrader that currently has 22 top notch altcoins listed. Keep an eye on the dominance charts to see when a breakout may be due.