Altseason: what is it and how to make money on it

Alt season, or altcoin season, is a phenomenon that attracts special attention from traders and investors. But what is alt season? It is a period when alternative cryptocurrencies, or altcoins, show significant growth, often outperforming Bitcoin in terms of profitability. After reading this article, you will understand what alt season is, how it works, how to recognize it, and what strategies will help investors make the most of this period in the crypto market.

What is this?

Alt-season is a period in the market when altcoins (all cryptocurrencies except Bitcoin) show rapid price growth, often surpassing Bitcoin in profitability. Alt-season - what is it? Essentially, this is the time when capital flows en masse from Bitcoin to alternative digital assets, which leads to their significant growth.

Altcoins are short for "alternative coins". They include cryptocurrencies such as Ethereum, Ripple, LiteCoin, Solana, and many others. These assets often attract investors due to their growth potential, especially during periods when Bitcoin stabilizes or reaches new highs.

How does the Alt Season work?

Alt season usually occurs after a significant rise in Bitcoin. When the first cryptocurrency reaches new price heights or stabilizes, investors begin to look for new opportunities to make a profit. Altcoins tend to have a lower price and more room for growth, which makes them attractive for investment.

A key sign of altseason is a decline in Bitcoin Dominance, a metric that measures Bitcoin's share of the overall crypto market cap. When this metric drops, it often signals the start of altseason as capital flows into altcoins, increasing their trading volume and market cap.

How to recognize an altseason?

Investors use various tools and metrics to determine when altseason has begun. One key one is the altseason index, which analyzes the performance of the top 100 altcoins compared to Bitcoin over the past 90 days. If more than 75% are outperforming Bitcoin, it is considered an altseason indicator.

Other signs include:

• Bitcoin Dominance Decline: Drop Below 50% Could Indicate Season Beginning

• Growth of Altcoin Capitalization: Increase in the TOTAL2 index (sum of capitalizations of the top 125 coins excluding Bitcoin).

• Increasing trading volume: Increased activity in the altcoin market indicates growing investor interest.

The Altseason Index, such as that on the CoinMarketCap platform, provides visual charts and metrics that help traders track market trends and assess whether the market is in an altseason or Bitcoin dominance phase.

Historical examples of altseason

The cryptocurrency market has experienced several notable altseasons, the most striking of which were the periods of 2017-2018 and 2020-2021.

2017-2018

In 2017, after Bitcoin reached an all-time high of around $20,000, the alt season began. Bitcoin dominance fell from 96% in March 2017 to 36% in January 2018. The total capitalization of altcoins grew to $470 billion. For example, Ethereum grew from $8.26 in early 2017 to $1,398 in January 2018, an increase of more than 16,900%, more information on CoinMarketCap. Other altcoins such as Ripple and Litecoin also showed significant growth.

This altseason has been associated with the ICO (initial coin offering) boom, when many new projects raised capital by creating their tokens.

2020-2021

After the crypto market crash in March 2020 due to the COVID-19 pandemic, a recovery has begun. Bitcoin reached new highs, and an alt season has followed. Ethereum, for example, rose from $88.50 in March 2020 to over $4,000 in 2021, peaking at $4,840 in November 2021. For more information, visit investing.com . This period also saw a boom in the DeFi (decentralized finance) and NFT (non-fungible token) sectors, which contributed to the growth of altcoins such as Solana, Polkadot, and Cardano.

Strategies for investors during the altseason

Alt-season offers unique opportunities to make profits, but requires caution due to high volatility. Here are some strategies that can help:

• Portfolio Diversification: Invest in multiple promising altcoins to reduce risk and increase potential returns.

• Fundamental Analysis: Study projects, their teams, technologies and market potential.

• Technical Analysis: Use charts and indicators to determine entry and exit points.

• Risk Management: Set stop losses and take profits at certain levels to protect your capital.

It is important to remember that the alt season can be both profitable and risky. Altcoins can rise quickly, but also fall rapidly, so careful analysis and discipline are necessary.

Conclusion

Alt season, or altcoin season, is an exciting time in the crypto market that can bring significant profits to investors. Understanding what alt season is, how it works, and how to recognize it using the alt season index is key to successful investing. By using the right strategies and tools, investors can maximize their chances of success. However, be aware of the risks and always do your own research before making investment decisions.

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