In the Crypto-world, we can divide the market cycle into Bitcoin season or Altcoin season. We either have the money flowing into Bitcoin or Altcoins. There are these occasions where both are gaining in price, but we need to be able to distinguish between those two key phases of the market, and be able to notice in which one we are – or towards which of them we are moving. To help with that, lets analyze the ways in which altcoins grow in price:
- When Altcoins stay at the same price in BTC value, but Bitcoin in rising, then Altcoins also rise in dollar value. If alts fall satoshi-wise, but at a slower pace than Bitcoin is gaining in dollar-value, then altcoins are also growing in dollar value.
- When Altcoins start outperforming in BTC value and Bitcoin does not fall, or falls at a slower pace, then alts are gaining momentum.
Having this in mind, most of the times, when Bitcoins starts rising, people take this as a signal to sell their Altcoins and stay in Bitcoin in order to maximize their gains. This is what we call “Bitcoin season”. When Bitcoin has had its run and starts cooling of or falling after a rise, we see that people who have made their gains in Bitcoin want to increase their portfolio and start buying Altcoins. In this case we have a lot of Altcoins gaining in value at the same time – often even some that have no fundamental value, and we call this “Alt season”.
One way to determine whether we are in an “Alt season” or “Bitcoin season” is to check the Bitcoin dominance chart, see the general direction and make our analysis:
Another indicator is provided to us by www.blockchaincenter.net. They have created this chart that shows the “Alt season” graph in terms of the top Altcoins outperforming BTC:
How do we know if it is altcoin season, according to this chart? If 75% of the Top 50 coins performed better than Bitcoin over the last 90 days, it is Altcoin Season. This means that 38 of the other projects need to have outperformed BTC in terms of price growth. As of today, 21.03.2021, we have 36 altcoins outperforming BTC, which means that we are quite close to going into an Altcoin season:
Historically we have touched the alt season more often than not when in the process of climbing. After some period of consolidation, we are currently steadily moving into this phase once again, unless a major event does not disrupt this trend. When entered, most peaks have lasted a short amount of time, forming a pointy top, followed by a sharp decline.
During the Altcoin season, you can expect many coins to go parabolic, as funds are transfered to them from BTC, and you can expect huge gains in short periods. You need to be following the market closely and it is a good practice to take profits from your winning altcoin positions. But be careful and don’t let greed get in the way of you winning – if you hold for too long, we may exit the altcoin season and you may be left with a tremendous loss in your altcoin portfolio – or if not, you may have missed on taking profit at the opportune moment! Make sure that you do your own research, design your own strategy and target prices, and stick to them!