What is Altcoin Season & When does it arrive?

As the crypto market continues to scale new heights, traders, analysts and crypto enthusiasts can now be seen throwing spotlight on the ‘Altcoin’ season. People often get confused – especially new investors – with the term Altcoin, which is not a cryptocurrency as it describes itself. When a novice investor visits any site for crypto related tips, they are most likely to find jargon when it comes to predictions for Altcoin season, leaving them even more flummoxed.

So if you are new to this domain and are looking to clear the clutter around Altcoin season, this article is just the right place for you as we are about to elaborate on the terminology and its aspects and impacts.

What are the Altcoins?

Before we dwell upon Altcoin season, it is pertinent that we are first acquainted with the term Altcoin. In the world of cryptocurrency, Altcoin or alternative coin is a term used to refer to crypto assets other than Bitcoin.

In the initial years of cryptocurrency, there were few altcoins like Ethereum, Ripple, Monero, Dash and others. However, the number of altcoins has grown exponentially in recent years as the crypto expansion continues. The concept of Altcoin distinguishes Bitcoin and other crypto assets on the basis of market capitalization where Bitcoin generally dominates almost 50% of the whole market.

What is Altcoin Season?

Altcoin Season, or also called Altseason, is a period in the cryptocurrency market where Altcoins experience a sharp increase in market price. It generally occurs after Bitcoin reaches new highs and the cryptocurrency market sees huge inflows. During the Altcoin season, Bitcoin price usually stays stable at a level while several crypto assets spiking over 100%, 200% or even more in a shorter time.

While seeing aggressive movements from Altcoins, the dominance of Bitcoin (BTC.D) often records sharp decreases in the overall crypto market capitalization. This market period of Altcoin Season tends to bring flourishing opportunities for Altcoins to grow and expand their existence in the vast crypto ecosystem. While different crypto assets have different utilities – such as payments, rewards, governance, etc – the most astonishing gains follow a particular narrative in the Altcoin Season.

For instance, the past Altcoin Season had an ongoing narrative of Ethereum scaling where several native tokens of layer 2 networks and scaling applications witnessed bustling price gains. During this season, which happened in mid 2020 to late 2021, Polygon (MATIC) price surged more than 1300% within months.

The following chart shows growth of Altcoin market cap that accelerated from 2020 and peaked to the highest level in December 2022. It suggests that the Altcoin market cap grew from barely $200 billion to over $1.7 trillion, recording the prosperous growth of 750% in the period.

Altcoin Market Cap: May 2024 – TradingView

When is the next Altseason?

Altcoin seasons are not scheduled like Bitcoin halving nor can it be predicted with 100% certainty. It is a market-driven time of period that depends on a variety of factors such as the cryptocurrency market inflows, ongoing market trends, and most importantly Bitcoin dominance. A common factor found in the past two Altcoin seasons was Bitcoin reaching a new high and consolidating around that level.

Here, we can say that Bitcoin provides a ground for Altcoins to accompany its price gains and push them upwards. This momentum leads Altcoin dominance higher while rebalancing the crypto market cap by decrease in Bitcoin dominance. The following chart visualizes the pattern seen in the past two Altcoin Seasons where Bitcoin dominance decreases sharply during the Altcoin Season and it steadily recovers for the next cycle.

Bitcoin Dominance (BTC.D): May 2024 – TradingView

As the earlier this year in March, we can expect that the new Altcoin Season is almost here. This current Bitcoin dominance also indicates that it has reached the seasonal high. However, Bitcoin is yet to reach its potentialized gains that it usually attains following the halving. Amid this uncertainty, several analysts have predicted that the next Altcoin Season will probably take place during the end of 2024 to early 2025 onwards.

What Fuels Prices in Altcoin Season?

In Altcoin Season, the prices of Altcoins are mainly fueled by the fresh inflows thaat enters into the crypto market during the bullrun. As mentioned above, gains in Bitcoin price attracts masses to the cryptocurrency market, most of the new investment straight goes to Altcoins. Moreover, the liquidity rotation from Bitcoin to Altcoin also plays a major role in Altcoin market spikes. Most of the investors who profit from Bitcoin, are tends to direct their funds into small cap Altcoins. The market narrative also provides a significant fueling in Altcoin prices where most of the VC investments flows in the meantime.

Altcoin Season History

The crypto market has been through two Altcoin Seasons, first occurred in 2017-18 and the second and last occurred in 2020-21.

Altcoin Season 2017 – 2018

In this first Altcoin Season, Bitcoin dominance took a huge hit, shrinking to 38% from the high of 86% in months. At the time, the ICO trend and the origination of new blockchain networks was happening in full swing. The most beneficial Altcoin during this Altseason was EOS which raised $4 billion in ICO presale and reached a market cap of $16 billion from the initial $200 million.

Altcoin Season 2020 – 2021

The second Altcoin season brought millions of new investors into the crypto market following the covid pandemic. Altcoins such as MATIC, SOL, AVAX, DOT, etc. and the novel concept of NFTs emerged as an outstanding investment opportunity during this period. The Altcoin market cap surged from $200 billion to $1.6 trillion from this Altcoin Season of 2020 to 2021.

Is the Next Altcoin Season in 2024?

While it is not determined when the next Altcoin Season will arrive, market speculators are predicting the late 2024 to be the next acceleration period. However, the recently changed market dynamics have failed a number of speculations that were based on historical data. A key point in deciding the incoming Altcoin Season will be the Bitcoin price that has become very volatile in the past few months. The next Altcoin Season is expected to bring massive gains in the Altcoin market and lead it to a valuation of over $3 trillion.