What is an altseason?

The cryptocurrency industry is known for its volatility and market cycles, one of which is known as the altseason. This phenomenon can be critical for both experienced and beginner investors.

This is because it represents a time when enormous profits can be obtained in currencies other than Bitcoin. But it also represents an enormous risk due to the tremendous volatility to which many of the altcoins that are affected by this phenomenon are subjected.

For that reason, in this article, we will explore what an altseason is, how it occurs, its different phases and how you can detect it, in order to make the best decisions when said opportunity arises.

What is an altseason and how is it defined?

When we talk about an altseason, we are referring to a period in which alternative cryptocurrencies, known as altcoins, experience significant growth in their value relative to Bitcoin and the US dollar or stablecoins such as USDT or USDC.

During an altseason, it is common to see that many altcoins (e.g. Solana) reach new all-time highs (All Time High or ATH) and in most cases, exceed the percentage of growth and profitability that Bitcoin offers at that time. Certain moment.

The reasons behind an altseason are varied and can include saturation of the bitcoin price, causing investors to look for other assets to generate higher returns, the launch of new technologies within altcoin projects, significant partnerships, or a change in regulation that favors cryptocurrencies in general.

How does an altseason occur in the cryptocurrency market?

Considering the above, an altseason generally follows a Bitcoin growth season. This occurs because Bitcoin's growth potential is reduced and the profits made can be transferred to altcoins in search of additional profits.

This is especially true as we start to see a decline in Bitcoin dominance and start to see increases in altcoin capitalization. All this due to the movement of investors towards altcoins, which creates a growing demand effect that drives prices upward until the flow of capital ends.

Phases of an altseason

The process that leads to an altseason can be divided into several phases, with very clear effects. These phases would be:

Phase 1

This first phase occurs after significant growth in Bitcoin, generally when it manages to reach all-time highs. At this point, Bitcoin begins a price correction, and that is when investors look for other currencies to trade with, trying to maximize their profits.

For example, when Bitcoin begins a price correction and stabilizes, it is common to see Ethereum begin to show impressive growth, especially if during those moments, the project carries out updates and relevant news arrives that mobilizes the community.

Phase 2

When Ethereum reaches a new high (ATH or within the time period examined), a price consolidation process then begins. At this point, the value of ETH is no longer growing with the same explosiveness, and this causes traders' attention to shift to the rest of the altcoins.

The first to react at this point are the cryptocurrencies in the Top 20 by capitalization, which begin to rise rapidly and whose effect (the rise) begins to reach more and more coins (generally an altseason significantly affects the Top 100 coins ).

Phase 3

Already at this point, the main altcoins complete their upward movements, and the rest of the altcoins continue their process of growth and price consolidation. However, at this point you must be very attentive, since most of these projects will have a sudden correction and you must be clear about your strategy to avoid being affected by this movement.

Tips to detect an altseason

Now, to detect an altseason, it is not necessary to take into account complex processes or market indicators. In fact, the easiest way to detect whether or not you are in an altseason is the well-known Altcoin Season Index (ASI). This is a market indicator that shows the percentage of altcoins in the Top 50 by market capitalization that have surpassed BTC in percentage growth over the last 3 months. When you are in the presence of an index above 75%, then you have the signal that indicates that you are in an altseason.

Other indicators that can help you detect an altseason are:

• BTC Dominance (BTC.D). In this case you must be attentive to the decrease in Bitcoin dominance, since a drop in this level will be reflected in the increase in altcoins (both up and down) and, therefore, you will be facing an altseason.
• ETH/BTC ratio. This other indicator can help you detect when the Bitcoin Season ends and when the Ethereum Season (the revaluation of Ethereum) begins to increase. At this point, the revaluation of Ethereum generally triggers an altseason so it is another good indicator to detect these types of events.
• Fear and Greed Index (Greed and Fear Index). This indicator is well known in the community as it helps gauge market sentiment. Extremely high greed values ​​can indicate the beginning of the main phase of a bull market and altseason.
• Capitalization of Stablecoins. This is another well-known indicator, since an increase in the capitalization of stablecoins can positively affect the season of Bitcoin and altcoins, this because it increases liquidity and facilitates the flow of capital between assets.

As you can see, there are several indicators and means with which to detect an altseason, but like everything in the markets, the best guide is experience and visualizing them correctly. Hence, the best way to detect an altseason is to carefully analyze the cryptocurrency market and use various financial indicators.

That said, always keep in mind that, while altseasons can present significant profit opportunities, they also come with associated risks. Hence, you should do due diligence and not rely exclusively on speculation. Plan your operations well and always maintain a flow of information to help you make the best decision at all times.