Altseason: What is it and how to trade during the altcoin growth wave

The cryptocurrency market moves in waves of activity, and one of the most anticipated phenomena for investors is the altcoin season. This phenomenon, when altcoins begin to significantly outperform Bitcoin in returns, opens unique trading opportunities. As of the end of 2024, the market is on the verge of major changes: favorable regulation is expected in the USA, institutional interest is growing, and the total market capitalization of crypto assets has reached a record $3.2 trillion.

What does altseason mean: Basic concepts

Altseason is a period in the cryptocurrency market when the total market capitalization of altcoins begins to dominate over Bitcoin during a bullish trend. In the past, this phenomenon was associated with simple capital rotation: investors withdrew funds from Bitcoin and invested them in alternative projects.

However, the market has evolved. Modern altseason is shaped by entirely different factors. CryptoQuant analyst Ki Yang Joo notes a fundamental shift: whereas previously the driving force was speculative rotation between trading pairs, today the key role is played by trading volume of altcoins against stablecoins (USDT, USDC). This reflects not just speculative interest, but real economic growth of altcoin ecosystems and influx of new capital.

Difference between altcoin growth periods and Bitcoin dominance

When altseason occurs, market attention shifts. Prices of alternative coins grow more aggressively, trading volumes increase, and retail speculation appears. During these moments, the Bitcoin dominance index, measuring its share in total crypto capitalization, begins to decline. Many altcoins reach all-time highs, often significantly outperforming Bitcoin’s own returns.

The opposite phenomenon is Bitcoin season, characterized by investors focusing on the main cryptocurrency. During these periods, altcoins often stagnate or lose value. Investors seek safety, preferring Bitcoin as “digital gold.” Bear markets especially amplify this effect: fear causes capital to concentrate in Bitcoin or stablecoins.

How altseason developed: History and transformation

From pair shifts to liquidity flows

In the 2017 and 2020 cycles, altseason was almost synonymous with capital rotation from Bitcoin to altcoins. When the main cryptocurrency’s price consolidated, traders began seeking profit in emerging projects. This period sparked the ICO boom in 2017 and DeFi summer of 2020, when the total crypto market cap soared from billions to trillions of dollars.

But the logic has changed. Analysts now look less at rotation between Bitcoin and altcoins and more at trading dynamics against stablecoins. Growing trading volume of altcoin-USDT pairs indicates inflow of new capital, not transfer of funds from one asset to another. Stablecoins have become the foundation of the modern altcoin market, providing liquidity and easing entry for new participants.

Role of Ethereum and megatrends

Ethereum traditionally leads at the start of altseason thanks to its developed ecosystem of DeFi applications and NFT projects. Analysts forecast that Ethereum’s momentum will continue to push other altcoins upward, especially when institutional investors begin diversifying portfolios beyond Bitcoin.

Projects like Solana and Ethereum attract increasing attention from corporate investors willing to take on additional risk for higher potential returns. This institutional movement is a fundamentally new factor for modern altseason.

Bitcoin dominance indicator as a signal

Analyst Rekt Capital identified a reliable historical signal: when Bitcoin dominance sharply drops below 50%, it usually signals the start of altcoin season. Observations show that Bitcoin consolidation in the range of $91,000–$100,000 often creates optimal conditions for altcoins to capture liquidity.

The altseason index from Blockchain Center provides a mathematical approach: if the index rises above 75 (measuring the performance of the top-50 altcoins relative to Bitcoin), it indicates a full-fledged altseason. As of December 2024, the index reached 78, indicating the market is already in an active growth zone for alternative coins.

Historical altseasons and key catalysts

2017-2018: The ICO era

During this cycle, Bitcoin’s dominance fell from 87% to 32%, while altcoins experienced explosive growth. The wave of token sales led to thousands of new projects. Total crypto market cap soared from $30 billion to $600 billion. However, regulatory pressure and a series of failed projects sharply ended this altseason in 2018.

2021: DeFi and NFT boom

Bitcoin dominance dropped from 70% to 38%, while the share of altcoins grew from 30% to 62%. This period was marked by explosive growth of decentralized finance, non-fungible tokens, and even memecoins. The total crypto market capitalization first exceeded $3 trillion. The movement was more powerful and lasted longer due to technological innovations and mass retail interest.

2023-2024: Institutional arrival

Bullish sentiment was driven by expectations of Bitcoin halving in April 2024 and approval of spot ETFs for Ethereum. But this altseason was different: instead of classic ICOs or DeFi, power was more broadly distributed — among AI coins, GameFi platforms, metaverse projects, and Web3 solutions.

AI sector showed extraordinary growth: coins like Render (RNDR) and Akash Network (AKT) soared over 1000%, fueled by demand for blockchain integration of artificial intelligence.

GameFi revived: platforms like ImmutableX (IMX) and Ronin (RON) attracted gamers and investors simultaneously, ensuring sustainable performance.

Memecoins evolved: starting as purely speculative tokens, they integrated utilities, including AI components. The expansion of memecoins beyond Ethereum (especially on Solana) demonstrated that the trend has captured the entire ecosystem.

From late 2024 onward: Market maturity

Several fundamental factors signal a long growth period:

Institutional adoption: over 70 spot Bitcoin ETFs received approval in 2024, opening the gates for corporate capital.

Favorable regulatory environment: election of pro-crypto legislators and expected changes in the USA promise less strict oversight.

Record market cap: global crypto capitalization surpassed $3.2 trillion for the first time, exceeding the 2021 peak.

Bitcoin approaching $100K: the main coin’s price neared a psychologically significant threshold, attracting mainstream attention.

These factors indicate a matured market with diversified investment opportunities.

Four phases of liquidity flow in altseason

Altseason typically develops in predictable waves:

Phase 1: Bitcoin dominance

• Capital concentrates in Bitcoin as a stable asset
• Indicators: rising dominance index, high BTC volumes, altcoin stagnation

Phase 2: Ethereum takes the lead

• Liquidity shifts to Ethereum and DeFi projects
• Indicators: rising ETH/BTC ratio, revival of Layer-2 networks

Phase 3: Rally of major altcoins

• Attention shifts to projects with established ecosystems (Solana, Cardano, Polygon)
• Indicators: double-digit growth of top altcoins

Phase 4: Small caps and speculative projects surge

• Bitcoin dominance drops below 40%
• Smaller altcoins show parabolic growth

How to recognize if altseason has started: Practical signals

Drop in Bitcoin dominance: historically, altseason begins with a sharp drop below 50%, though a more reliable signal is below 40%.

ETH/BTC ratio: rising Ethereum-to-Bitcoin price ratio serves as a barometer. When Ethereum starts to outpace Bitcoin, a broader altcoin season usually follows.

Altseason index: a value above 75 from Blockchain Center indicates a full altseason.

Growth in trading volumes: increased activity in altcoin-stablecoin pairs signals influx of new capital. Researchers at K33 note that sectoral growth of 40%+ in memecoins (DOGE, SHIB, BONK, PEPE, WIF) often precedes a broader altcoin season.

Similarly, the AI sector shows steady growth with projects like Render and NEAR Protocol, creating momentum for a wider altseason.

Market sentiment: shifting from fear to greed in sentiment indices indicates a bullish period.

Stablecoin liquidity: availability of USDT, USDC, and other stablecoins is critical. More trading pairs with stablecoins make it easier for capital to enter and exit, stimulating activity.

How to trade effectively during altseason

In-depth research: before investing in an altcoin, study the project, its team, technology, and market potential. Don’t jump on hype without understanding fundamentals.

Portfolio diversification: allocate funds across several promising altcoins and sectors. This reduces concentration risk.

Realistic expectations: altseason can be profitable, but it doesn’t guarantee quick riches. The market is volatile, and prices can fluctuate sharply.

Risk management: set stop-loss orders, maintain a balanced risk-reward ratio. Professional traders always have an exit strategy.

Risks of altseason: What to watch out for

Extreme volatility: altcoins are more unstable than Bitcoin. Prices can drop 50% in days. Spreads on illiquid pairs also increase costs.

Hype and speculation: uncontrolled interest can inflate prices into a bubble that then bursts with catastrophic consequences for investors.

Fraud and rug pulls: developers sometimes abandon projects after attracting investments. Beware of pump-and-dump schemes that artificially inflate prices before crashing.

Regulatory changes: legislative restrictions can sharply alter market dynamics. For example, regulatory pressure on ICOs in 2018 ended the previous altseason.

Regulatory changes and their impact on altseason

Regulation has a dual effect. Strict measures (bans on ICOs, restrictions on crypto exchanges) usually dampen enthusiasm and cause corrections. Conversely, clear legal frameworks and favorable legislation stimulate interest.

A prime example is the approval of spot Bitcoin ETFs by the SEC in 2024. This decision opened the largest financial channels for institutional investors, significantly improving market sentiment and laying the groundwork for the current altseason.

Jurisdictions providing clear legal frameworks for crypto assets see increased investor interest and ecosystem development. Therefore, monitoring global regulatory developments is an essential part of successful altcoin trading.

Conclusion

Altseason is a window of opportunity that requires both courage and discipline. By staying informed, diversifying investments, and applying strict risk management, traders can maximize gains during altcoin periods. The key to success is a deep understanding of market dynamics, constant monitoring of key indicators, and readiness to adapt to changing conditions.

Additional materials for study

• Best trading strategies in a bullish crypto market
• First steps in spot trading: core concepts
• Automation in trading: bots and their role in crypto trading
• Diversification of a crypto portfolio: balancing risk and reward
• Dollar-cost averaging (DCA): a strategy for long-term accumulation
• Risk management in crypto trading: a practical guide
• Market sentiment analysis: how to read crypto trends