The Path to Altseason: Understanding the Cyclical Movement of the Crypto Market

The cryptocurrency market experiences distinct cycles and activity phase transitions similar to traditional financial sectors. Within these cycles, a particularly notable phenomenon emerges for participants investing in Bitcoin alternatives: altseason. As of December 2024, the return of Trump to the presidency and the associated expectations of crypto-friendly policies are exciting market participants. This development follows the Bitcoin halving in April 2024 and the approval of spot Bitcoin/Ethereum ETFs. Among global investors, strong expectations have formed that the path to altseason has shortened and that a clear altseason period may begin soon.

What is Altseason: Basic Concepts

Altseason (Altcoin Season) is defined as a period during a bull market when the total market capitalization of alternative cryptocurrencies surpasses that of Bitcoin. In past cycles, the movement of capital from Bitcoin to altcoins was prominent during altseason, but in recent years, it has gained different dynamics.

As stablecoin liquidity increases, the triggers for altseason also change. Previously, capital directly shifted from Bitcoin to altcoins; today, rising trading volumes against stablecoin pairs indicate real market growth and increased institutional participation. Stablecoins like USDT and USDC have become the backbone of modern altcoin markets, providing more fluid entry and exit points for investors.

The Relationship Between Altseason and Bitcoin Dominance

During altseason, the market focus shifts from Bitcoin to alternative cryptocurrencies. The most prominent indicator accompanying this shift is the decline in Bitcoin dominance. Bitcoin dominance refers to Bitcoin’s share of the total crypto market capitalization, and historical data shows that a drop below 50% is a reliable signal of the start of altseason.

During altseason, altcoins tend to outperform Bitcoin. This is driven by speculative trading activity, new project launches, technological breakthroughs, and increased risk appetite among market participants.

Conversely, during Bitcoin season, the dynamics are the opposite: Bitcoin dominance rises, investors move toward safer assets, and interest in altcoins wanes. When market uncertainty or downturns occur, participants often prefer Bitcoin or stablecoins to avoid risk.

The Evolution of the Altseason Journey: Market Maturity

Change in Liquidity Sources

In previous crypto cycles, altseason began with Bitcoin price consolidation. Traders shifted their funds into altcoins seeking high returns. The ICO boom of 2017 and the DeFi craze of 2020 are prime examples of this trend.

Analysis by CryptoQuant CEO Ki Young Ju reveals a radical change in altseason triggers. Today, trading volume against stablecoin pairs plays a more critical role than capital rotation. This shift reflects a more robust market infrastructure and increased institutional participation.

The Leading Role of Ethereum and Institutional Impact

Ethereum typically leads during altseason periods. The growth of DeFi and NFT ecosystems drives Ethereum to be the engine at the start of altcoin seasons. Fundstrat analysts emphasize that Ethereum’s momentum will continue to support altcoin performance, and as institutional investors diversify beyond Bitcoin, second-layer protocols like Solana will offer attractive investment opportunities.

Path to Altseason: Liquidity Flow Stages

The journey to the altcoin season generally follows four distinct stages:

Stage 1: Bitcoin Dominance - Bitcoin’s dominance is high, and capital accumulates in Bitcoin. Trading volumes concentrate on BTC.

Stage 2: Ethereum Movement - Liquidity begins flowing into Ethereum. Interest in DeFi projects increases. The ETH/BTC ratio rises.

Stage 3: Major Capacity Altcoins - Projects with established ecosystems like Solana, Cardano, Polygon attract attention. Double-digit gains start to appear.

Stage 4: Full Altseason - Smaller market cap altcoins and speculative projects come to the forefront. Bitcoin dominance can fall below 40%. Parabolic movements begin.

Historical Prototypes and Breakpoints of Altseason

2017-2018 Cycle: ICO Boom

Bitcoin dominance dropped from 87% to 32%. The ICO market rapidly expanded, with projects like Ethereum, Ripple, Litecoin gaining enormous attention. The global crypto market grew from $30 billion to over $600 billion. However, regulatory pressures and failed projects abruptly ended this altseason in 2018.

Early 2021: DeFi and NFT Era

Bitcoin dominance declined from 70% to 38%. Altcoin market share jumped from 30% to 62%. This period marked the rise of DeFi protocols, NFTs, and memecoins. Technological advancements and retail participation pushed market cap above $3 trillion.

End of 2023 - Mid 2024: Institutional Era

Expectations of Bitcoin halving and spot Ethereum ETF approvals drove the market. Unlike previous altseasons, growth was spread across sectors like AI, GameFi, metaverse, and DePIN.

AI coins such as (RNDR) and Akash Network (AKT) saw increases exceeding 1000%. Blockchain gaming platforms like (ImmutableX and Ronin) gained momentum. The Solana ecosystem experienced a 945% increase through memecoins. This period was characterized by altseason expanding beyond traditional DeFi and ICO boundaries into different sectors.

Final Quarter of 2024: Mature Market

Spot Bitcoin ETF approvals in January 2024 increased institutional participation. Over 70 Bitcoin ETFs became operational. Elections with crypto-friendly lawmakers improved market sentiment. The total crypto market reached $3.2 trillion, and Bitcoin approached $100,000. This environment has made the path to altseason clearly visible.

How to Recognize the Start of Altseason

Indicators to monitor for altseason presence:

Decline in Bitcoin Dominance - Especially falling below 50%, is the clearest sign that altcoin activity has begun.

ETH/BTC Ratio - Ethereum’s performance relative to Bitcoin acts as a leading indicator for altcoin rallies. Rising ratio suggests altseason may be starting under Ethereum’s leadership.

Altseason Index - Methodology by Blockchain Center measures the performance of the top 50 altcoins against Bitcoin. Readings above 75 indicate altseason. The December 2024 index reading of 78 already signals that altseason is underway.

Sectoral Trading Volume Increase - Sudden trading activity in categories like AI, GameFi, or memecoins indicates renewed retail interest.

Social Media Activity - Hashtag trends, influencer activity, and social media discussions serve as sentiment indicators.

Stablecoin Liquidity - Rising trading volumes of USDT and USDC facilitate capital movement within the altcoin market.

Impact of Regulatory Environment on Altseason

Regulatory developments play a dual role in the altseason dynamic. Negative steps—such as ICO crackdowns in 2018 or strict interventions against crypto exchanges—increase volatility and diminish altseason enthusiasm.

Positive regulatory clarity, on the other hand, can rekindle interest in altcoins. Clear legal frameworks or an open attitude toward blockchain innovation can attract institutional and retail investors. The approval of spot Bitcoin ETFs, improving market conditions and accelerating institutional participation, is a prime example.

Potential crypto-friendly regulation under the Trump administration is considered one of the most significant factors that could shorten the path to altseason.

Altseason Trading: Risk Management and Strategic Approach

Basic Principles

Comprehensive Research - It is essential to thoroughly examine the project, team, technology, and market potential of any altcoin before investing. Falling for hype and hot news increases risk.

Portfolio Diversification - Spread investments across different altcoins and sectors to mitigate risk. Avoid concentrating all funds in a single token.

Realistic Expectations - Altseason can be profitable but does not make you rich overnight. Be prepared for market fluctuations.

Risk Management Protocols - Setting stop-loss orders, limiting position sizes, and establishing profit-taking strategies are vital.

Understanding Risks in Altseason Trading

Increased Volatility - Altcoins tend to be significantly more volatile than Bitcoin. Illiquid markets also have higher spread costs.

Speculative Hype - Excessive expectations can artificially inflate prices, followed by sharp corrections.

Fraud and Rug Pulls - Developer exits and pump-and-dump schemes are more common during altseason.

Liquidity Gaps - Small market cap altcoins may be difficult to exit quickly.

Analysts emphasize that gradual profit-taking strategies—such as selling 30-40% of holdings at target levels—help preserve gains and reduce exposure to sudden corrections.

Practical Steps Before Starting the Altseason Journey

Participants interested in entering altcoin investments can follow these steps:

1. Choose a Reputable Platform - Use a trustworthy crypto trading platform that meets KYC standards and has robust security infrastructure.

2. Secure Your Account - Enable two-factor authentication (2FA), create strong passwords, and securely store private keys.

3. Manage Funds - Select platforms that allow crypto or fiat deposits, and check if P2P options for purchasing crypto are available.

4. Research Projects - Before buying, investigate the whitepaper, development team, tokenomics, and market position of the altcoin.

5. Determine Positions - Start with a small portion of your total portfolio to test risk appetite.

6. Passive Income Opportunities - Some platforms offer staking or lending options for passive returns on altcoins.

Conclusion: Preparing for the Path to Altseason

Altseason is a natural part of the crypto market cycle and can present unmissable opportunities with proper knowledge and strategies. While the path to altseason is clearly visible, participants can maximize this period by making informed decisions, diversifying portfolios, and applying solid risk management.

Understanding market dynamics, reviewing historical precedents, and monitoring current indicators are essential tools for success during altseason. Given the volatile nature of the crypto market, never skip thorough research and careful evaluation of your investment strategy.