What Is the Altcoin Season? Opportunities and Challenges During This Period

Cryptocurrency markets do not always operate in a consistent manner. Like other financial markets, they go through cycles of boom and bust. One of the most notable phenomena investors pay attention to is the altcoin season—a period when alternative cryptocurrencies outperform Bitcoin in terms of price performance. Currently, (late Q4 2024 to early 2025), the cryptocurrency market is recovering from a prolonged period of bearish sentiment. Bitcoin is trading around $88.56K, while the total market capitalization exceeds $2 trillion. This optimism is mainly driven by significant events such as the recent Bitcoin Halving and the potential approval of cryptocurrency funds, with Bitcoin dominance at 55.09%. However, more notably, signs of the 2023 altcoin season are gradually emerging, where alternative projects are beginning to attract strong capital flows.

What Is Altcoin Season and Why Is It Important?

Altcoin season refers to a period when the total market capitalization of all altcoins (excluding Bitcoin) reaches or surpasses Bitcoin, often during major bull runs. This phase is characterized by significant increases in both value and trading volume of altcoins.

As confidence in the cryptocurrency market expands beyond Bitcoin, investors start seeking opportunities in emerging projects. This usually happens when Bitcoin’s price rises to levels that are difficult for retail investors to access, prompting them to shift focus toward higher-potential altcoins.

The Difference Between Altcoin Season and Bitcoin Season

These two phases create entirely different market dynamics:

During Altcoin Season:

• Market focus shifts from Bitcoin to other projects
• Bitcoin’s dominance (BTC dominance) decreases, often below 50%
• Altcoins show superior returns compared to Bitcoin
• Capital flows into diverse sectors such as DeFi, NFT, GameFi, AI tokens

During Bitcoin Season:

• Bitcoin becomes the main focus of attention
• Bitcoin’s dominance increases significantly
• Altcoins grow slowly or even depreciate
• Investors seek safety by holding Bitcoin or stablecoins

In a bear market, when negative sentiment dominates, investors tend to flock to safe assets like Bitcoin and stablecoins, putting downward pressure on altcoins.

History of Previous Altcoin Seasons

###Late 2017 - Early 2018: ICO Bubble

This period saw Bitcoin’s dominance drop from 87% to 32% in January 2018—its lowest point in history at that time. The total cryptocurrency market cap exploded from $30 billion to over $600 billion within a year.

This period was marked by the ICO (initial coin offering) craze, when hundreds of new projects launched with grand promises. Many altcoins reached all-time highs (ATH), although most later disappeared or lost significant value.

Early 2021: DeFi and NFT Boom

2021 witnessed a strong shift as Bitcoin’s dominance declined from 70% to 38%, while the altcoin market share increased from 30% to 62%.

Highlights of this period include:

• The explosion of DeFi projects like Uniswap, Aave, Curve
• The NFT craze with outrageous sale prices
• The rise of memecoins like Dogecoin, Shiba Inu
• Outstanding performance from Solana, Polygon, BNB, PancakeSwap

The total market capitalization of cryptocurrencies surpassed $2 trillion for the first time, later reaching over $3 trillion by the end of 2021, with Bitcoin surpassing $69,000.

Altcoin Season 2023-2024: More Diverse Than Ever

Unlike previous altcoin seasons driven by one or two sectors (ICO, DeFi/NFT), the 2023 altcoin season is characterized by diversification across many directions:

• AI Tokens: Sudden surge with the AI technology boom
• DePIN tokens: Decentralized infrastructure projects
• GameFi and Metaverse: Continuing to attract capital
• Web3 infrastructure: Growth of layer-2 blockchain platforms

Altcoins like Arweave, dogwifhat, Worldcoin, Fetch.ai, and JasmyCoin have experienced impressive price increases, reflecting the market’s diversification.

Signs That Altcoin Season Is Starting

While there’s no foolproof formula to predict altcoin season, some key indicators can help you recognize it:

Bitcoin Dominance Index

This measures Bitcoin’s market cap as a percentage of the total cryptocurrency market cap. When it drops below 50%, it’s often a signal that altcoin season is beginning. Currently at 55.09%, this indicates we are still in a transition phase.

Altcoin Market Cap Index

Conversely, this index rises when investor attention shifts toward altcoins. A significant increase in this index is the clearest sign of the start of altcoin season.

Surge in Altcoin Trading Volume

When trading volume across altcoins increases substantially across the market, it signals growing interest and potential price gains.

Widespread Positive Market Sentiment

When optimism spreads throughout the entire crypto space and new projects receive investor support, altcoin season is likely approaching.

Catalytic Events

ETF approvals, favorable regulations, or major project launches can trigger or accelerate the onset of altcoin season.

Trading Strategies During Altcoin Season

Conduct Thorough Research Before Investing

The first step is to understand the projects you plan to buy:

• Read whitepapers and understand the technology
• Research the development team
• Analyze market potential
• Don’t get caught up in hype without understanding fundamentals

Diversify Your Portfolio

“Don’t put all your eggs in one basket”—the golden rule of investing. Spread your capital across multiple promising altcoins to reduce risk. A reasonable portfolio might include:

• 40-50% in top-tier large-cap altcoins
• 30-40% in mid-cap projects
• 10-20% in small-cap projects with high potential

Set Realistic Expectations

Although altcoin season can bring high returns, don’t expect to get rich quickly. The crypto market is highly volatile, and prices can change rapidly in both directions.

Effective Risk Management

Always apply risk management strategies:

• Set stop-loss orders (stop-loss) to limit losses
• Define profit targets and stick to them
• Maintain a balance between potential rewards and acceptable losses
• Never invest your entire account in a single trade

Risks When Trading Altcoins

Higher Price Volatility

Altcoins tend to be more volatile than Bitcoin, with a higher risk of significant short-term losses. Additionally, illiquid alt markets can cause large slippage (slippage).

Bubbles and Pump-and-Dump Schemes

The excitement during altcoin seasons often leads to unsustainable price hype, with the risk of sudden crashes. Traders should be cautious of pump-and-dump patterns.

Scams and Rug Pulls

Beware of fraudulent projects where developers abruptly withdraw support after raising funds from investors. Warning signs include:

• Grandiose claims without real technology
• Anonymous or unverifiable development teams
• Poor track record of previous projects by the founders

Regulatory Changes

Sudden regulatory developments can significantly impact altcoin prices. For example, stricter ICO regulations announced in 2018 caused a notable market sentiment decline.

Impact of Regulations on Altcoin Season

Regulatory changes influence altcoin season in two ways:

Negative Regulations can:

• Create uncertainty and dampen investor sentiment
• Limit exchange operations
• Increase compliance costs, weakening small projects

Positive Regulations can:

• Trigger interest from institutional investors
• Provide clear legal frameworks, encouraging investment
• Approve official crypto products like Bitcoin spot ETFs

Recent approvals of spot cryptocurrency funds exemplify how positive regulation can spark optimism across the entire market.

How to Start Trading Altcoins

To participate in altcoin season, you need to follow basic steps:

1. Choose a Reliable Exchange

Select an exchange with:

• Good reputation and long-standing operation
• Large trading volume with a diverse altcoin list
• Advanced security features
• User-friendly interface

2. Create an Account and Complete Verification

• Register with email or phone number
• Complete KYC (identity verification)
• Enable two-factor authentication (2FA)

3. Deposit Funds

• Transfer cryptocurrency from your wallet (from your wallet)
• Or deposit fiat currency (fiat) via credit card or bank transfer

4. Find and Select Altcoins

Use search tools to find altcoins of interest based on:

• Market cap
• Price history
• Trading volume
• News and related events

5. Place Trade Orders

• Market Order (Market order): Buy immediately at current price
• Limit Order (Limit order): Set a specific price at which you want to buy

6. Manage Your Positions

After purchase:

• Keep on the exchange for easy trading
• Transfer to personal wallet for long-term security
• Monitor regularly and adjust your strategy

7. Stay Updated

Due to market volatility, it’s important to:

• Follow cryptocurrency news
• Keep track of the projects you invested in
• Use technical analysis tools
• Conduct your own research (DYOR)

Conclusion

Altcoin season offers exciting opportunities but also involves significant risks. With Bitcoin at $88.56K and Ethereum at $2.97K, the crypto market is ripe for a surge in alternative projects.

To maximize your chances during the 2023 altcoin season and beyond, consider:

• Conducting thorough project research before investing
• Diversifying your portfolio
• Managing risks carefully
• Staying informed about market changes
• Maintaining realistic profit expectations

By combining solid knowledge, prudent strategies, and effective risk management, you can maximize profits during this altcoin phase.