Altcoin Season Guide: Seize the Crazy Opportunity

Every crypto market has its rhythm. Sometimes Bitcoin dominates the scene, and other times altcoins take turns dancing. But the most exciting period is the altseason — we call it altseason.

If you haven’t experienced a true altseason, you probably can’t imagine what it feels like. During this phase, hundreds or even thousands of small coins can double or even tenfold within weeks, while Bitcoin seems somewhat dull in comparison.

What is Altseason?

Simply put, altseason is the time window when altcoins collectively explode.

Specifically, when the total market cap of altcoins starts to grow relative to Bitcoin, especially when the Bitcoin dominance index drops from a high level below 50%, you know altseason may be underway. During this period, a large amount of capital flows from Bitcoin into Ethereum, Solana, Cardano, and other second-tier coins, then gradually into smaller altcoins.

Altseason vs. Bitcoin Season: Two Completely Different Games

What makes Bitcoin season special? Investors focus on Bitcoin, liquidity concentrates, and small coins are neglected. Bitcoin dominance keeps rising, indicating Bitcoin is absorbing the market’s attention. At this time, retail investors often chase high prices in Bitcoin, while altcoins quietly accumulate strength.

Altseason is the opposite. Funds start seeking higher returns. After Bitcoin enters a consolidation phase, smart money quietly positions itself in forgotten projects. When a hot topic (like AI, GameFi, DeFi) suddenly sparks public interest, capital floods in, and small coins can see 10x or even 100x gains in a short period.

How does Altseason evolve?

This isn’t the first altseason; historical data tell many stories.

2017-2018 ICO Boom: Bitcoin’s dominance dropped from 87% to 32%. Ethereum, Ripple, Litecoin, and others kept appearing in headlines, with total funding soaring from $3 billion to $60 billion. But regulatory crackdowns came quickly, abruptly ending this season.

2021 DeFi and NFT Frenzy: Bitcoin’s dominance declined sharply again, with the altcoin market share rising from 30% to 62%. Projects like Uniswap, Aave, OpenSea emerged, showcasing the potential of decentralized finance and digital collectibles. The total market cap hit a peak of $3 trillion.

2024: Institutional Entry

This recent altseason differs from previous ones. Earlier this year, Bitcoin spot ETFs were approved, prompting systematic institutional investment. Over 70 Bitcoin ETFs have been approved. Subsequently, Ethereum spot ETFs gained approval from the US SEC.

What does this mean? It indicates that the market is no longer just retail gambling; it’s maturing. More stablecoin liquidity enters the market, making trading pairs more convenient. Institutions are no longer only interested in Bitcoin but are also seeking projects with stronger ecosystems like Ethereum and Solana.

Currently, altseason features multiple hot spots running in parallel:

• AI Coins: Render, Akash Network, and others surged over 1000%
• GameFi Sector: ImmutableX, Ronin, and other gaming chains continue to strengthen
• Meme Coins: From jokes to serious trading assets, some now incorporate real functions
• DePIN: The new concept of decentralized physical infrastructure attracts significant capital

How to tell if Altseason has truly arrived?

Don’t rely on intuition; look for signals.

Signal 1: Sharp decline in Bitcoin dominance index
Historically, when Bitcoin dominance drops below 50%, altseason is already underway. A more aggressive signal is falling below 40%, when small coins are already going crazy. According to Blockchain Center data, when the Altseason Index (performance of the top 50 altcoins relative to Bitcoin) exceeds 75, the altcoin season officially begins. As of December 2024, this index has reached 78.

Signal 2: Rapid rise in ETH/BTC ratio
Ethereum’s relative gains accelerate compared to Bitcoin, indicating large funds are shifting from Bitcoin to Ethereum and its ecosystem. This is often a leading indicator of altseason.

Signal 3: Surge in trading volume, especially stablecoin pairs
When trading volume of stablecoins like USDT, USDC spikes, particularly in small altcoin pairs, it shows market liquidity is truly increasing. This reflects genuine capital movement better than Bitcoin price increases.

Signal 4: Collective rise in specific sectors
If meme coins like DOGE, SHIB, BONK, PEPE surge over 40% in a short period, or if AI-related coins all strengthen, it indicates a hot-topic-driven altseason.

Signal 5: Surge in social media buzz
A sudden increase in discussions about various coins on X (Twitter), with active fan groups for small coins, shows retail FOMO and indicates altseason is attracting more attention.

Four stages of Altseason: the story of capital flow

Altseason doesn’t happen overnight. It usually has four distinct stages:

Stage 1: Bitcoin reigns supreme
Funds flow entirely into Bitcoin, with Bitcoin dominance rising rapidly. Altcoins are dull, with stagnant prices. This is the accumulation phase.

Stage 2: Ethereum attracts attention
After Bitcoin reaches a certain high, it consolidates. Meanwhile, Ethereum begins to attract funds. DeFi ecosystems, Layer-2 solutions, and others are reevaluated. ETH/BTC ratio rises quickly.

Stage 3: Major coins rotate
Solana, Cardano, Polygon, and other mainstream altcoins start to grow in double digits. These projects have mature ecosystems and user bases, becoming safe havens for institutions and savvy retail investors.

Stage 4: Small coins take off
Finally, the real frenzy begins. Coins with market caps between $10 million and $1 billion start competing. If they catch a hot trend (like a new narrative or ecosystem explosion), these coins can multiply several times within weeks.

How to trade during Altseason

Maintain the right mindset. Altseason offers opportunities but also traps.

Point 1: Do your homework
Don’t buy coins you don’t understand. Who is the team? What problem does the project solve? What’s its competitive advantage? Ask yourself these questions first. Many chase hot trends without understanding fundamentals, ending up as bagholders.

Point 2: Diversify
Don’t put all your funds into one coin. Even if you believe in a project, buy in stages and spread your investments across multiple promising coins. If one crashes, others can help mitigate losses.

Point 3: Set realistic expectations
While some can make 10x or 100x gains during altseason, that’s rare. For most, 2-3x returns are already good. Greed can cause you to miss the best exit points.

Point 4: Manage risks carefully
Set stop-loss orders. When a coin drops 20-30%, cut losses and exit. Don’t hope for a rebound. Many coins crash faster than they rise during altseason.

Real risks in Altseason

Don’t be fooled by stories of quick riches. Altseason can be deadly.

Risk 1: Excessive volatility
Daily fluctuations of 20-30% or more are common. One night from paradise to hell isn’t exaggerated. Using leverage makes losses even worse.

Risk 2: Ponzi schemes and scams
Many new projects emerge during altseason. Some are outright scams — rug pulls, exit scams, or pump-and-dump schemes with false hype to trap retail investors.

Risk 3: Regulatory crackdowns
Historically, altseason often ends abruptly due to regulatory risks. If a country suddenly tightens crypto regulations or targets certain coins, the market can collapse instantly.

Risk 4: Technical risks
Smart contract bugs, exchange hacks, project founders fleeing — these have all happened. Never assume any project is completely safe.

How does regulation affect Altseason?

Regulation is like weather forecasting. The market reacts before bad weather arrives.

In 2018, regulatory crackdowns on ICOs cooled the altseason enthusiasm. Many projects were delisted or shut down for violating rules.

Conversely, positive regulatory signals boost market confidence. The approval of Bitcoin spot ETFs in the US is essentially regulatory recognition of crypto. This directly attracts institutional capital. If there are signs that XRP or other regulated coins might get ETF approval, the market reacts immediately.

Currently, the US government’s relatively friendly stance on crypto supports the continuation of altseason. But this can change at any time, so keep an eye on global regulatory developments.

A few golden rules

To sum up the essence of altseason:

1. Follow liquidity: The inflow of stablecoins determines the duration and strength of altseason. When stablecoin inflow wanes, consider exiting.

2. Focus on Ethereum: ETH’s performance often sets the pace for the entire altseason. If ETH weakens, other altcoins will struggle too.

3. Hot sectors rotate: This year is AI; next year might be DePIN or a new concept. Capital always chases the latest story.

4. Beware of high positions: When a coin’s gains exceed 500%, the risk of entering at the top skyrockets. Even good projects have tops.

5. Stage your exits: Don’t greedily wait for the absolute top. Take profits gradually and exit slowly to preserve gains.

Final words

Altseason is the most exciting yet most dangerous time in the crypto market. Opportunities and traps often coexist. Successful traders aren’t those who make the most money but those who survive the longest and manage risks well.

Before the next big altseason erupts, do your homework and establish solid trading discipline — that’s more important than anything. And remember: never invest more than you can afford to lose. The crypto market is never soft on mistakes.