The true face of Altseason in the crypto market: A complete interpretation from theory to practice

Cryptocurrency markets do not develop linearly but exhibit cyclical fluctuations. Among the most notable phenomena is the altcoin season—a market phase that many traders look forward to and that confuses many newcomers.

As 2024 approaches, the market is filled with anticipation. Factors such as the potential pro-cryptocurrency policies of the new US administration, Bitcoin’s halving event in April, and the approval of spot ETFs all point to one direction: the next altseason (seasonal market cycle) seems to be not far away.

But the question is—do you really understand what an altseason is?

The Essence of Seasonal Market Cycles: Not Just Price Rises

When people talk about the altcoin season, most imagine a surge in altcoin prices. But this definition is too superficial.

To be precise, an altseason refers to specific periods within the market cycle when the performance of non-Bitcoin cryptocurrencies significantly outpaces BTC. This is not just a simple price increase but a shift in market structure.

In past market cycles, this shift was mainly reflected by capital moving from Bitcoin to altcoins. However, the driving forces behind modern altseasons have evolved. Today, increased liquidity in stablecoins, influxes of institutional capital, and market participant diversification are the true catalysts.

What does this mean? It means that an altseason is no longer just the result of retail chasing hot assets but a sign of an upgraded market structure.

Bitcoin Dominance Era vs. Altcoin Era

Understanding market phase transitions requires observing two key indicators:

What does a decline in the Bitcoin Dominance Index imply?

When BTC’s share in the entire crypto market drops from 70%, 60% to 40%, 30%, what do you see? The rise of altcoins. This process is often accompanied by:

• Explosive growth in trading volume
• A boom in new project funding
• Sharp increase in retail participation
• Market sentiment shifting from cautious to greedy

Conversely, Bitcoin season is a completely different story. At this time, narratives of safety, stability, and “digital gold” regain mainstream attention. Investors reduce risk-taking, and the prominence of altcoins gradually diminishes.

Evolution of Altseasons: From 2017 to 2024

End of 2017 - Early 2018: The ICO frenzy

The characteristics of that era were clear—Bitcoin’s dominance fell from 87% to 32%. Hundreds of new projects raised funds via ICOs, with Ethereum, Ripple, Litecoin, and others attracting unprecedented attention. The total market cap expanded from $30 billion to $60 billion.

But it was also a bubble. When regulatory crackdowns arrived, the entire market collapsed instantly.

DeFi and NFT boom of 2021

This altseason was more diverse. BTC dominance dropped from 70% to 38%, while the market share of altcoins doubled to 62%. The drivers were different:

• DeFi projects brought real use cases
• The NFT market created new gameplay
• The emergence of memecoins indicated retail participation reached new heights
• Total market cap surged to $3 trillion

2023-2024: Institutional investors entering

The nature of this phase has fundamentally changed. What drives the altseason now is no longer ICO hype or pure speculation but:

1. Institutional adoption: Over 70 spot Bitcoin ETFs approved
2. Regulatory friendly signals: Potential policy support from new government
3. Focus on technological innovation: AI coins, GameFi, DePIN, and other new sectors emerging
4. Market maturity: Stablecoin liquidity becoming a foundational infrastructure

Some altcoins’ performance illustrates this well: projects like Render (RNDR), Arweave, Jasmy Coin, and others have surged over 1000%.

How to Identify an Altseason: Indicators to Monitor

Don’t be fooled by market noise. A genuine altseason has clear signals:

1. Turn in the Bitcoin Dominance Index

Historical experience shows that when the Bitcoin dominance index falls below 50%, an altseason has usually already started. A more aggressive signal is dropping below 40%—at this point, small-cap altcoins often experience parabolic rallies.

2. Rise in the ETH/BTC ratio

Ethereum’s performance relative to Bitcoin often serves as a barometer for the entire altseason. When this ratio rises, it indicates capital is flowing from BTC into more complex, application-rich projects.

3. Altseason Index

Blockchain Center’s indicator quantifies market signals:

• Index >75: Typical altseason state
• Index 50-75: Transition phase
• Index <50: Bitcoin dominance period

As of December 2024, this index has reached 78—indicating the market has entered the altseason zone.

4. Abnormal increase in trading volume

Especially in stablecoin trading pairs (USDT/USDC). When these pairs see a significant volume spike, it suggests both institutional and retail investors are actively building positions in altcoins.

5. Concentrated rise in specific sectors

Synchronous increases in memecoins (DOGE, SHIB, BONK, etc.) or sustained strength in AI-related projects often signal a deepening altseason.

Understanding the Four Stages of Altseason from a Liquidity Perspective

The market does not jump directly from “Bitcoin season” to “altcoin season.” This process can be divided into four distinct phases:

Stage 1: Bitcoin Establishes Dominance

• Funds flow into Bitcoin as a “safe haven”
• Altcoins remain relatively quiet
• BTC trading volume surges

Stage 2: Ethereum Takes the Lead

• DeFi ecosystem begins to activate
• Layer-2 scaling solutions attract attention
• Signs of ETH/BTC ratio rising appear

Stage 3: Major Altcoins Wake Up

• Solana, Cardano, Polygon, and others enter an upward trend
• Ecosystem projects gain attention
• Mainstream altcoins see double-digit gains

Stage 4: Small-cap Altcoins Celebrate

• Various new concept tokens take off
• BTC dominance drops below 40%
• Retail participation peaks

The key to understanding these stages is recognizing the cyclical flow of liquidity. Capital is always seeking returns, moving from the most conservative assets (BTC), to relatively stable platform coins (ETH), and then to more aggressive altcoins.

The Current Situation at the End of 2024: Has the Altseason Truly Arrived?

Let’s look at the real data:

• Global crypto market cap: Surpassed $3.2 trillion, exceeding the 2021 all-time high
• Bitcoin price: Hovering around $90,000, approaching the psychological threshold of $100,000
• BTC dominance index: At a historic low
• Altseason index: Reached 78, clearly indicating an altcoin market is underway

But more importantly, the background factors include:

• Political changes potentially bringing regulatory benefits
• Widespread participation of institutional investors (not just in Bitcoin but also in altcoins)
• Continuous technological innovations driving new sectors (AI, GameFi, Web3, etc.)

All these factors point to one conclusion: The current altseason has not only begun but may be more persistent than any previous cycle.

Practical Trading Tips During an Altseason

Essential lessons before trading

1. Deep research: Don’t chase after a coin just because it has doubled. Understand the project’s technology, team, and use cases—these are the long-term values.

2. Portfolio diversification: Don’t put all your bets on one project. Use 20% of your aggressive capital to try new projects, and allocate 80% to stable, leading altcoins.

3. Realistic expectations: An altseason can bring tenfold gains or cause you to lose 50% in weeks. Be mentally prepared.

4. Risk management: The most overlooked yet critical aspect. Use stop-loss orders, control leverage, and take profits regularly—these are not optional but essential.

Common pitfalls in an altseason

Overleveraging: Borrowing to trade is tempting, especially in a hot market. But history repeatedly proves this is a fast track to losses.

FOMO and chasing highs: Seeing a coin surge 1000% and rushing to buy at the top often results in becoming a “bagholder.”

Ignoring regulatory risks: While the policy environment may seem favorable, new regulations can appear suddenly. Some altcoins may crash due to policy reasons.

“Rug pulls” and scams: During altseasons, scams increase. Be wary of projects promising unrealistic returns or with opaque teams.

Policy and Regulation: The Invisible Hand of the Altseason

Policy changes have complex and far-reaching impacts on the altseason:

Favorable policies: Approval of spot ETFs, shifts in government stance, transparent regulatory frameworks—these can significantly boost market confidence.

Unfavorable policies: Strict trading restrictions, bans on certain tokens, tightening AML rules—these can instantly dampen the altseason enthusiasm.

The uniqueness at the end of 2024 is that political shifts may bring unprecedented benefits to the crypto market. But risks also exist: if policies suddenly turn, the altseason could abruptly end.

Therefore, continuous monitoring of global regulatory developments is not just recommended but essential.

Conclusion: The Significance of Understanding Altseason

An altseason is not just a trading opportunity; it reflects the maturity and evolution of the crypto market. From the speculative frenzy of 2017, through the technological innovation wave of 2021, to the institutional participation of 2024—each cycle tells us that the market is progressing.

But progress does not mean the risks disappear. On the contrary, a more complex market structure may bring more hidden dangers.

To profit during an altseason without getting hurt, remember these:

• Do thorough research, avoid FOMO
• Diversify your investments, don’t bet everything on one asset
• Protect your principal—more important than chasing profits
• Keep learning—markets are always more complex than you think

Altseason is coming, it has already arrived. Are you ready?