What Is Altcoin Season (Altseason), and How to Trade Altcoins?

Like any other financial sector, the cryptocurrency market experiences periods of heightened activity and market cycles. Among these, the phenomenon known as altcoin season stands out, especially intriguing for those invested in Bitcoin alternatives.

 

In recent years, altcoin season has transformed, with factors like stablecoin liquidity and market innovation redefining its dynamics. As the crypto market evolves, understanding altcoin season becomes crucial for maximizing opportunities and navigating the associated risks.

 

As of December 2024, the crypto market is abuzz with anticipation that Trump’s return to presidency could usher in a pro-crypto stance in the US. This key development coming months after the fourth Bitcoin halving and rising mainstream adoption of cryptos as investment assets following spot Bitcoin and Ethereum ETF approvals, has investors worldwide hoping the next altcoin season is right around the corner. 

 

Altcoin season refers to a period when the aggregate market capitalization of altcoins outperforms Bitcoin during a bullish market phase. Unlike earlier cycles dominated by Bitcoin-to-altcoin capital rotation, recent altcoin seasons have been driven by rising altcoin trading volumes against stablecoin pairs and increasing liquidity.

 

This shift reflects real market growth fueled by institutional capital inflows into altcoins and new market participants exploring crypto investments. Altcoin season is often accompanied by declining Bitcoin dominance, increased trading activity in altcoins, and heightened retail speculation.

 

Altcoin Season vs. Bitcoin Season 

During an altcoin season, the broader market's focus shifts away from Bitcoin to alternative cryptocurrencies. This shift is characterized by a substantial increase in both the prices and trading volumes of altcoins. Several factors drive this surge, including speculative trading, new project launches, technological advancements, and increasing utility that captures investor interest. The result is often a period where many altcoins experience rapid price appreciation, frequently outperforming Bitcoin. The capital will flow into altcoins after a sustained period of price increases in Bitcoin and become unaffordable for average investors. 

 

On the other hand, Bitcoin Season is marked by the market's heightened focus on Bitcoin, often at the expense of altcoins. During these periods, Bitcoin's dominance index—a measure of Bitcoin's market capitalization relative to the total crypto market cap—increases, indicating investors are favoring Bitcoin over altcoins. Reasons for this shift include Bitcoin's perceived stability, its status as digital gold, or a flight to safety amidst broader market uncertainty. In bear markets, where pessimism prevails, investors often gravitate towards Bitcoin or stablecoins, seeking lower risk. In this phase,  altcoins may stagnate or even lose value as investment will concentrate on Bitcoin or large coins.

 

From Bitcoin Dominance to Stablecoin Liquidity

In earlier crypto cycles, altcoin seasons were marked by a rotation of capital from Bitcoin to altcoins. As Bitcoin’s price consolidated, traders shifted funds to altcoins in search of higher returns. This trend defined the ICO boom of 2017 and the DeFi summer of 2020.

 

However, the narrative has shifted. Ki Young Ju, CEO of CryptoQuant, emphasizes a significant shift in the drivers of altcoin season. In earlier cycles, capital rotated from Bitcoin to altcoins, signaling the onset of altseason. However, this dynamic has changed.

 

Ju highlights that altcoin trading volume against stablecoin pairs now plays a more critical role, reflecting genuine market growth rather than speculative Bitcoin pair rotations. The increased liquidity provided by stablecoins like USDT and USDC is fostering broader altcoin adoption, making stablecoins the backbone of modern altcoin markets.

 

Ethereum and Institutional Inflows

Ethereum often leads the charge during altcoin seasons, with its growing ecosystem of decentralized finance (DeFi) and non-fungible tokens (NFTs). Fundstrat’s Tom Lee predicts that Ethereum’s momentum will continue to drive altcoin performance, particularly as institutional investors diversify into assets beyond Bitcoin.

 

Lee also highlights the role of institutional capital in pushing altcoins to outperform, suggesting that projects like Solana and Ethereum provide compelling investment opportunities for those looking to move further out on the risk curve.

 

Bitcoin Dominance as a Key Indicator

Rekt Capital, a prominent crypto analyst, notes that Bitcoin dominance remains a critical metric for forecasting altcoin season. Historically, a sharp decline in Bitcoin dominance below 50% has been a reliable signal for the onset of altseason. Rekt Capital observes that Bitcoin consolidating between $91,000 and $100,000 could create the perfect conditions for Ethereum and other altcoins to capture liquidity.

 

Altseason Index Signals

Blockchain Center’s Altseason Index | Source: Blockchain Center

 

Blockchain Center’s Altseason Index provides a data-driven approach to gauging market trends. The index measures the performance of the top 50 altcoins relative to Bitcoin. A reading above 75 indicates altseason, where a majority of altcoins outperform Bitcoin. As of December 2024, the index has climbed to 78, signaling that the market is already in altseason territory.

 

Regulatory Impact

Analysts stress the importance of monitoring regulatory developments. While favorable regulations—such as the approval of spot Bitcoin ETFs—boost market confidence, adverse regulatory actions can dampen enthusiasm. Fundstrat’s Tom Lee notes that pro-crypto legislation could fuel an extended altcoin season, particularly with major players like BlackRock rumored to explore XRP ETFs.

 

Risks and Overleveraging

Experts caution against overleveraging and chasing speculative hype during altcoin seasons. The volatility of altcoins makes risk management essential. Analysts like Doctor Profit recommend incremental profit-taking to secure gains and reduce exposure to sudden market corrections.

 

"Altseason is thrilling but requires discipline. Without proper risk management, gains can quickly turn into losses,” says Doctor Profit.

 

New Drivers of Altcoin Season

1. Stablecoin liquidity and institutional capital are now primary drivers of altcoin seasons.

2. Ethereum’s performance often serves as a precursor to broader altcoin rallies.

3. Monitoring Bitcoin dominance and the Altseason Index offers valuable signals for traders.

4. Sector-specific narratives, like AI and GameFi, are reshaping altcoin growth opportunities.

5. Regulatory clarity remains a critical factor in sustaining altcoin momentum.

This evolution signals a maturing market where altcoins thrive on innovation and utility, not just speculative hype.

 

Past altcoin seasons when Bitcoin dominance dipped under 50% | Source: TradingView 

 

Historical examples of altcoin seasons include periods following major technological advancements or significant crypto market milestones. 

 

Late 2017 - Early 2018

During this cycle, Bitcoin dominance plummeted from 87% to 32%, while altcoins experienced massive growth. The ICO (Initial Coin Offering) boom introduced a wave of new tokens like Ethereum, Ripple, and Litecoin, attracting speculative investments.

 

The total cryptocurrency market cap surged from $30 billion to over $600 billion, with many altcoins reaching all-time highs. However, regulatory crackdowns and failed projects brought this altseason to an abrupt end in 2018.

 

Early 2021

The Bitcoin dominance began the year with dominance falling from 70% to 38%, showing a significant shift towards altcoins. Meanwhile, altcoins' market share rose from 30% to 62%, more than doubling in the span of a year. This period was characterized by a massive boom in DeFi projects, NFTs, and even memecoins. Altcoins related to these sectors, including smaller-cap cryptocurrencies, saw tremendous gains. 

 

This altseason was fueled by technological advancements and retail adoption, pushing the total market cap to an all-time high of over $3 trillion by the end of 2021.

 

Q4 2023 - Mid-2024

The bullish mood in the crypto market during this period was mainly powered by the optimism surrounding the upcoming Bitcoin halving in April 2024 and potential spot Ethereum ETF approvals by the US SEC by May 2024. However, unlike the previous altcoin seasons that were driven by ICOs, DeFi, and NFTs, the upcoming altcoin season could see rallies in more sectors of the market, such as AI, GameFi, metaverse, DePIN, and web3. The market has already experienced strong rallies in some altcoins, such as Arweave, JasmyCoin, dogwifhat, Worldcoin, and Fetch.ai. 

 

1. AI Coins: The integration of AI into blockchain projects has garnered substantial attention. Tokens like Render (RNDR) and Akash Network (AKT) have experienced remarkable price surges, exceeding 1,000%. This growth is attributed to the increasing demand for AI-driven solutions within the crypto space.

2. GameFi: The blockchain gaming sector has seen a resurgence, with platforms such as ImmutableX (IMX) and Ronin (RON) making significant comebacks. These platforms have attracted gamers and investors alike, contributing to their robust performance.

3. Memecoins: Initially perceived as novelty tokens, memecoins have evolved by integrating AI and other utilities. Projects like SnailBrook (SNAIL) are gaining traction, reflecting this trend.

Here’s a list of the top AI coins to trade in the crypto market. 

 

The expansion of memecoins beyond the Ethereum ecosystem is another noteworthy trend, with Solana-based memecoins gaining popularity. The Solana ecosystem, in particular, has seen a 945% increase in its token price, recovering from its "dead-chain" label and contributing to the broader acceptance and growth of memecoins in various blockchain environments​​.

 

These developments suggest that the altcoin season during this period was broader, encompassing multiple sectors beyond traditional decentralized finance (DeFi) and initial coin offerings (ICOs).

 

Q4 2024 Onwards: Institutional Influence and Market Maturation

As we move into the latter part of 2024, the cryptocurrency market continues to evolve, with several key trends shaping the landscape:

 

1. Institutional Adoption: The approval of spot Bitcoin ETFs in January 2024 has led to increased institutional participation. Over 70 spot Bitcoin ETFs have been approved, injecting strong confidence into the market.

2. Regulatory Developments: The election of pro-crypto lawmakers and a potentially favorable regulatory environment under the upcoming Trump administration have bolstered market sentiment. This shift is expected to benefit altcoins, especially those previously under regulatory scrutiny.

3. Market Capitalization Milestones: The global cryptocurrency market capitalization has reached a record $3.2 trillion, surpassing previous highs from 2021. This growth is driven by renewed enthusiasm and expectations of friendlier U.S. regulations.

4. Bitcoin Testing $100K: Investor sentiment toward cryptocurrencies received a boost starting November 2024 as Bitcoin broke previous record highs and made its way toward the psychologically significant $100,000 level. As of December 2024, Bitcoin’s value remains under this level, but several analysts expect this level to be crossed before the end of this year and head higher into 2025. 

These factors indicate a maturing market with diversified investment opportunities, setting the stage for a sustained altcoin season.

 

Altcoin season often unfolds in four distinct phases, reflecting the cyclical nature of the crypto market:

 

Phase 1: Bitcoin Dominance

Bitcoin dominance starts dipping before altcoin season | Source: Coinmarketcap

 

• What Happens: Capital flows into Bitcoin as a stable asset, establishing its dominance.

• Indicators: Rising Bitcoin dominance index, increased trading volumes for BTC, and stagnant altcoin prices.

Phase 2: Ethereum Gains Momentum

• What Happens: Liquidity shifts to Ethereum as investors explore DeFi and Layer-2 projects.

• Indicators: Rising ETH/BTC ratio, surging Ethereum prices, and growing DeFi activity.

Phase 3: Large-Cap Altcoins Rally

Market performance of the top 50 cryptos | Source: Blockchain Center

 

• What Happens: Attention moves to large-cap altcoins with established ecosystems.

• Indicators: Double-digit growth in projects like Solana, Cardano, and Polygon.

Phase 4: Altseason Arrives

• What Happens: Small-cap altcoins and speculative projects dominate.

• Indicators: Bitcoin dominance drops below 40%, and smaller altcoins achieve parabolic gains.

This cycle highlights the importance of tracking liquidity flows and positioning yourself accordingly.

 

Bitcoin vs. altcoin market cap | Source: K33 Research 

 

Identifying altcoin season involves monitoring specific market indicators:

 

1. Bitcoin Dominance Dips: A decline below 50% suggests rising altcoin activity. Historical altseasons often begin when Bitcoin dominance drops sharply.

2. ETH/BTC Ratio: The Ethereum-to-Bitcoin price ratio serves as a barometer for altcoin performance. A rising ETH/BTC ratio suggests Ethereum is outperforming Bitcoin, which often precedes broader altcoin market rallies. Conversely, a declining ratio may indicate a stronger Bitcoin market.

3. Altseason Index: Tools like Blockchain Center’s Altseason Index quantify altcoin performance relative to Bitcoin. An index reading above 75 signals the start of altseason.

4. Rising Altcoin Trading Volume: Increased trading volume in specific sectors, such as altcoin-stablecoin pairs, often signals growing market confidence. Sectors like AI-focused cryptocurrencies or memecoins can drive this surge, as strong gains in these niches often result in a substantial increase in their overall market cap. According to K33 Research, recent sector-wide gains of over 40% in memecoins like DOGE, SHIB, BONK, PEPE, and WIF highlight the potential for a broader altcoin season driven by concentrated market interest in these trends. Similarly, the AI sector has shown robust growth with projects like Render and NEAR Protocol, contributing to sectoral market cap increases and setting the stage for altcoin momentum.

5. Social Media Trends: Hashtags, memes, and influencer discussions often signal retail interest.

6. Market Sentiment: A shift from fear to greed suggests bullish momentum across altcoins.

7. Stablecoin Liquidity: The availability and trading volume of stablecoin pairs (e.g., USDT and USDC) play a critical role in driving altcoin market activity. Stablecoin liquidity facilitates easier entry and exit points for investors, encouraging capital inflows into altcoins. As stablecoin adoption grows, it provides the foundation for increased altcoin trading and market participation.

As home to crypto gems, KuCoin is widely recognized as one of the leading altcoin exchanges globally, offering more than 800 cryptocurrencies to buy, sell, or trade on our platform. Its comprehensive selection, user-friendly interface, and advanced security features make it a top choice for traders looking to diversify their crypto portfolio with altcoins. Moreover, projects listed on KuCoin are strictly vetted by our stringent security and regulatory standards. 

 

Here's a straightforward guide on how to buy altcoins on KuCoin:

 

1. Create an Account: The first step is to sign up for a KuCoin account. Visit the KuCoin website and click on the "Sign Up" button. You'll need to provide an email address or phone number and set a password. Complete the KYC verification process as required.

2. Secure Your Account: It's highly recommended to enable two-factor authentication (2FA) for an added layer of security. This can usually be set up in the account settings section.

3. Deposit Funds: Before buying altcoins, you need to deposit funds into your account. KuCoin allows deposits in both cryptocurrencies and fiat currencies. If you're depositing crypto, navigate to the "Assets" section, select "Deposit," and choose the cryptocurrency you wish to deposit to get the address. KuCoin supports fiat deposits via credit/debit cards and bank transfers. Availability may vary by region. You can also fund your account by buying crypto on the KuCoin P2P marketplace or transferring existing crypto holdings from your wallet to your KuCoin funding account. 

4. Search for Altcoins: Once your account is funded, go to the "Markets" or "Trade" section to find the altcoin you want to buy. You can use the search bar to find the specific cryptocurrency by its ticker symbol or name.

5. Place an Order: After selecting the altcoin, decide on the type of order you want to place on the KuCoin Spot Market. KuCoin supports various order types, including market orders (buy immediately at the current market price) and limit orders (set a specific price at which you want to buy). Enter the amount of the altcoin you want to purchase and confirm your order. You can also use other products like KuCoin’s Pre-Market, Margin Trading, or Futures Trading to buy leading altcoins, or automate your trades with KuCoin trading bots. 

6. Manage Your Altcoins: After the purchase, your altcoins will be credited to your KuCoin account. You can view your holdings in the "Assets" section. From here, you can choose to keep your altcoins on KuCoin, trade them for other cryptocurrencies, or withdraw them to an external wallet. You can also earn passive income on some altcoins via KuCoin Earn. 

Given the volatile nature of the cryptocurrency market, it's important to do your own research and consider your investment strategy carefully before buying altcoins or any other digital assets. KuCoin, with its extensive range of altcoins and robust trading features, offers a dynamic platform for exploring the cryptocurrency market.

 

• Do your research: Before investing in any altcoin, thoroughly research the project, its team, technology, and market potential. Don't get caught up in the hype without understanding the underlying fundamentals.

• Diversify your portfolio: Don't put all your eggs in one basket. Spread your investments across various promising altcoins and sectors to mitigate risk.

• Set realistic expectations: While altcoin season can be lucrative, don't expect overnight riches. Remember, the market can be volatile, and prices can fluctuate rapidly.

• Manage your risk: Always implement proper risk management strategies, such as setting stop-loss orders and maintaining a healthy balance between potential rewards and acceptable losses.

While altcoin season can be an exciting opportunity, it also comes with inherent risks:

 

• Increased volatility: Altcoin prices tend to be more volatile than Bitcoin, leading to the potential for significant losses in a short time span. Additionally, users may incur higher costs from price spreads in an illiquid altcoin market

• Hype and speculation: Excessive hype and speculation can artificially inflate prices, leading to potential price bubbles and crashes. 

• Scams and rug pulls: Be wary of scams and rug pulls, where developers abandon a project after raising funds from investors. Beware of pump-and-dump schemes that artificially inflate prices.

• Regulatory Changes: Stay informed on regulatory developments that could impact altcoin markets.

How Do Regulatory Developments Impact Altcoin Season? 

Regulatory changes have a complex impact on altcoin seasons, potentially catalyzing or dampening the enthusiasm around altcoins. Notable regulatory developments that have influenced altcoin seasons include announcements of increased scrutiny or regulation of cryptocurrencies by major economies, which can lead to market uncertainty and impact investor sentiment. For example, announcements of regulatory crackdowns on ICOs back in late 2018 or stricter guidelines for cryptocurrency exchanges in various countries have historically led to increased volatility and sometimes a dampening of altcoin season fervor. 

 

Conversely, positive regulatory clarity or the adoption of favorable regulations for cryptocurrencies can stimulate interest in altcoins. An example is when jurisdictions provide clear legal frameworks for crypto assets or when significant regulatory bodies express openness to blockchain innovations, encouraging investment in altcoins. A perfect instance of this is the recent approval of spot Bitcoin ETFs by the US SEC, encouraging institutional investors to enter the crypto market and boosting the overall market sentiment These regulatory changes underscore the importance of staying informed on global regulatory developments, as they can significantly affect the dynamics of altcoin seasons.

 

Altcoin season offers a window of opportunity for savvy investors willing to navigate its challenges. By staying informed, diversifying investments, and practicing sound risk management, traders can potentially maximize their profits during this period. Drawing on the educational ethos of platforms like Binance Academy, investors are encouraged to deepen their understanding of the market dynamics at play​​​​​​​​.

 

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