The altcoin season is one of the most exciting phases in the digital asset market, where liquidity gradually shifts from Bitcoin to altcoins, leading to rapid and intense price increases. However, determining the start of this phase is not a simple task; it requires monitoring a set of technical and behavioral indicators that usually precede the launch.
Here are the key signals that investors should follow:
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1. Decline in Bitcoin Dominance
Bitcoin's dominance over the total market capitalization is a key measure to understand market dynamics.
This indicator usually declines after a strong Bitcoin rally, as investors begin to look for higher-risk and higher-return opportunities.
A noticeable decline in dominance (for example, from 55% to below 50%) is often a direct signal of the beginning of liquidity flowing into alternative currencies.
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2. Ethereum's performance strength against Bitcoin (ETH/BTC)
Historically, Ethereum serves as the leading indicator for the alternative currency season.
An increase in the ETH/BTC pair indicates a shift in buying power from Bitcoin to the second largest digital asset.
Breaking historical resistance levels in this pair is usually followed by a acceleration in the performance of Layer 1 currencies and then the rest of the market.
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3. Growth of liquidity and trading volume
Increasing trading volumes on alternative currency pairs against the dollar or stablecoins like USDT is a strong sign of new capital entering.
Also, rising deposit rates in decentralized finance (DeFi) protocols or increased activity in sectors like the metaverse and RWA reflect a return of risk appetite among investors.
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4. Shifts in market sentiment
General sentiments (Market Sentiment) clearly change at the beginning of the alternative currency season.
The rise of indicators like the Fear & Greed Index into optimistic zones, and alternative currencies leading discussions on social platforms, represent early psychological signals of a change in the overall market mood.
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5. Pattern of repeating past cycles
The alternative currency season often appears after a period of stability or correction in Bitcoin's price following new peaks.
This pattern repeats in most historical cycles: Bitcoin's rise → relative stability → a rush of capital into alternative currencies.
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Strategies for dealing with the alternative currency season
Focus on projects with strong fundamentals: such as smart contract platforms or infrastructure solutions.
Avoid chasing late surges: currencies that rise sharply often face quick corrections.
Clearly define exit levels: because alternative currency seasons are relatively short and accompanied by high volatility.
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Summary
The alternative currency season is not a random event, but a cyclical phase resulting from liquidity flow and changing market psychology. By observing the decline in Bitcoin dominance, Ethereum's performance against Bitcoin, increasing liquidity, and shifts in investor sentiment, traders can capture early signals that help them make more accurate and proactive decisions.
