"Alt season," or "altcoin season," is a period in the cryptocurrency market when most altcoins (all cryptocurrencies other than Bitcoin) experience a significant increase in their value, often outperforming Bitcoin.
Here's a breakdown of what that means and how to identify it:
What happens during Alt Season?
* Capital shifts from Bitcoin to altcoins: Often, after Bitcoin (BTC) has had a strong price rally and perhaps consolidated or moved sideways, investors look for higher returns in other, more volatile assets. They may take profits from Bitcoin and re-invest them into altcoins.
* Widespread altcoin price increases: This influx of capital leads to a broad surge in the prices of many altcoins, from large-cap ones like Ethereum (ETH) and Solana (SOL) to smaller, more speculative projects.
* Decreased Bitcoin dominance: A key characteristic of alt season is a drop in Bitcoin's dominance. Bitcoin dominance refers to the percentage of the total cryptocurrency market capitalization that Bitcoin holds. When altcoins are outperforming Bitcoin, BTC dominance declines.
How to identify Alt Season:
While there's no official announcement, several indicators can signal an alt season:
* Bitcoin Dominance: A sustained drop in Bitcoin dominance is a strong indicator. Many sources suggest that an alt season is generally considered to be underway when 75% of the top 50 altcoins outperform Bitcoin over a specific period (often 30 or 90 days).
* Altcoin Season Index: Some platforms and tools provide an "Altcoin Season Index" that measures the relative performance of altcoins against Bitcoin. A high index score (e.g., 75 or above) suggests an alt season.
* Increased trading volumes for altcoins: You'll typically see a surge in trading activity and liquidity for various altcoins.
* Positive sentiment and hype: Social media and news may be filled with positive discussions and excitement around altcoin projects.
* Phased market movement: Alt season often follows a pattern:
* Bitcoin dominance: Bitcoin first leads the market with a strong price increase.
* Major altcoins gain traction: As Bitcoin stabilizes, large-cap altcoins like Ethereum and BNB start to rise.
* Mid-cap altcoins follow: Mid-sized altcoins then begin to attract attention.
* New and low-cap altcoins explode: This is often the most speculative phase, where newer and smaller altcoins see significant gains.
* Return to Bitcoin dominance: Eventually, the market may reach a saturation point, and capital flows back into Bitcoin, causing altcoins to lose value against BTC.
Important Considerations:
* Volatility and Risk: Alt seasons are characterized by high volatility. While they offer potential for significant gains, they also carry high risks, especially with less-established projects.
* Duration: Alt seasons can last from a few weeks to several months. There's no fixed duration.
* Not a guaranteed event: While alt seasons are a recurring phenomenon, their timing and intensity can vary, and they are not guaranteed to happen in every market cycle.