Altseason is here: how to recognize the altcoin wave and trade on it

Every experienced trader knows that the cryptocurrency market moves in waves. But while most talk about ups and downs, there is a phenomenon in the crypto community that fundamentally changes the game — altseason, or the altcoin season. This is a period when secondary cryptocurrencies suddenly start to grow faster than Bitcoin, and investors shift capital into riskier projects. Over the past few years, the altcoin season mechanism has significantly evolved, and understanding these changes can be key to profitable trading.

Altseason: What’s happening in the market

Altseason is not just when alternative coins are rising. It’s a period when the total market capitalization of altcoins begins to dominate over Bitcoin in a bullish market. The main signal of such a period is the decline of Bitcoin’s dominance index, which shows Bitcoin’s share of the total crypto market capitalization.

Historically, altseason developed as simple capital rotation: when Bitcoin’s price consolidated, traders would just move funds into altcoins seeking higher percentage gains. But today, the mechanism works differently. Ky Young Joo, head of CryptoQuant, emphasizes: the modern altcoin season now moves with liquidity from stablecoins and inflows of institutional capital, not just speculative rotation out of BTC.

Altseason almost always involves three phenomena:

• Decrease in Bitcoin dominance (often below 50%)
• Sharp increase in trading volumes of altcoins in pairs with stablecoins
• Wave of retail speculative interest in small-cap projects

Altseason vs Bitcoin season: two sides of the same cycle

There are two opposite periods in the market: when altcoins lead upward, and when Bitcoin dominates. During altseason, market attention shifts to alternatives. This manifests as rising altcoin prices, often outperforming Bitcoin returns several times.

The switching mechanism is simple: after a prolonged Bitcoin rally, investors start looking for alternatives — Ethereum, Solana, or niche projects. Prices rise, trading volumes increase, and FOMO (fear of missing out) pushes new participants into the market.

On the other hand, Bitcoin season is the opposite. During these periods, Bitcoin’s dominance index grows, indicating investor preference for the first and most stable cryptocurrency. This often happens during market uncertainty or bearish periods when people seek safety. In such times, altcoins often stagnate or lose value.

How the altcoin season has evolved

From simple rotation to stablecoin flows

During the crypto cycles of 2017-2018 and 2020-2021, altseason was quite predictable: capital moved from Bitcoin into altcoins. The ICO boom of 2017 and the DeFi summer of 2020 were classic examples of this phenomenon.

But the market matured, and the logic changed. Now, the main role is played not just by rotation out of BTC, but by trading volume of altcoins in pairs with stablecoins (USDT, USDC). This reflects real market growth, not just speculative games. Stablecoins create a foundation for altcoin growth, making it easier for investors to enter and exit positions.

Ethereum as the anchor of altseason

Ethereum often acts as the main driver of altseason. Thanks to the growing decentralized finance (DeFi) ecosystem and non-fungible tokens (NFTs), the second-largest cryptocurrency frequently leads the altcoin rally. Analysis from Fundstrat shows that Ethereum’s momentum often precedes broader altcoin movements, especially when institutional investors diversify portfolios beyond Bitcoin.

Projects like Solana, Cardano, and other Layer 1 blockchains demonstrate that altseason creates opportunities even for more risky investments.

Bitcoin dominance index as a compass

Rekt Capital, a prominent crypto analyst, has long noted a clear pattern: a decline in Bitcoin dominance below 50% is almost a guaranteed signal of the start of altseason. This simple but effective rule has worked for years.

Current observations suggest that when Bitcoin consolidates in the $91,000–$100,000 range, conditions are ideal for Ethereum and other altcoins to start capturing liquidity from this zone.

Altseason index as a baseline

Blockchain Center developed the Altseason Index, which measures the performance of the top 50 altcoins relative to Bitcoin. When the index exceeds 75, it signals a full-blown altseason. As of late 2024, the index rose to 78, indicating the market was already entering an active altseason zone.

History of altseasons: what happened before

2017–2018: ICO boom and crash

Late 2017 was a classic example of altseason. Bitcoin’s dominance dropped from 87% to 32% in just a few months. During this time, a wave of new projects emerged via ICOs: Ethereum, Ripple, Litecoin, and hundreds of other tokens attracted speculative investments.

Total crypto market capitalization grew from $30 billion to over $600 billion. Many altcoins hit all-time highs. But in 2018, government crackdowns and failed projects led to a sharp crash of the altseason.

2021: DeFi, NFTs, and trillions

Early 2021 brought an even larger altseason. Bitcoin’s dominance fell from 70% to 38%, while the share of altcoins rose from 30% to 62%. This was the era of DeFi, where decentralized financial protocols promised to revolutionize traditional finance. NFTs added fuel — collectible digital assets attracted mass interest.

Projects in these sectors showed monstrous gains. Some altcoins increased 100-fold. The total market cap hit $3 trillion — a record high, far exceeding 2017 peaks.

2023–2024: AI and institutionalization

The latest altseason was different. Early 2024 was marked by optimism around Bitcoin halving in April and SEC approval of spot ETFs for Ethereum by May.

But the main difference: while previous altseasons were driven by ICOs and DeFi, 2023–2024 saw sector diversification. AI coins (Render, Akash Network) surged over 1000%. The GameFi sector (ImmutableX, Ronin) experienced a revival. Meme coins (DOGE, SHIB, BONK, PEPE, WIF) grew over 40%.

For the first time, meme coins expanded beyond Ethereum, especially on Solana, whose ecosystem grew by 945%, rebounding from the reputation of a “dead blockchain.”

Four phases of altseason: liquidity wave

Altcoin season rarely starts abruptly. Usually, it unfolds in four clear phases, reflecting cyclical capital movement.

Phase 1: Bitcoin dominance

At this stage, capital concentrates in Bitcoin as the most stable asset. The Bitcoin dominance index rises, altcoin trading volumes fall, and prices stagnate. It’s a dull but important accumulation period.

Phase 2: Ethereum takes the lead

The first sign of altseason is Ethereum’s growth. Investors begin exploring DeFi, Layer-2 solutions, and the smart contract ecosystem. The ETH/BTC ratio starts rising — a key signal.

Phase 3: Rally of major altcoins

In this phase, larger altcoins with established ecosystems come into play: Solana, Cardano, Polygon, and others. Double-digit gains become normal. The market starts believing in altcoins as an asset class.

Phase 4: Small-cap explosion

This is the peak of altseason. Bitcoin’s dominance index drops below 40%, small-cap altcoins grow parabolically, speculative projects attract mass interest, and FOMO reaches its maximum. The market often overheats at this point.

Seven signals of altseason start

How to recognize that altseason has begun or is about to? Here are key indicators experienced traders watch:

1. Bitcoin dominance decline: historically, dropping below 50% was a reliable signal. If the index starts decreasing rapidly, altseason is approaching.

2. ETH/BTC ratio rising: when Ethereum outperforms Bitcoin, it almost always precedes broader altcoin rallies. Rising ETH/BTC is an altseason compass.

3. Altseason index above 75: Blockchain Center’s tool. A value above 75 indicates most of the top 50 altcoins already outperform Bitcoin.

4. Volume growth in altcoin-stablecoin pairs: increased trading in pairs with USDT and USDC signals real capital inflow, not just rotation.

5. Sector-specific surges: if you see parabolic growth in AI coins, GameFi, or meme tokens, it often signals the start of a broader move. Recent example: AI sector showing +40% before a major altseason.

6. Market sentiment shift: the “Fear and Greed” index moving from fear to greed indicates bullish momentum. Social media fills with speculative content.

7. Stablecoin liquidity: when stablecoins become more accessible and trading volumes in pairs with them grow, it creates a foundation for altseason. Stablecoins are the lubricant of the altseason engine.

How to start trading altcoins: practical steps

If you decide to participate in altseason, the first step is choosing a reliable platform with a wide range of altcoins. Here’s a step-by-step guide for beginners:

Step 1: Create an account
Register on a chosen exchange, providing email or phone number. Complete KYC verification.

Step 2: Secure your account
Activate two-factor authentication (2FA). Critical for protecting your funds.

Step 3: Deposit funds
Deposit crypto (transfer from another wallet) or fiat (credit card, bank transfer). Many exchanges offer P2P markets for buying crypto with local currency.

Step 4: Choose altcoins
Use platform search tools to find interesting altcoins. Look in “Markets” or “Trading” sections.

Step 5: Place an order
Decide on order type: market (buy at current price) or limit (set desired price). Specify amount and confirm.

Step 6: Manage your position
After purchase, you can hold altcoins on the exchange, swap them for other coins, or withdraw to your own wallet. Some platforms offer passive income mechanisms like staking.

Golden rules for trading during altseason

Altcoin season is exciting but requires discipline. Here are proven tips from experienced traders:

Conduct thorough research: before investing in any altcoin, study the project team, technology, roadmap, and real use cases. Don’t FOMO blindly.

Diversify your portfolio: don’t put all your money into one altcoin. Spread investments across 5–10 promising projects from different sectors. This reduces risk.

Set realistic expectations: while altseason can bring big profits, it doesn’t guarantee instant riches. Some altcoins will grow 10x, others will fall 90%. Be prepared for volatility.

Use stop-loss orders: set automatic sell orders if the price drops by a certain percentage. This protects you from catastrophic losses.

Take profits gradually: don’t wait for the maximum. Sell part of your holdings at each doubling of price. This guarantees profit and reduces risk.

As analyst Doctor Profit says: “Altcoin season is exciting but requires discipline. Without proper risk management, gains can quickly turn into losses.”

Altseason pitfalls: risks to avoid

Increased volatility and isolation

Altcoins are a different level of volatility compared to Bitcoin. Prices can drop 50% in a day. On illiquid markets, spreads can be so wide that you lose a significant part of capital just entering or exiting.

Speculative bubbles and scams

During altseason, outright scams appear. “Rug pulls” — developers disappearing with investors’ funds — become common. “Pump-and-dump” schemes artificially inflate prices before crashing.

Excessive leverage use

The temptation to borrow and increase positions is high but dangerous. If an altcoin’s price drops 30–40%, margin calls will force you out at a loss. Many traders lost everything this way.

Regulatory shocks

Sudden regulatory actions can destroy sectors. Bans on trading certain tokens, exchange requirements, pressure on projects — all can happen overnight and cause panic.

How regulation affects altseason

History shows regulation can both catalyze and suppress altseason.

Negative impact: in 2018, regulators cracked down on ICOs, leading to the collapse of many projects. Regulatory uncertainty scared institutional investors away.

Positive impact: approval of spot Bitcoin ETFs in January 2024 created optimism and attracted institutional capital. Over 70 spot Bitcoin ETFs were approved, boosting market confidence. The new US administration’s favorable stance toward cryptocurrencies may lead to approval of ETFs for XRP and other projects, further extending altseason.

The clearer the regulation, the more confident investors are, and the longer altseason lasts.

Altseason outlook for 2025–2026

By late 2024, the crypto market shows signs of maturation:

Institutional adoption is growing: approval of spot Bitcoin ETFs opened the floodgates for huge capital inflows. If Ethereum ETFs and others get approved, volumes could soar.

Political factors improve: electing lawmakers supportive of crypto promises a more favorable regulatory environment in the US — the largest crypto market.

Market capitalization has already hit records: total crypto market cap reached $3.2 trillion, surpassing 2021 highs. This indicates the market has moved beyond mere speculation.

Bitcoin moves upward: approaching or surpassing psychological levels (like $100K) often signals a healthy bull market that drags altcoins along.

These factors suggest conditions are ripe for a sustained and powerful altseason. The market seems ready for a new wave of growth, especially if regulatory clarity continues to improve.

Final thoughts

Altcoin season is not just a market cycle but a unique window of opportunity for traders willing to take the right steps. From understanding market mechanics to recognizing signals and managing risks — everything matters.

The main thing to remember: altseason is predictable if you know where to look for signals. Bitcoin dominance decline, Ethereum growth, increased volumes in altcoin-stablecoin pairs — all are parts of one puzzle.

Those who understand this mechanism can not only catch the wave but also prepare for it in advance. And remember: huge profits during altseason often come hand in hand with huge risks. Discipline, research, and risk management are your key tools on the path to success in the world of altcoins.