Altseason Index: A Complete Guide to Trading Altcoins During the Bull Run

The cryptocurrency market moves in cycles, and each cycle brings its own opportunities and challenges. One of the most exciting periods for investors is the altseason — a time when altcoins begin to significantly outpace Bitcoin. The key tool for tracking this phenomenon is the altseason index, which helps traders determine when the market enters a phase of increased activity in alternative assets.

Defining Altseason and Its Evolution

Altseason is a period of active growth in altcoins, when the total market capitalization of alternative cryptocurrencies exceeds Bitcoin’s performance amid a bullish market. However, in recent years, the mechanism of altseason has undergone significant changes. Previously, it was driven by simple capital rotation from Bitcoin into altcoins, but now liquidity from stablecoins and institutional capital inflows play a larger role.

Analysts like Ki Young Ju from CryptoQuant emphasize a fundamental shift: trading volumes of altcoins in stablecoin pairs (USDT, USDC) have become a more meaningful indicator of true market growth than just moving funds between Bitcoin and other assets. This reflects the real expansion of the crypto market due to new participants and institutional investors.

Today, with a more favorable regulatory environment and approval of spot ETFs for Bitcoin and Ethereum, the market is on the verge of a new altseason. Recognition of cryptocurrencies as an asset class opens new horizons for all market participants.

How to Distinguish Altseason from Bitcoin Season

Altseason: shifting focus to alternative assets

During altseason, capital begins to concentrate on alternative cryptocurrencies. This process is characterized by sharp increases in trading volumes and price jumps of altcoins, often surpassing Bitcoin’s returns. Factors contributing to this include the launch of innovative projects, technological breakthroughs, growing retail investor interest, and increased speculative activity.

Capital starts flowing into altcoins after a prolonged period of Bitcoin consolidation, when the asset becomes less accessible to the average investor due to its high price.

Bitcoin season: dominance recovery

The opposite dynamic occurs during Bitcoin season, when market attention shifts back to the main asset. During these periods, Bitcoin’s dominance index rises, signaling a shift in investor preference toward the core asset. Reasons include seeking safety amid market uncertainty, positioning Bitcoin as digital gold, and minimizing risks in bear markets.

In times of high volatility and pessimistic sentiment, investors typically focus funds on Bitcoin or stablecoins, while altcoins stagnate or decline.

Drivers of Altseason Transformation

From simple rotation to liquidity flows

Historically, altseasons were associated with direct capital movement from Bitcoin into altcoins. When BTC price entered consolidation, traders actively transferred funds seeking higher returns. Events like the 2017 ICO boom and the explosive growth of DeFi projects in summer 2020 defined that era.

However, Ki Young Ju from CryptoQuant notes a qualitative transformation: today, trading volumes in altcoin-stablecoin pairs play a central role, reflecting organic ecosystem growth rather than cyclical speculation. Liquidity expansion through stablecoins like USDT and USDC has facilitated market entry and exit, laying the foundation for sustainable altcoin development.

Ethereum’s role in launching growth waves

Ethereum traditionally serves as the locomotive of altseasons thanks to its dynamic DeFi and NFT ecosystem. Tom Lee from Fundstrat predicts that Ethereum’s momentum will continue to shape altcoin trajectories as institutional investors diversify their portfolios. The analyst highlights projects like Solana and Ethereum itself as attractive options for investors willing to accept higher risks for significant growth opportunities.

Institutional capital inflows into Ethereum and its ecosystem tokens are becoming a key marker of the start of a global altseason.

Bitcoin dominance as a key indicator

Crypto analyst Rekt Capital highlights Bitcoin dominance as a critical indicator. Historical experience shows that a drop below 50% reliably signals the onset of altseason. Current consolidation of Bitcoin at certain levels can create optimal conditions for capital inflows into Ethereum and other altcoins.

Altseason Index: A Key Analytical Tool

The altseason index, developed by Blockchain Center, provides a quantitative method for assessing market conditions. This index compares the performance of the top 50 altcoins relative to Bitcoin. A value above 75 indicates the start of an altseason, when most altcoins outperform BTC.

Currently, the altseason index is in a critical zone, signaling the formation of conditions for a major rally. Regular monitoring of this indicator allows traders to position their portfolios optimally and catch major trend waves.

Regulation’s Impact on Altseason Development

Government regulation significantly influences the trajectory of altseasons. Favorable regulatory decisions, such as approval of spot Bitcoin and Ethereum ETFs, boost confidence and attract new capital. Conversely, tightening regulations or negative announcements can quickly dampen investor enthusiasm.

Tom Lee notes that pro-cryptocurrency legislation could trigger a prolonged altseason, especially if major financial players like BlackRock start launching new investment products. Such regulatory clarity strengthens market confidence and promotes healthy growth of alternative assets.

Historical Altseasons and Their Characteristics

2017-2018: The ICO Era

The first significant altseason of the modern era occurred at the end of 2017 — early 2018. Bitcoin’s dominance plummeted from 87% to 32%, while altcoins experienced exponential growth. The ICO boom attracted waves of investment into new projects like Ripple and Litecoin. The total crypto market cap grew from modest $30 billion to over $600 billion.

However, regulatory restrictions and numerous failed projects quickly cooled this wave.

Early 2021: DeFi and NFT Revolution

The second powerful altseason unfolded in early 2021, when Bitcoin’s dominance dropped from 70% to 38%. Altcoins associated with DeFi, NFTs, and even meme coins showed phenomenal growth. Market capitalization hit a record $3 trillion, demonstrating mass adoption by retail investors.

Q4 2023 – H1 2024: New wave of institutional capital

The latest altseason was driven by different factors. Expectations of Bitcoin halving (April 2024) and anticipated approval of spot Ethereum ETFs created a positive backdrop. Unlike previous cycles, this period saw diversification of growth sectors into AI, GameFi, and DePIN.

Projects like Render (RNDR) and Akash Network (AKT) surged over 1000%, reflecting rising demand for AI solutions in crypto. The blockchain gaming sector (ImmutableX, Ronin) experienced a revival, attracting gamers and investors alike. Even meme coins like DOGE, SHIB, and BONK posted over 40% gains, showing concentrated market interest in these niches.

Expansion of meme coins beyond Ethereum, especially on Solana, indicates ecosystem maturation and growing recognition of alternative blockchains.

Four Phases of Capital Flow in Altseasons

Altseason unfolds in distinct phases, reflecting cyclical liquidity redistribution:

Phase one: Consolidation and Bitcoin dominance

Capital concentrates in Bitcoin as a stable asset. BTC dominance rises, trading volumes of the main asset increase, while altcoins stagnate. This is a temporary, expected state before a breakout.

Phase two: Ethereum gains momentum

Liquidity begins shifting toward Ethereum. The ETH/BTC ratio rises, activity in DeFi and Layer-2 solutions intensifies. This signals market readiness for expansion.

Phase three: Rally of major altcoins

Attention shifts to established altcoins with mature ecosystems — Solana, Cardano, Polygon. These projects show double-digit gains, attracting speculative demand.

Phase four: Explosive growth of small-cap altcoins

The final phase features parabolic rises in small-cap altcoins. Bitcoin’s dominance drops below 40%, speculative interest peaks, and the altseason index hits maximum levels.

Tracking these phases is critical for positioning and capturing growth waves.

How to Identify the Start of Altseason: Key Indicators

1. Falling Bitcoin dominance

A sliding decline below 50% in dominance is a classic signal of approaching altseason. This movement indicates a reorientation of investor capital toward alternatives.

2. ETH/BTC ratio

This ratio serves as an altseason barometer. An upward trend in ETH/BTC signals Ethereum’s outperformance over Bitcoin and often precedes broader altcoin rallies. Conversely, a decline may indicate a return to Bitcoin dominance.

3. Altseason index

The tool from Blockchain Center quantitatively assesses the top 50 altcoins’ performance. A value above 75 officially signals an altseason. Monitoring this index provides an objective, metric-based signal.

4. Trading volumes in altcoin-stablecoin pairs

An increase in volumes in these pairs indicates growing confidence and new capital inflows. Analysts highlight significant growth in meme coins (DOGE, SHIB, BONK, PEPE, WIF) over 40% as an early altseason sign. The AI sector shows steady growth through projects like Render and NEAR Protocol.

5. Social signals and media trends

Discussions about altcoins on social media, rising popularity of certain tickers, and influential opinions often precede price movements.

6. Transition from fear to greed

The overall market sentiment index shifting from fear to greed signals bullish sentiment, favorable for altseason.

7. Stablecoin liquidity

Availability of USDT, USDC, and other stablecoins is critical. High liquidity facilitates market entry and exit, encouraging capital inflows into altcoins. As stablecoin adoption grows, they become a guarantee of healthy development for alternative assets.

Entry Strategy: How to Trade Altcoins During the Wave

Step 1: Choose a reliable platform

Start with an authoritative crypto exchange offering a wide selection of altcoins, robust security, and user-friendly interface. The platform should support both fiat and crypto deposits.

Step 2: Fund your account

Deposit funds via your preferred method — credit card, bank transfer, or transfer from your personal wallet. Understand fees and processing times.

Step 3: Identify target altcoins

Use analysis tools and market scanners to find altcoins aligned with your strategy. Monitor the altseason index and related indicators to determine the optimal entry point.

Step 4: Place orders

Select order types:

• Market orders — immediate purchase at current price
• Limit orders — buy at a predetermined price
• Margin trading — using leverage (with increased risk)

Enter desired amounts and confirm the transaction.

Step 5: Manage your position

Track altcoin performance, set stop-loss levels, and take profits gradually. Avoid the temptation to hold positions to the maximum — discipline is critical in high volatility.

Mastering Altseason: Practical Tips

Conduct thorough research. Before investing, carefully study the project: team composition, technological foundation, market potential, and competitive advantages. Avoid hype without understanding fundamental factors.

Diversify your portfolio. Spread investments across multiple altcoins and sectors (AI, GameFi, DeFi) to reduce risk. Don’t concentrate all funds in one asset.

Set realistic goals. While altseason can be highly profitable, don’t expect instant riches. The market remains volatile, and corrections happen quickly.

Apply risk management strategies. Use stop-loss orders, maintain acceptable risk-reward ratios, and avoid excessive leverage.

Systematically lock in profits. Gradually closing positions as prices rise protects gains and reduces exposure to sudden corrections.

Risks and Pitfalls of Trading During Altseason

Extreme volatility

Altcoins exhibit much higher volatility than Bitcoin. Prices can drop 50% within days, wiping out profits. Spreads on illiquid markets can significantly increase costs.

Hype-driven bubbles

Excessive speculation and hype often inflate prices to unrealistic levels. Such bubbles inevitably burst, leaving investors with losses.

Scams and rug pulls

Beware of scams and rug pulls — when project creators disappear after raising funds. Pump-and-dump schemes artificially inflate prices before crashing.

Regulatory shocks

Unexpected legislative actions or regulatory measures can abruptly reverse trends. Constantly monitor the political and regulatory landscape.

Leverage risk

Using margin amplifies both gains and losses. Miscalculations can lead to liquidation on minor adverse moves.

Regulation as a Shaping Factor of Altseasons

Regulatory environment exerts a comprehensive influence on altseasons. Negative developments, such as ICO bans in 2018 or exchange restrictions, have historically caused volatility and cooled enthusiasm.

Conversely, favorable regulation stimulates investment. Recent SEC approval of spot Bitcoin and Ethereum ETFs attracted significant institutional capital, expanding the investor base and boosting market sentiment.

Analysts suggest that potential approval of ETFs for XRP and other altcoins by major players like BlackRock could significantly accelerate the next altseason. Monitoring global regulatory trends is essential for successful altseason trading.

The Global Context: Market Maturation

As the crypto market develops, altseasons are becoming more sophisticated and institutionalized. The early altseasons (2017–2018) were driven by speculation and technological enthusiasm. Current altseasons are fueled by real capital flows and diversified interest across sectors.

The total crypto market cap has repeatedly hit new highs, reflecting growing recognition of cryptocurrencies as a serious investment class. Expansion beyond Bitcoin and Ethereum into emerging ecosystems (Solana, Cardano) and narratives (AI in blockchain, GameFi, metaverses) signals a move toward a more balanced and sustainable market.

The altseason index remains a valuable navigation tool in this evolving landscape, helping traders and investors synchronize with market cycles and optimize capital deployment.

Conclusion: Opportunities and Discipline

Altseason offers a unique window of opportunity for experienced and disciplined investors. Understanding altseason mechanics, monitoring key indicators (especially the altseason index), diversifying portfolios, and strict risk management are fundamental to successful trading during these periods.

On the path to profitable trading, conscious research, prudent decisions, readiness for volatility, and the ability to step back when conditions change are crucial. History shows that combining knowledge and discipline allows participants to maximize opportunities and minimize losses.

Staying informed about market developments, technological innovations, and regulatory changes will prepare you for the next altseason wave and enable you to leverage it effectively toward your investment goals.