Despite the ongoing crypto decline, investors stand to gain significantly when the ‘altcoin season’ begins. The potential hazards and successful trading techniques of this particular cryptocurrency season are all laid out in detail in this thorough guide, so keep reading.
What is Altcoin Season?
The term “altcoin season” is used to describe a period of time when the performance of altcoins (cryptocurrencies other than Bitcoin) exceeds that of BTC.
Due to its status as the cryptocurrency with the highest market capitalization, Bitcoin controls a significant portion of the marketplace’s daily trading activity. Bitcoin’s historical dominance percentage was very near 100%, which reflected its once-dominant status.
Nevertheless, Bitcoin’s dominance has eroded due to the debut and increasing acceptance of altcoins. When the aggregate value of altcoins rises to overtake Bitcoin’s, we say that we’ve entered “altcoin season.”
Investors and trading professionals with experience and a variety of investments pay careful consideration to altcoin seasons so that they may make changes to their holdings as needed. They foresee a time in which altcoins will surpass Bitcoin and take advantage of the situation by adjusting their portfolios accordingly.
Why Does an Altcoin Season Happen?
There are several possible explanations for why an altcoin season occurs. Here are three factors that might spark this development:
Bitcoin’s Diminished Market Demand
Alternate cryptocurrencies may flourish during a period of declining Bitcoin popularity. Market capitalization may move from Bitcoin to other digital money if investors seek diversification by buying them. Due to this steadiness, some traders decide to liquidate their Bitcoin holdings in pursuit of short-term profits, while others begin investigating other cryptocurrencies.
A healthy economy, a rising stock market, and optimistic feelings in the cryptocurrency market may all boost demand for altcoins. Throughout bull markets, when investors are looking for bigger comes back, even cryptocurrencies with modest market caps may see substantial price gains.
As a result, the total market value of altcoins increases as more people look to them as an alternative investment.
Recent Developments in the Cryptocurrency Industry
Exciting new cryptocurrencies or intriguing changes to old ones might stimulate demand. These altcoins have a greater impact when they follow bigger movements and provide answers that other cryptocurrencies haven’t thought of. When new developments are made, investors gravitate towards them and prefer them rather than conventional bitcoins, thereby increasing market demand for altcoins.
How To Trade Efficiently through the Altcoin Season?
The altcoin trading season is an excellent opportunity for investors to broaden their holdings beyond Bitcoin. To mitigate the risk associated with the unpredictability of cryptocurrency prices, savvy investors diversify their holdings among a number of potential altcoins.
Finding the best entry and exit positions during cryptocurrency season may be a breeze with the use of techniques for technical analysis, like evaluating patterns of charts, measurements, and volume data.
Moreover, the process of “whale watching” is a reliable method for predicting market volatility during the altcoin season in particular. This tactic centers on keeping an eye on the investments of wealthy people or institutions (termed “whales”) who have a significant impact on the market.
To “watch whales,” one must monitor the addresses or wallets linked with very wealthy individuals in order to learn about their trading habits. Trading and investing professionals study the behaviour of these whales in an effort to spot fresh market patterns, predict price swings, and arrive at informed, smart and effective decisions.
Finally, altcoin season is that special time of year when alternative cryptocurrencies (altcoins) do very well relative to Bitcoin.
Investors may effectively traverse this market period by using a variety of methods, including diversification, the use of technical assessment instruments and close surveillance of whale activity. Though the altcoin season is exciting, it’s important to proceed with care due to volatile markets and other hazards involving market manipulation.