The term ‘Altseason’ has not been very popular for the past couple of months. Many cryptocurrencies have been underperforming with extremely low volumes, while others have just completely fallen off the radar.
In recent weeks, however, the term “altseason” has been echoed around in many crypto communities, Twitter spaces, and Telegram trading channels, but it is a matter of time before it looms. It’s safe to say the significant rise in the price of bitcoin has something to do with it. But before we dive any deeper, let’s get a good understanding of what an altcoin is.
What is an Altcoin?
Altcoins, also known as alts, are every other cryptocurrency other than bitcoin. They are cryptocurrencies that came after the invention of Bitcoin. There are many popular ones, including Ether (ETH), Tether (USDT), XRP, and Litecoin (LTC), which came in second.
The value of altcoins is directly proportional to the price and momentum of the largest cryptocurrency, bitcoin. This means that when the price of bitcoin goes up, the price of altcoins also increases, and vice versa. The Bitcoin Dominance Index, which measures the level of influence bitcoin has on altcoins, measures the intensity of this relationship.
Currently, the BTC dominance index is still quite high, which means that Bitcoin still maintains a dominant level of influence over the cryptocurrency market.
Bitcoin Dominance Chart Source: Trading View
As the chart shows, the bitcoin dominance index has dwindled slightly from a peak—a two-year peak since April 2021—that it broke last month. At the current bitcoin price of $37,000, the BTC dominance index stands at 52.59%, which is more than half of every other cryptocurrency combined. It’s safe to say altseason has not begun. So, what exactly does altseason mean?
What is an Altseason?
An altseason is a period of excitement for crypto traders and investors. It is a period whereby the influence of bitcoin on alts lowers and alts are free to perform on their own accord. In other words, it is the season at which bitcoin’s dominance begins to decrease and alts move freely with high volatility without being influenced. And why does this happen?
This happens because, as the bitcoin price keeps growing exponentially, it consolidates for a period of time, leaving investors to seek out more profitable investments. This often leads them to altcoins in search of greater gains due to increased volatility. During this period, altcoins begin to outperform bitcoin, and they start to gain dominance. The previous bull market saw the same cycle as bitcoin, which took precedence before cryptocurrencies such as Shiba Inu, ETH, Solana, and Floki skyrocketed in price. An altseason ends when Bitcoin outperforms altcoins, and the cycle continues.
Is it Altseason?
As you can see from the bitcoin dominance chart, we might be in the early stages of a potential altseason. The BTC dominance index is at a very high level, which means that bitcoin still holds the majority of liquidity. However, some altcoins have already seen massive gains, including ETH, XRP, and SOL, as was the case in the previous bull markets. Volatility is also increasing among other alts, which can be indicators of a not so far altseason in the future.