Altcoin Season occurs when top alternative cryptocurrencies, or ‘altcoins’ outperform Bitcoin for three months straight, a phenomenon that every crypto trader plans ahead for. Every four years, Bitcoin undergoes its ‘Halving’ event, a pre-programmed moment when the issuance of new BTC to bitcoin miners is cut in half, causing an economic supply shock that sends BTC into a speculation bubble.
The bubble is driven primarily by retail investors, who are mostly motivated by hype and media manipulation tactics convincing them to buy as much as possible while they still can, and the rapidly rising price of BTC only fuels their FOMO. People go into debt, bet life savings, empty their children’s college funds, and withdraw their retirement accounts to ride the bubble, forgetting that what goes up must always come down, and when crypto comes down it crashes harder than any other asset class. Underestimating this phenomenon results in most people getting wrecked by crypto, while the few who understand it make enviable gains.
During Bitcoin bull-markets, each ‘leg’ of the bubble will always peak, crash, and then trade sideways, at which point Altcoin Season begins. As Anycoin Direct explains, Altcoin Season is confirmed when 75 percent of the top 50 altcoins outperform BTC for 90 days in terms of total market value, and can be tracked by a chart provided by Blockchain Center. Often, Ethereum’s native cryptocurrency ETH (ether) is the first to pop, followed by the top 50 altcoins. However, it is not these altcoins that excite crypto traders during Altcoin Season. It’s the smaller cryptocurrencies that make crypto fortunes, but only for those who got in early.
How Does Altcoin Season Work?
Altcoin Season flows through the crypto market in waves, beginning with the largest market cap tokens and working down to the smallest projects, which can be found by researching CoinGecko and CoinMarketCap listings far ahead of time. The billions that flow through the market during this wave have increasingly larger multiplier effects on smaller market cap coins, and the tiniest tokens (or ‘micro-caps’) experience the largest gains, some of which become the legendary ‘100x altcoin gems’ that afford metaphorical ‘Lambos’ for their investors if they remember to cash out their crypto, though most don’t and lose everything.
There is no way to predict which tokens will be hit, as Altcoin Seasons are mainly fueled by retail speculators who trade on emotion and hype, and who only buy coins as they are skyrocketing in value, often resulting in buying the tops and selling the bottoms. This prompts veteran crypto traders to employ a strategy of investing a small amount of disposable capital into dozens of micro-cap projects that all have some combination of utility, innovation, and potential hype value long before retail speculators know they exist. Altcoin Season is also when crypto rug pull scams are the most common and lucrative, so this strategy is necessary to reduce risk while remaining exposed to potential asymmetric gains.
Experienced crypto traders also never adopt the popular “HODL” cryptocurrency investing strategy when a micro-cap altcoin explodes, as very few tokens will ever retain their gains no matter how good the project is. While crypto bull-runs triggered by a Bitcoin halving event are not necessary for Altcoin Season to occur, they are the most predictable time when the phenomenon can be expected.