Altcoin season? What does it mean? The altcoin season is a period when non-Bitcoin digital currencies register a surge in price, with chances to surpass the leading cryptocurrency’s performance. What makes the market take such a turn?
According to crypto experts, unique projects, an increased interest in altcoins, and the overall positive sentiment usually lead to an altcoin season.
While it’s an innovative ecosystem, the crypto financial space experiences the same periods of bear and bull cycles because it’s a financial environment at the end of the day.
Since the start of 2024, the crypto world has been more exciting than ever, and you are right to be interested in a Bitcoin, Ethereum or XRP price prediction 2030 because all digital currencies seem to be on an upward trajectory.
Market optimism is fueled by a multitude of factors, such as the halving of Bitcoin and authorities worldwide developing a regulatory framework for cryptocurrencies.
Gaining knowledge about the altcoin season
As mentioned earlier, the altcoin season is a time when the altcoins have a high market capitalization and could outrun Bitcoin. The entire crypto sector is going through a bull run at the moment; hence, it was only natural for altcoins to perform well.
The increased trading volume of alternative coins has attracted more investors to the sector, who are confident that the assets extending past Bitcoin could provide them with profit opportunities. The altcoin season fosters investment into new crypto projects because they are more affordable than Bitcoin. Bitcoin tends to become inaccessible for the majority of investors, especially if they have just entered the sector.
Is the altcoin season different from the Bitcoin season?
Altcoin seasons are marked by investors’ attention being focused on alternative currencies and shifting away from Bitcoin for several reasons. This trend registers a significant increase in trading volume and price of altcoins as a consequence of a cumulus of factors like technological advancements, new projects, speculative trading, and an increasing utility of cryptocurrencies.
When these factors all come together, alternative coins tend to go through a time of value appreciation, usually outperforming Bitcoin. Most of the market capital will go into alternative currencies after it has been directed towards Bitcoin for a long time, and its price has surged so high that most investors can no longer afford to add it to their portfolios.
Bitcoin season, on the other hand, is a time when the entire market focuses on Bitcoin, and most investors prefer to dedicate their portfolios solely to this asset, neglecting diversification. You’ll notice that Bitcoin dominates the sector during these periods and has a higher market capitalization.
Usually, the market shifts towards this trend when the market regards Bitcoin as a stable commodity. Over the years, it gained the status of a store of value, similar to gold, so it can be used as an instrument that fights market uncertainty.
During bear markets, investors prefer Bitcoin because it’s the oldest cryptocurrency, and they associate it with a lower risk. During bear phases, digital currencies tend to lose value or stagnate, and investors prefer to buy larger currencies that have a history of bouncing back when the market ends the cycle.
Factors to check when buying altcoins during their season
Finding the best digital asset during the altcoin season can be challenging, especially in the current context when there are so many projects available in the sector. Therefore, you need to consider a series of factors to review them and figure out which one makes the best match for your investment portfolio.
Depending on your investment goals, there are a number of things you must think about. The secret to investing in altcoins successfully is to research the niche thoroughly. Here is a list of factors to check in the process.
Market capitalization
It’s essential to check the market capitalization of a digital currency to learn more about its growth potential and market stability. To better understand what market capitalization refers to, you should know that it’s calculated according to the currency price of the digital currency multiplied by the total amount of tokens in circulation.
Altcoins are considered less risky if they have a large market capitalization compared to other commodities from the same category. Crypto investors always check an asset’s market cap because it provides them with great knowledge about its worth on the market. They find it more relevant than the market price.
It’s advisable to create a diversified investment portfolio and add several altcoins with a high market capitalization to manage risk and increase the chances of making a return.
White paper
All blockchain-based assets have white papers that provide details about the project, and while they can be quite technical for a beginner, it’s essential to read them so you can figure out what the asset does.
When reading the white paper, check the utility of digital currency because it tells you what its purpose is and if it aims to improve blockchain technology or solve a real-world problem. Then, check its roadmap to understand where it’s going and if the future prospects match your investment needs.
Use cases
When we discuss cryptocurrencies’ use cases, we refer to their utilities and help you determine whether the public really needs this alternative asset. Most cryptocurrencies were created to serve as digital payment tools that don’t require a bank, but they also have additional purposes, and it’s essential to check them.
Competition
Research the market to find information about the several categories of cryptocurrencies available. They serve numerous purposes, from gaming to payment solutions and decentralized finance.
Depending on their utility, some work better than others, and it’s paramount to compare the projects to identify the best for your portfolio. Compare their white papers and utilities and pick the ones that dominate the market.
Conclusion
Altcoins seasons are different each time, but they always provide savvy investors with opportunities to make a return. If you’re willing to invest time in research and follow suitable strategies, you can maximize your profit.
