Altcoin season: concept introduction, when and why

The term “altcoin season” refers to a period in which altcoins steadily outperform Bitcoin.

Due to the volatility of the market, there is no such thing as guaranteed profits, but the altcoin season may be a good time for traders and investors to diversify their portfolios.

Learning how to spot altcoin peak season is also of great benefit, as it tends to affect Bitcoin’s dominance.

Learn why and when altcoin peak season occurs, and how to buy altcoins on Binance.

What is peak season for altcoins? How does it affect cryptocurrency investors and traders? Learn about altcoin season and ways to add altcoins to your Binance portfolio.

The term “altcoin season” isn’t just a fancy phrase that impresses crypto friends; it’s also an important time for traders looking to take advantage of market opportunities. Learn how to identify peak altcoin seasons and add altcoins to your Binance portfolio.

Binance is the world’s leading blockchain ecosystem and cryptocurrency platform. The platform offers a unique portfolio of financial products covering hundreds of altcoins, trusted by millions of investors and traders around the world. Sign up for a Binance account today and start your portfolio diversification journey.

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What is peak season for altcoins?

Altcoin season is when non-Bitcoin cryptocurrencies, known as altcoins, outperform Bitcoin.

As we all know, Bitcoin is the largest cryptocurrency by market capitalization in the world and is widely traded around the world. In fact, it accounts for such a crucial share of the cryptocurrency market’s volume that it forms a well-known metric for comparing Bitcoin to non-Bitcoin cryptocurrencies. The metric, aptly named ” Bitcoin Dominance,” is meant to describe the ratio between Bitcoin’s market capitalization and the rest of the cryptocurrency market.

While Bitcoin’s dominance was once close to 100%, the presence and growing popularity of altcoins have led to a decline in Bitcoin’s dominance. When the market cap of multiple altcoins significantly exceeds the market cap of Bitcoin, it marks the beginning of the peak season for altcoins.

Altcoins tend to outperform Bitcoin during peak altcoin season, causing Bitcoin to lose its dominance in the cryptocurrency market. Because of this, seasoned traders and investors with diversified portfolios will notice peak altcoin seasons and adjust their portfolios accordingly.

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Why is there a peak season for altcoins?

While we were unable to pinpoint the exact reason for the peak altcoin season, there are a few factors that contribute to this. Here are two potential factors that could lead to a peak season for altcoins.

1. Transfer funds from Bitcoin to other cryptocurrencies

The price of Bitcoin tends to become more stable after a sharp increase in price action. As a result, investors looking for more profitable investment opportunities may sell Bitcoin in exchange for altcoins such as Binance Coin ( BNB ) and Ethereum ( ETH ). This strategy of selling bitcoin for altcoins could eventually trigger a peak altcoin season. For more information on market dynamics, read Interpreting the Wyckoff Method.

2. Changing trends involving altcoins such as NFTs and DeFi

2020 is the year of DeFi. And 2021 is the year of NFTs. Currently, Web 3.0 and its tokens are gaining popularity. Now, the blockchain space is constantly innovating and growing, and it is this constant evolution that has created a pool of altcoins with powerful utility cases.

Some altcoins may gain more attention than Bitcoin due to the constant development of the industry. Market capitalization tends to increase when traders and investors follow the trend of a particular altcoin. Over time, a peak season for altcoins emerged.

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Three Metrics to Identify Peak Season for Altcoins

Due to the volatility of cryptocurrencies, there is no perfect indicator for the arrival of peak season for altcoins. However, based on historical data, there are some indicators that may herald a peak season for altcoins.

1. When Bitcoin was in a bull market

Over the past few years, Bitcoin bull markets have often ended with altcoins doing well. This phenomenon can be attributed to the purchase of altcoins by new investors as they are more affordable than Bitcoin, making their growth potential more attractive.

2. When the price of large-cap altcoins starts to rise

Apart from Bitcoin (BTC), there are other popular cryptocurrencies with large market caps as well. When altcoins like Binance Coin and Ether (ETH) rise in price more than Bitcoin, profits can sometimes flow to other altcoins as well. This is just like the logic of investors moving funds from Bitcoin to other potentially profitable altcoin investments.

3. When a new blockchain trend emerges

The power of blockchain trends has been a big factor in the performance of specific altcoins. For example, at the height of DeFi 2020, Defi altcoins started (and are still) experiencing growth. The metaverse trend is another big trend that has sparked interest among gamers, fans, and other communities outside the cryptocurrency space. Altcoins are the basis for entry into the metaverse, so there is no doubt that when the metaverse took the world by storm, altcoins rose in popularity. As new blockchain trends and milestones continue to emerge, altcoin hype around these trends is likely to follow.

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When is the best time to buy altcoins?

There is no such thing as the best time to buy or sell altcoins. Due to the volatility of the cryptocurrency market, no one can perfectly measure the peak season of altcoins, nor can they accurately predict how long it will last.

Instead, you should do your own research ( DYOR ) for altcoins of interest. It is important to understand their value in the cryptocurrency ecosystem and the risks they may carry. Besides fundamental analysis, short-term traders can also use different technical indicators to monitor altcoin price movements and patterns.

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Ways to Buy Altcoins on Binance

Want to buy altcoins before the peak altcoin season? It only takes a few minutes to make a successful purchase on Binance. Binance offers a range of payment options to make your transactions smooth and easy. On Binance, you can buy altcoins and other cryptocurrencies with low fees in just two easy steps:

Step 1: Fiat currency recharge can be completed via e-wallet transfer or bank transfer on Binance. Be sure to check the available fiat channels for the desired currency. For more information, read our in-depth guide How to fund USD via SWIFT.

Step 2: Buy your favorite altcoins through your user wallet or directly with your credit/debit card.

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Conclusion

Altcoins are a good alternative to Bitcoin for investors and traders looking to diversify their portfolios. Armed with the knowledge of altcoin peak season, you can do your own research more thoroughly before investing in your favorite altcoins. Sign up for a Binance account today to buy your first altcoin.

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