What to do when the altcoin season arrives? Master the trading secrets of Altseason

The cryptocurrency market is like the tide, with rises and falls. Amidst these waves, the phenomenon that investors look forward to the most is the arrival of Altseason. Especially as 2024 comes to an end, with expectations of pro-crypto policies from the Trump administration, Bitcoin breaking new highs, and institutional funds pouring in, the next wave of Altseason seems to be on the horizon.

But the question is: do you really understand Altseason? Do you know how to profit during this phase?

What exactly is Altseason?

Simply put, Altseason refers to the period during a bull market when the total market capitalization of other cryptocurrencies (altcoins) surpasses that of Bitcoin. But this definition is no longer entirely accurate.

In early crypto cycles, Altseason was just a simple rotation of funds: after Bitcoin reached a certain high and struggled to go higher, investors shifted their focus to cheaper alternative tokens. But now, things are different.

According to Ki Young Ju, CEO of CryptoQuant, the driving factors of contemporary Altseason have changed. Stablecoins (like USDT, USDC) trading volume with altcoins have become the new key indicator, signaling that it’s no longer just speculative rotation, but genuine market growth. The inflow of institutional capital and exploration by new market participants have made Altseason a more mature and in-depth market phenomenon.

Altseason vs. Bitcoin Season: Two Worlds

When Altseason arrives, market focus shifts from Bitcoin to other cryptocurrencies. You will see:

• Significant increases in altcoin prices and trading volumes
• A noticeable decline in Bitcoin dominance index (Bitcoin’s market cap share of the total crypto market)
• Increased speculative activity and frequent new project launches
• Rising participation of retail investors

In contrast, Bitcoin season is characterized by intense focus on Bitcoin. Investors tend to hold BTC due to its stability, “digital gold” status, or risk aversion. During these periods, altcoins often stagnate or even decline.

Interestingly, both scenarios can occur during bear markets: investors generally flock to Bitcoin or stablecoins for safety, while altcoins are ruthlessly neglected.

What has happened in past Altseasons?

Late 2017 to early 2018: ICO frenzy

How crazy was this Altseason? Bitcoin’s dominance plummeted from 87% to 32%. The total crypto market cap surged from $30 billion to over $600 billion.

The ICO (Initial Coin Offering) boom attracted massive speculative capital to projects like Ethereum, Ripple, Litecoin, and many others. Many altcoins hit all-time highs. But the bubble burst quickly due to regulatory crackdowns and project failures, ending this cycle in 2018.

Early 2021: DeFi and NFT mania

Bitcoin’s dominance dropped from 70% to 38% within a few months. Meanwhile, altcoin market share skyrocketed from 30% to over 62%, more than quadrupling.

This period saw explosive growth in DeFi projects, NFTs, and meme coins. Small-cap altcoins gained huge returns. Technological advances combined with retail adoption pushed the entire crypto market to a record high of over $3 trillion by the end of 2021.

Q4 2023 to mid-2024: Diversified institutional era

The bullish sentiment during this period is driven by the upcoming Bitcoin halving (April 2024) and the anticipation of Ethereum spot ETF approval.

Unlike before, this Altseason involves multiple sectors: AI tokens, GameFi, Metaverse, DePIN, and more. AI-related tokens like Render (RNDR) and Akash Network (AKT) soared over 1,000%. GameFi platforms like ImmutableX (IMX) and Ronin (RON) also made strong recoveries.

Meme coins (DOGE, SHIB, BONK, PEPE, WIF) have grown over 40% recently. Solana-based meme tokens surged against the trend, helping Solana’s ecosystem recover from the “dead chain” phase, with some tokens increasing by 945% at certain times.

Current signals: Altseason in Q4 2024

As 2024 ends, several key events are paving the way for a new Altseason:

1. Accelerated institutional adoption

• The approval of spot Bitcoin ETFs in January 2024 marks a turning point
• Over 70 spot Bitcoin ETFs have been approved
• Institutional funds are seeking diversification beyond Bitcoin

2. Improved regulatory environment

• Pro-crypto legislators elected
• Expectations of favorable policies from the Trump administration
• These boost market sentiment and investor confidence in altcoins

3. Market cap hits new highs

• Global crypto market cap reaches a record $3.2 trillion
• Surpassing the 2021 all-time high
• Bitcoin is expected to break its all-time high after November 2024, approaching the $100,000 psychological level

4. Stablecoin liquidity remains ample

• Trading pairs with USDT, USDC, and other stablecoins provide sufficient liquidity
• Easier market entry and exit encourage capital flow into altcoins

According to Blockchain Center’s Altseason Index, as of December 2024, the index has risen to 78 (above 75 indicates entering Altseason territory). The market is signaling: The Altseason feast has begun.

How to identify the arrival of Altseason?

As a trader, you need to monitor the following key indicators:

1. Rapid decline in Bitcoin dominance Renowned analyst Rekt Capital points out that historically, when Bitcoin’s dominance sharply falls below 50%, it’s a reliable signal that Altseason is approaching. When Bitcoin consolidates between $91,000 and $100,000, it often creates liquidity opportunities for Ethereum and other altcoins.

2. ETH/BTC ratio rising The ETH/BTC price ratio serves as a barometer for altcoin performance. When this ratio rises, it indicates Ethereum is outperforming Bitcoin, often foreshadowing broader altcoin market strength.

3. Altseason Index surpasses 75 Blockchain Center’s index measures the performance of the top 50 altcoins relative to Bitcoin. Readings above 75 suggest most altcoins are outperforming Bitcoin.

4. Increased trading volume of altcoins against stablecoins This is a hallmark of the new era of Altseason. When you see trading volume for USDT and USDC pairs with altcoins surge, it indicates genuine market demand rather than mere speculation.

5. Explosive growth in specific sectors For example, AI tokens, GameFi, or meme coins. When a particular sector’s tokens suddenly rally with high trading volume, it’s a sign of brewing Altseason. According to K33 Research, meme coins recently grew over 40%, and sectors like AI show strong momentum, with projects like Render and NEAR Protocol driving overall market cap increases.

6. Social media and market sentiment shifts When retail investors start actively discussing altcoins, meme coins, and new projects on social platforms, and market sentiment shifts from fear to greed, these are early signs of Altseason.

The four stages of Altseason: How liquidity flows

Altseason doesn’t happen overnight. It unfolds in four distinct stages, representing the gradual transfer of market funds:

Stage 1: Bitcoin leads Funds first flow into Bitcoin as a safe haven. During this phase, Bitcoin dominance rises, BTC trading volume increases, and altcoin prices stagnate.

Stage 2: Ethereum gains attention As Bitcoin’s gains slow, liquidity shifts toward Ethereum. You’ll see ETH/BTC ratio rise, ETH prices surge, DeFi activity increase, and exploration of Layer-2 solutions.

Stage 3: Major altcoins rebound Focus shifts to established altcoins with mature ecosystems, such as Solana, Cardano, and Polygon. These projects start to achieve double-digit growth.

Stage 4: Full-blown Altseason Small-cap altcoins and speculative projects dominate. Bitcoin’s dominance drops below 40%. This is when small altcoins often experience parabolic rises—high risk but high reward.

The key to understanding this cycle is: Follow the flow of liquidity and adjust your investment strategy accordingly.

How and why the rules of Altseason are changing

Altseason is not static. As the crypto market matures, its drivers are evolving.

From Bitcoin fund flows to stablecoin liquidity

During the 2017 ICO boom and 2020 DeFi summer, Altseason was straightforward: Bitcoin surged high, and investors rotated funds into altcoins seeking higher returns.

Now, stablecoins have become the hub. Stablecoin trading volume with altcoins is a better indicator of genuine market demand than mere speculative shifts. What does this reflect? The market is maturing, with institutional capital inflows and new participants creating real growth.

Institutional capital and Ethereum’s leadership

Ethereum plays a leading role in modern Altseason. Fundstrat’s Tom Lee predicts that Ethereum’s continued strength will drive the entire altcoin market, especially as institutional investors diversify their crypto holdings.

The entry of institutional funds has changed the game. Unlike past retail-driven Altseasons, today’s market is shaped by more rational, strategic institutional investors.

Sector diversification and prosperity

Unlike before, current Altseasons involve synchronized growth across multiple sectors: AI tokens, GameFi, Metaverse, DePIN, Web3, and more. This diversification reduces risk concentration and offers more investment opportunities.

New drivers of Altseason: 2024 and beyond

Experts have identified five new factors shaping the modern Altseason:

1. Stablecoin liquidity and institutional capital — now the main engines, replacing retail speculation
2. Ethereum’s leadership — its performance often signals broader altcoin rallies
3. Bitcoin dominance and index monitoring — providing valuable trading signals
4. Sector narratives — AI, GameFi, and emerging sectors redefine growth opportunities
5. Regulatory clarity — pro-crypto policies and clear legal frameworks are crucial for sustaining Altseason momentum

These changes indicate a more mature market, where innovation and utility drive altcoin growth, not just speculation.

The deep impact of regulation on Altseason

Regulatory shifts are the invisible drivers of Altseason.

Negative regulatory cases: End-of-2018 ICO crackdowns and stricter guidance on exchanges increased volatility and sometimes abruptly ended Altseasons.

Positive regulatory cases: Clearer regulations can stimulate interest. When jurisdictions provide legal clarity or major institutions show openness to blockchain innovation, it encourages investment in altcoins.

A prime example is the recent approval of spot Bitcoin ETFs by the US SEC, which directly incentivized institutional participation and boosted overall market sentiment. The pro-crypto expectations from the current Trump administration also play a similar role.

Practical strategies for trading during Altseason

Step 1: Conduct thorough research

Before investing in any altcoin, don’t be fooled by hype. Deeply analyze:

• The project’s technical fundamentals
• The team’s background and capabilities
• Market potential and competitive landscape
• Tokenomics and economic model

Step 2: Diversify your portfolio

Avoid putting all your funds into one project. Spread your investments across promising altcoins and sectors to reduce risk. Consider different market caps: allocate proportionally among large, mid, and small-cap altcoins.

Step 3: Set realistic expectations

Altseason can be highly profitable, but don’t expect overnight riches. Market volatility is high, and prices can change rapidly. Set reasonable profit targets, such as 50%, 100%, or 200%, and take profits gradually.

Step 4: Implement strict risk management

• Use stop-loss orders to limit losses
• Keep position sizes manageable; don’t invest all your capital at once
• Regularly reassess your portfolio and adjust risk exposure

Step 5: Monitor indicators and market signals

Continuously track Bitcoin dominance, ETH/BTC ratio, Altseason Index, and other key metrics. Be ready to adjust your strategy when signals shift.

Risks not to ignore during Altseason

High volatility

Altcoins are far more volatile than Bitcoin, which can lead to significant losses in a short period. Small-cap altcoins often have low liquidity, and slippage can eat into your gains.

Over-leverage and chasing highs

This is a common fatal mistake during Altseason. Investors attracted by rapid gains often use leverage or chase high prices, only to be forced out by sharp corrections. Analyst Doctor Profit warns: “Altseason is exciting, but discipline is essential. Without proper risk management, profits can quickly turn into losses.”

Scams and pump-and-dump schemes

During Altseason, many scams emerge. Be wary of projects promising astronomical returns, fake hype communities, and obvious pump-and-dump plans.

Regulatory storms

Regulatory changes can swiftly end an Altseason. Stay informed about global regulatory developments, especially in major economies.

Conclusion: Seize the opportunity of Altseason, but be wise

Altseason indeed offers a lucrative window for savvy investors. The participation of institutions, clearer regulations, and sector diversification all suggest this Altseason could be more fundamentally supported than any previous one.

But the key to success is: Knowledge, discipline, and risk management.

Thoroughly research the market; diversify your investments to manage risk; set strict stop-loss and profit targets to protect gains. When Altseason arrives, well-prepared investors will be able to seize opportunities, while impulsive ones may pay the price for recklessness.

The question now is not “Will Altseason come?”, but “Are you ready?”