When is Altcoin Season? In Short: Never

Altcoin Season

In 2017, the first altcoin season witnessed Ethereum and other cryptocurrencies surging in market capitalization compared to Bitcoin. Many believed that Bitcoin's dominance would wane.

However, these predictions failed to materialize. Over the years, a cyclical pattern emerged in the market. Analysts anticipate another surge in altcoins based on recent charts.

Historical Context

Bitcoin's success inspired enthusiasts to pursue alternative approaches. Bitcoin laid the groundwork for decentralized network experiments.

As a foundational protocol, Bitcoin balanced decentralization, security, and performance. However, some users prioritized performance, leading to the emergence of alternative coins. These alternatives often compromised security or decentralization in exchange for improved performance.

Aggressive marketing campaigns employed terms like "Bitcoin killer." However, altcoins have consistently fallen short of Bitcoin's adoption and valuation.

Bitcoin's dominance, which reflects its share in the total market capitalization, illustrates the rivalry between Bitcoin and altcoins.

In 2016, Bitcoin's share declined due to forks, Ethereum's launch, an ICO boom, and the ERC-20 standard adoption. This marked the advent of "altcoin season," where altcoins outpaced Bitcoin.

Blockchain Center introduced the Altcoin Season Index in 2017, which compares altcoin performance to Bitcoin over a 90-day period. An index value above 75% indicates altcoin season. Coinalyze tracks trading volume dominance, where altcoins exceeding 35% suggest a shift in liquidity toward altcoins.

Prerequisites for Altcoin Season

Altcoin season in 2017 was accompanied by speculation about Bitcoin's dethronement. However, subsequent discussions focused on dominance and capital flows between sectors.

The primary driver of altcoin growth is the overall market wealth effect. Investors reallocate profits from major projects into new altcoins and tokens.

For example, Ethereum's success fueled investment in its ecosystem. Conversely, Solana's rise led to project development on its platform.

Capital movements occur outside ecosystems as well, with profits from meme coins being invested in NFTs, GameFi projects, and AI tokens.

Altcoin season is characterized by increased risk appetite due to the volatility of such assets.

Characteristics of Altcoin Season

Previous growth waves indicate an approaching altcoin season. However, there are significantly more altcoins today than during past cycles.

Conservative estimates suggest a seven- to eightfold increase in the number of cryptocurrencies since 2017-2018. Considering untracked tokens, the total number exceeds several million.

The sheer number of altcoins prevents simultaneous growth across the entire market. Instead, specific categories have thrived.

Meme coins, which previously consisted of Dogecoin alone, now constitute a sector with a capitalization of around $50 billion. Artificial intelligence narratives have also gained traction.

Market fragmentation is accelerating at an alarming rate. As of November 2024, CoinGecko recognizes 354 distinct categories. However, not all narratives succeed. Data shows that 50% of traffic is derived from AI, GameFi, meme coins, Solana's ecosystem, and RWA.

Some categories have sustained popularity into 2025. Memes have become the most successful market segment with an 1800% increase, while RWAs have outperformed BTC and ETH by 213%.

With limited growth opportunities, significant capitalization increases are driven by major coins like Bitcoin and ETH.

Redefining Altcoin Season

Instead of a traditional altcoin season, we are likely to experience local growth trends within specific categories, similar to the S&P 500 index in the U.S. market.

Participants may experience great returns or little change within these categories.

Questions and Answers

What is an Altcoin Season Index?

The Altcoin Season Index measures altcoin performance against Bitcoin over a specific period. A high index indicates that altcoins are outperforming Bitcoin.

How can I predict Altcoin Season?

Indicators such as BTC dominance, trading volume, and capital inflows into altcoins can signal an approaching altcoin season. Tools like the Altcoin Season Index and blockchain data provide insights.

What does an Altcoin Season Index chart look like?

The chart shows altcoin performance relative to Bitcoin. Peaks indicate periods of altcoin dominance.

What is an Altcoin Seasonal Cycle?

Altcoin cycles often align with Bitcoin's price cycles. When Bitcoin's dominance peaks or declines, investor interest shifts toward altcoins. Understanding these cycles is crucial for anticipating market movements.