In this article, I will try to answer several questions that a neophyte may have about AltSeason.
If you are new to the crypto world you may not have heard of the “AltSeason”. AltSeason is simply the diminutive of Altcoins Season, it is a period when cryptocurrencies market excluding Bitcoin becomes very positive and this results in exponential increases for these cryptocurrencies, also called Altcoins.
Altcoin is the abbreviation for “Alternative Coin”, it refers to all cryptocurrencies other than Bitcoin! (For example: AION, DASH, NEO, DOGECOIN etc…..) If you want to invest in Altcoins, think of Binance, which is the best exchange right now.
One of the most famous and probably the most powerful AltSeason took place in December 2017. Some cryptocurrencies then experienced x100%…X400% !
Why should you be interested in the Altcoins market?
This is the place where you have the best chance of making very significant gains due to the low value of some of these cryptocurrencies! Trading in this market will allow you to accumulate BTC, or $, depending on you and your strategy. In the end, the AltSeason is a bit like the BlackFriday period for merchants: a period when traders/investors can make the majority of their earnings over the year.
Easy? Not so much.
To make sure you don’t let this season pass you by, you need to be prepared.
How to prepare for an Altseason?
The preparation goes through 2 steps:
1/ Identify the beginning of AltSeason.
2/ Have done preliminary research on both technical and fundamental aspects of the Altcoins that are the most likely to increase in value.
1/ How to identify an AltSeason? :The easiest way to identify an AltSeason is to look at the BTC dominance. But first of all, what is the BTC dominance ?
The BTC dominance corresponds to the percentage of market share held by the BTC in the crypto market. How does this relate to the AltSeasons?
As can be seen on the associated graph, AltSeason occur during a significant decrease in BTC dominance. Thus, the graph on the left (BTC dominance) shows that on December 09, 2017, the BTC dominance had gone from 69 to 37 in only 35 days! If we now look at the chart on the right (Altcoins market cap) we see that December 09 coincides exactly with the beginning of an increase that will be known as the largest AltSeason at the moment.
History repeats itself on March 30, 2018: Strong and sharp decline in the BTC dominance, from 50 to 38 in 40 days. On the Altcoins’ capitalization side, this translates into a significant increase: AltSeason!
Based on these observations, the following rule can be stated:
“When BTC dominance declines rapidly, it leads to an increase of investments in the Altcoins and may lead to an AltSeason.”
How can this phenomenon be explained?
It is simply the law of supply and demand. A decrease in BTC dominance is due to the sale of BTC by investors. Thus, when this happens, investors have two solutions: sell BTC in exchange for FIAT as the dollar, the euro etc… or sell BTC for Altcoins.
In the end, it is the transfer of capital from the BTC to the Altcoins that induces AltSeason !
In addition to that , there is also the FOMO (Fear Of Missing Out) in the crypto currency market. As soon as people realize that the Altcoin market is on the rise again, the amount of capital injected increases: it is the snowball effect : investors are scared to miss a great opportunity and they start to invest more and more which explain why the Altcoins increase exponentially.
2/ The selection of Alts:
The question to 1 million Bitcoin 😉 ! The easiest way is to diversify your selection to ensure that you have big winners. Thus, you can create a portfolio of Altcoins, in which you see a great potential from a fundamental point of view or in which you identify very bullish chartist configurations. You can of course mix the two to get a more precise selection! As they say in the crypto world: DYOR (Do Your own Research) and invest only what you can afford to lose (especially on this type of strategy considered as very risky).
At Crypto-Addicts, we have also created a report: the HPC Binance (High Potential Cryptocurrencies on Binance). This report includes 21 crypto currencies with strong growth potential in the event of an AltSeason. In this report, we explain the investment strategy, the methodology used to find these crypto currencies and of course the selection with the entry positions, the take profit and the expected % return! If you are interested you can click here to access the presentation for free.
When is the next AltSeason?
No one knows ! This will depend on the market and as mentioned above: the BTC dominance must be monitored.
The following analysis can then be performed: the BTC dominance would currently be in an ascending channel. Thus, if in the future, the BTC dominance graph violently breaks its support, we could have a new AltSeason (case 2 on the graph). In the case of a continuation of an increase, the graph could then re-test its superior resistance before dropping back to its support (case 1 on the graph). Note that case 1 corresponds exactly to what happened during the AltSeason in April 2018!
To be continued!
Nico, trading analyst at Crypto-Addicts.