Cryptocurrency is like a double-edged sword, as it can provide great yields over time, but only with considerable investments of time and money. At the same time, the risks of investing in cryptocurrency expanded with scammers’ sophisticated tactics. Still, users can take advantage of the ecosystem by being wired with the media.
Every small change in charts is recorded online, so information is accessible for everyone to leverage accordingly. For example, cryptocurrencies go through periods of higher demand than supply, triggering bullish and bearish seasons. These moments can affect the current Bitcoin price, especially when the season favors altcoins and other types of tokens.
In that case, the altcoin season has arrived, and it’ll rule over the market for a while until the
Bitcoin season comes back again. Learning about them is considerably important for investors, so let’s see what it’s about.
What is the Bitcoin season?
The Bitcoin season happens when the cryptocurrency is prevalent in popularity over investors’ preferences. This means they buy and sell it more than altcoins due to the increased value, so the high demand makes the later coins less attractive.
The Bitcoin season is a result of new technologies and projects introduced to the network. A recent event occurred at the beginning of the year when the SEC approved BTC ETFs so investors could acquire them legally. During this period, Bitcoin prices boomed as users pumped up values to help Bitcoin gain traction.
Bitcoin seasons are more frequent and long than altcoin seasons, mainly because Bitcoin is the first cryptocurrency to be released on blockchains and has paved the way for further innovation. Without it, it may be possible that Ethereum or Dogecoin would not have existed.
What is the altcoin season?
The altcoin season is a moment in the market when the entire collection of altcoins outperforms Bitcoin. Considering there are about 10,000 cryptocurrencies in circulation at the moment, we can say that Bitcoin’s value is significant, but it can sometimes be overturned.
While Bitcoin is a store of value, altcoins are more than that, many being tools for decentralized ecosystems. Ethereum, for example, is the biggest blockchain that holds NFTs, dApps, and DAOs and continues to innovate systems. Polygon, Polkadot, or Shiba Inu are closely following in terms of functionalities.
The altcoin season happens when technological developments occur. When Ethereum changed its consensus mechanisms from PoWm to PoS, the entire crypto community forgot about Bitcoin and got excited about what Ethereum would be capable of doing in the future with this new functionality.
What are the signs of an upcoming season change?
Both seasons don’t just happen out of nowhere ―there are always signs of a slow domination start. Most signs apply to both seasons. For example, when there’s an altcoin season about to happen, you’ll notice their influence on the market. The elements are calculated as a percentage of their collective market capitalization, excluding Bitcoin.
At the same time, Bitcoin suddenly went down, which is one of the most vital indicators of the altcoin season. When the percentage of total cryptocurrency market capitalization helped by Bitcoin declines, that’s a sure sign of a change.
Finally, an increased trading volume in cryptocurrencies shows an increase in liquidity and investor interest, so it’s best to monitor them as closely as possible. Stablecoins usually show the highest trading volumes, so keep your eyes on Tether, BNB, and USDC.
When’s the best time to invest?
The best thing about the cryptocurrency market is that you can adjust and adapt your strategies to withstand changes. During the Bitcoin season, it’s best to be careful which altcoin projects you invest in because even if value flows towards them, they’re more susceptible to providing more losses than wins.
At the same time, the altcoin season is the best time to learn more about other coin projects and choose the most promising ones to get you through the end of the season. However, you should be wary of scams because they’re everywhere around this time since more investors get into different crypto projects.
Some of the most known altcoin scams include the following:
- Pump and dump schemes lure in investors with the promise of quick and considerable returns;
- Minting or tokenizing NFTs without the creators’ permission;
- Ponzi schemes imply the promise of high returns with little investment;
What’s a strategy you should avoid?
Regardless of the season, investors are easily influenced by trends, affecting their decision-making process. Hence, they’re prone to several pitfalls, such as:
- Overtrading happens due to FOMO (fear of missing out) when prices are high;
- Chasing hype and buying assets during peak movements leads to buying too late;
- Forgetting the fundamentals leads to a profit decline;
It’s easy to get lost in so much information and trends, especially when you’re present on social media. While leveraging these websites is beneficial for keeping up with news, it’s best to avoid following other people’s strategies and methods too much because your risk level might be different from theirs.
There are many risks during every coin season, especially regarding increased volatility. Indeed, every season lasts for up to a year, sometimes even for two, in Bitcoin’s case, but that doesn’t mean they’re free of massive price swings.
The massive hype and speculation are also dangerous to follow because investors tend to increase the price of a cryptocurrency due to simple excitement, but many other factors influence value. For instance, regulatory changes can turn the tables during such a season when the government decides to add a new law on crypto.
Which season is the most interesting?
The cryptocurrency world is full of surprises, but it mostly follows the same cycles over and over. That’s why the Bitcoin and altcoin seasons precede each other, occurring somewhere around once per year. These movements favor either Bitcoin or altcoins due to technological developments or innovations that improve the user experience. Whether it’s about the Lighting Network or NFTs, these seasons can make the most of every asset.
