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Everything you need to know about Altcoin Season is explained in this article

The "altcoin season" is a crucial time for traders who want to take advantage of market possibilities; it's not just a buzzword you can use to wow your crypto pals. Learn how to identify an altcoin season and how to add altcoins to your Binance portfolio.

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What Is an Altcoin Season?

The term "altcoin season" describes a time frame in which alternative cryptocurrencies, or "altcoins," outperform bitcoin (BTC).

We are all aware that Bitcoin, the largest cryptocurrency in the world by market capitalization, is actively traded all over the world. It controls such a sizable share of cryptocurrency marketplaces' trading volume that there is a well-known indicator that contrasts BTC to cryptocurrencies other than BTC. This measurement, dubbed "Bitcoin dominance," is defined as the ratio of Bitcoin's market cap to the market caps of all other cryptocurrencies.

The emergence and growing acceptance of alternative cryptocurrencies have caused Bitcoin's once-near-total dominance to decline. An altcoin season may begin when several cryptocurrencies amass a substantial market cap that surpasses Bitcoin's market value.

Altcoins typically outperform Bitcoin during an altcoin season, which results in Bitcoin losing market share. As a result, investors and seasoned traders with varied portfolios pay attention to altcoin seasons and modify their holdings as necessary.

Why Does an Altcoin Season Happen?

Several elements influence an altcoin season, even though we cannot identify the precise cause. Two potential causes for an altcoin season are listed here.

converting money from Bitcoin to another cryptocurrency

After a substantial price increase, Bitcoin's price will often stabilize. So, investors looking for more lucrative investment options can exchange their bitcoin for alternative cryptocurrencies, eventually sparking an altcoin season. You can read our Wyckoff Method explanation to learn more about market dynamics.

Altering patterns involving cryptocurrencies, such as NFTs and DeFi

The year for DeFi was 2020. In 2021, NFTs were used. Web 3.0 and Web 3.0 tokens are currently gaining prominence. The blockchain industry is constantly innovating and changing, and it is this unending evolution that has led to the current pool of altcoins with compelling use cases.

Certain cryptocurrencies may receive greater attention than Bitcoin due to the industry's constant evolution. The market cap typically rises when investors and traders trade in line with trends that highlight particular altcoins. This might eventually lead to an altcoin season.

3 Indicators That Will Spot an Upcoming Altcoin Season

There is no 100% accurate predictor of a future altcoin season due to the volatility of cryptocurrencies. However, there are some indicators based on historical data that might indicate an altcoin season.

Whenever Bitcoin Experiences a Bull Market

In previous years, the bull market in Bitcoin frequently came to an end with altcoins performing well. This behavior can be linked to new investors buying altcoins since they are less expensive than Bitcoin, which increases the appeal of their growth potential.

When The Prices of Major Altcoins with A Large Market Cap Start to Rise

Other well-known cryptocurrencies besides Bitcoin (BTC) also have significant market capitalizations. Profits may transfer to other altcoins when altcoins like Ether and BNB have upward price movements that transcend those of Bitcoin.

As New Blockchain Trends Emerge

Certain cryptocurrencies' performance has been significantly influenced by the strength of blockchain trends. For instance, DeFi altcoins began to grow (and are still doing so) during the peak of DeFi in 2020. Another trend that piqued the interest of gamers, fans, and other communities outside of the cryptocurrency world is the metaverse trend. It is not surprising that altcoins gained popularity when the metaverse swept the globe because they are essential for gaining access to the metaverse.