What is altcoin season?

Altcoin season, sometimes shortened to "altseason," is a stretch of time in which altcoins, meaning cryptocurrencies other than bitcoin, rise faster than bitcoin. It is a trader's label for a pattern seen in past rallies and has no formal definition. This guide makes no claim about whether one is under way.

How is altcoin season measured?

Two yardsticks are widely quoted.

Bitcoin dominance is bitcoin's share of the total value of all cryptocurrencies. It is based on market cap, which is price multiplied by the number of coins in circulation. When dominance falls, money is flowing toward other coins faster than toward bitcoin, or leaving them more slowly.

The altcoin season index turns the idea into a score. One widely cited version, published by the data site Blockchain Center, declares an altcoin season when 75% of the 50 largest coins have outperformed bitcoin over the previous 90 days. It leaves out stablecoins and tokens that simply track another asset. Other data providers publish variations with different coin lists.

Both measures have limits. Dominance is affected by the growth of stablecoins, which are counted in the total but are designed not to change in price. The index describes the last 90 days and says nothing about the next.

Why would altcoins outperform bitcoin?

The usual explanation is rotation. In past cycles, a rally often began with bitcoin. As it rose, some holders moved gains into ether, the coin of the Ethereum network, and other large coins, then into smaller and riskier ones in search of bigger percentage moves.

Size helps explain why. A small coin needs far less new money to double than bitcoin does. Fresh narratives play a part too. The 2017 boom centered on new token sales, and the 2021 rally on decentralized finance, NFTs and meme coins.

When has it happened before?

The clearest example came in late 2017 and early 2018. Bitcoin's share of the total market fell from more than 80% at the start of 2017 to below 40% in January 2018, as thousands of new tokens launched. A second broad altcoin rally ran through the first half of 2021.

Both ended badly for most of the coins involved. In the bear markets that followed, the majority of altcoins fell further than bitcoin, and many disappeared.

What do critics say?

Skeptics question whether "seasons" are a reliable pattern or a story built on two or three episodes. The number of tokens has multiplied, so the same money is spread across far more coins, and a broad rise in everything is harder to produce.

The term is a marketing tool as well. Announcements that altcoin season has arrived are common in promotions for obscure coins, including pump and dump schemes. The label describes what has already happened in the market. It is not a signal about what will happen.