In 2017, the first-ever altcoin season occurred, during which Ethereum and other cryptocurrencies experienced greater market capitalization growth than Bitcoin. At that time, many believed that digital gold would lose its leading position to emerging projects.
However, these expectations did not materialize. In the following years, a certain cyclicality emerged in the market. Based on charts from recent years, analysts anticipate a new surge in altcoins.
A Bit of History
The success of the first cryptocurrency attracted enthusiasts with various viewpoints who promoted their principles and ideas to the masses. Bitcoin paved the way for a series of technological and social experiments aimed at creating and developing decentralized networks.
As a market-forming protocol, Bitcoin was the first project to offer a balanced solution to the blockchain trilemma: decentralization, security, and performance.
Yet, it turned out that not all users valued this balance. This led to the formation of two opposing camps: Bitcoin enthusiasts and supporters of alternative coins. The developers of these alternatives primarily focused on performance, often sacrificing security or decentralization.
Aggressive marketing strategies were frequently employed to promote projects, using phrases like ”Bitcoin killer.” However, the scale of adoption of digital gold and its market valuation proved unattainable for all altcoins.
The struggle between these two directions can be observed in the historical chart of Bitcoin’s dominance, which shows the percentage share of BTC compared to other coins and tokens in total cryptocurrency market capitalization.
In 2016, Bitcoin’s share began to decline due to several hard forks, including Bitcoin Cash, the launch of Ethereum’s blockchain, an ICO boom, and the adoption of the ERC-20 standard.
This was when the concept of a season first emerged, when alternative coins and tokens showed greater growth than the first cryptocurrency. In 2017, Blockchain Center launched an analytical tool: the Altcoin Season Index, which tracks the performance of relevant assets relative to BTC.
If 75% of assets from the top 50 by market capitalization outperform Bitcoin over a 90-day period, it indicates an altcoin season. Stablecoins (USDT, DAI, USDC) and wrapped tokens (WBTC, stETH) are excluded from this index.
Another tool for determining altcoin season is analyzing trading volume dominance in the futures market. Coinalyze provides this chart variant. If altcoins account for more than 35% of trading volume, it indicates traders’ willingness to take risks. This suggests a liquidity shift toward alternative coins and tokens.
Prerequisites for Altcoin Season
In 2017, altcoin season was accompanied by narratives about Bitcoin being dethroned from its top position by market capitalization. However, subsequent discussions only revolved around dominance percentages and capital flows from sector to sector.
The primary reason for the growth in the altcoin segment is the effect of overall market wealth. This occurs when investors who have profited from major projects reallocate part of their capital into new coins and tokens.
For instance, Ethereum’s success and miners’ colossal earnings sparked a significant influx of funds into its ecosystem. Similarly, Solana’s rise led to further project developments within its platform.
Capital movements between sectors can also occur outside ecosystems. Many market participants who gained substantial profits from meme coins also invest in NFTs, GameFi projects, and AI tokens.
It’s worth noting that such assets are much more volatile and less ”stress-resistant.” Therefore, altcoin season is characterized by FOMO (fear of missing out).
What Does Altcoin Season Look Like?
Many still anticipate an upcoming altcoin season based on past waves of growth in the crypto market. However, optimists often overlook an important factor: there are now far more coins than in previous cycles.
By conservative estimates, compared to the first altcoin season in 2017-2018, the number of cryptocurrencies has increased seven- to eightfold.
If we consider tokens not tracked by monitoring services like CoinGecko or CoinMarketCap, their total exceeds several million.
For example, in May 2024 alone, 455,000 tokens were launched on the Solana blockchain; Base saw 177,000; BNB Chain had 39,000; and around 20,000 were created during the same period on Ethereum’s main network as well as in Layer 2 solutions like Arbitrum and Optimism.
Such scales simply prevent the entire market or any significant portion from experiencing growth simultaneously. Historical trends show that specific categories have developed rather than altcoins as a whole.
For instance, the meme coin market grew from just one coin Dogecoin to an entire sector with a capitalization of around $50 billion comprising nearly 900 entries on CoinGecko’s list.
This trend also includes artificial intelligence narratives that enabled OpenAI’s Sam Altman to simultaneously promote Worldcoin.
Market fractalization is growing at an enormous pace and has reached absurd proportions in some areas. As of early November 2024, CoinGecko identifies 354 distinct categories — a number likely to continue increasing. However, not all narratives gain popularity. Data from 2023 revealed that over 50% of traffic comes from five directions: AI, GameFi, meme coins, Solana’s ecosystem, and RWA (real-world assets).
Some categories remained popular into 2025. According to analysts at BiteyeCN, memes became the most successful market segment with over an 1800% increase. The RWAsegment also significantly outperformed BTC and ETH, its sector surpassed a growth rate of 213%.
Thus, market capacity relative to growth opportunities becomes limited for many tokens and coins simultaneously. Significant capitalization increases overall come from major coins: Bitcoin, ETH, and a few others.
Therefore, one should not expect a classic altcoin season at all, nor significant growth across entire categories of projects. Instead, we are likely witnessing the formation of numerous index narratives.
For instance, growth in the U.S. market is typically measured by the S&P 500 index value where around 30% is made up of just seven companies (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla) out of 500 listed.
This suggests that future altcoin seasons may represent local short-term growth trends among blue-chip assets within specific categories where some market participants achieve extraordinary returns while others see little change or even incur losses.
Questions and Answers
What is an Altcoin Season Index?
The Altcoin Season Index reflects how effectively altcoins perform compared to Bitcoin over a specific period — usually 30 or 90 days. A high index indicates that many altcoins are outperforming Bitcoin during this season.
The index serves as a valuable tool for investors by helping them understand when market trends favor altcoins, thus identifying suitable times for profitable trades.
How can I predict Altcoin Season?
To predict ”altcoin season,” one must analyze market cycles, sentiment shifts, and historical data. Key indicators such as BTC dominance changes trading volume fluctuations and capital inflows into smaller coins often precede an ”altcoin season.” Monitoring tools like the Altcoin Season Index along with blockchain data and technical indicators can signal growing interest in altcoins.
What does an Altcoin Season Index chart look like?
An Altcoin Season Index chart visually demonstrates how altcoins behave compared to Bitcoin over time. Peaks on this chart indicate moments when most altcoins outperform Bitcoin — signifying the onset of an altcoin season. By analyzing this chart you can track trends and determine when it may be advantageous to switch investments from Bitcoin to altcoins.
What is an Altcoin Seasonal Cycle?
An altcoin seasonal cycle often correlates with Bitcoin’s price cycles. When Bitcoin dominance reaches its peak or begins to decline investor interest typically shifts toward altcoins — especially as traders seek higher returns from lower-cap assets. Understanding this cycle will help you anticipate phases of market euphoria as well as potential corrections.
This article was originally Posted on Coinpaper.com
