What is the Alt Season?
"Alt Season" is a part of the cryptocurrency market cycle. Many altcoins exchange rates against Bitcoin have risen rapidly. The most typical example is the bull market in altcoins from late December 2017 to early January 2018.
The short-term altcoin bull market is both heaven and hell, since some people make a lot of money, while others lose a lot.
Seizing the short-term altcoin bull market is the hope of achieving a class jump in the eyes of many retail investors. After all, most investors have no chance to hold Bitcoin - the coin worth about $35,000.
When the Alt Season is over and Bitcoin will regain its predominance, what is waiting for the altcoin will be "falling by 90% and continuing to fall by 90%", which we call "Salt Season".
Cryptocurrency sector rotation
Cryptocurrency also has a cyclical sector rotation. From the perspective of the flow of funds, the cryptocurrency bull market is divided into four stages.
The first stage: Bitcoin skyrockets.
The inflow of funds from inside and outside the sector caused Bitcoin to skyrocket. Subsequently, funds slowly flowed into Ethereum, but it was difficult to keep up with the pace of Bitcoin, until the turning point appeared, and the rise of Ethereum began to surpass Bitcoin.
The second stage: Ethereum becomes the protagonist.
At this stage, the price performance of Ethereum has surpassed that of Bitcoin, and there have been voices in the market that "the long-term price performance of Ethereum will surpass Bitcoin". At the same time, funds began to slowly flow to mainstream currencies, and the top 20 mainstream currencies began to rise.
The third stage: the mainstream currency rises.
Ethereum performed better than Bitcoin, and the top 50 cryptocurrencies by market capitalization began to soar. Regardless of the market cap, some new altcoins with strong fundamentals have begun to become the focus of the market.
The fourth stage: altcoins come to the stage
At this stage, many high-quality blue-chip coins continue to break new highs. Cryptocurrencies with medium market capitalization, low market capitalization, and micro-market capitalization have all continued to rise at the same time. Regardless of the fundamentals, it seems that every coin has risen sharply, and the performance of blue-chip coins has far surpassed Bitcoin and Ethereum. Meme is everywhere, everyone is super excited, and you will feel the fanaticism in the air.
What is after the Alt Season?
Generally speaking, after the Alt Season, funds will have two movements.
First, profit cashing into legal currency. When investors get several times or even dozens of times of return in the altcoin carnival, the profit will be directly converted into legal currency. Large-scale cash out will inevitably lead to adjustments in the entire cryptocurrency market, and even a complete exit during the Altcoin Season. The cryptocurrency market turns into a bear market.
Second, the funds profited from altcoins flow back to Bitcoin. This will reactivate the potential of Bitcoin. Bitcoin will continue to rise and start a new "bull market cycle". Funds will roll down again and flow back to Ethereum, mainstream coins, and altcoins, slowly opening the second round of bull market.
Is the Alt Season coming?
In the past week, as DeFi coins such as UNI\SUSHI continue to rise sharply, the market cap of Bitcoin has fallen nearly 70% to 67%. The market cap of altcoins has continued to rise, but it has not exceeded the historical high in 2017. Is the altcoin bull market coming?
According to the definition of blockchaincenter, if 75% of the top 50 cryptocurrencies outperform Bitcoin in a period of time, it is an Alt Season.
Judging from past data, whether it is quarter, month, or year, the Alt Season has not yet arrived.
In the past 90 days, only 18 cryptocurrencies have gained more than Bitcoin, and 31 have fallen behind.
In the past year, 19 cryptocurrencies have outperformed Bitcoin, and 20 have fallen behind.
In the past month, 23 cryptocurrencies have gained over Bitcoin and 26 have fallen behind.
From the data point of view, the cryptocurrency market has not entered a comprehensive Alt Season, only concentrated in areas such as DeFi, but the trend has gradually emerged, and the Alt Season has begun to take shape.
When will the comprehensive Alt Season come?
First of all, let us review the 2017 Alt Season.
As mentioned above, the starting point for everything comes from the rise of Bitcoin. After September 4, Bitcoin rebounded sharply, rising from a low of $3,600 in September to a high of nearly $20,000 in December. Subsequently, funds flowed into Ethereum. Starting from November 19, ETH began to rise sharply, from $351 to a high of $1,400 in January. The turning point was on December 16, when the price of Bitcoin reached its peak and then plummeted.
The altcoin bull market started on December 11, just a few days before Bitcoin approached its highest point, and lasted until its peak on January 7, 2018. During this period, Ethereum rose simultaneously until it reached a record high on January 13, close to the market cap of Bitcoin.
To sum up, in 2017, the bull market of altcoins was accompanied by the outflow of funds from Bitcoin and synchronized with the price trend of Ethereum. The reason is that the 2017 bull market in the Alt Season was promoted by IC0, which greatly stimulated the demand for Ethereum.
In 2021, the situation is different. Compared with 2017, the increase in Bitcoin price is driven by institutional funds and has higher stability, which may mean that even in a big bull market for altcoins, Bitcoin may not have a large retracement.
Secondly, the driving force of the Alt Season has become the DeFi ecological prosperity on the Ethereum chain and the auction of the Polkadot parachain slot. The old altcoins stalled and the new ones rose.
What remains unchanged is that the source of funds for the altcoin bull market is still the overflow of Bitcoin funds, and weak Bitcoin is a sufficient condition for the Alt Season.
Purely subjective judgment, the trigger conditions for this big bull market in altcoins may be:
Bitcoin fell to around $34,000 and went sideways;
Ethereum broke new historical highs;
Bitcoin's market value share remains below 66%;
Once the Alt Season starts, it will last from January to February.