When does the altseason start? Understanding the crypto market rotation cycle

Cryptocurrency markets, like traditional financial markets, exhibit cyclical booms and busts. Among the most anticipated phenomena for investors is the arrival of альтсезон (altcoin season)—a period when a collective rise in alternative tokens often brings opportunities for returns of several times or even dozens of times.

As we approach the end of 2024, the market is gathering new energy. Factors such as potential shifts in US policy environment, the fourth Bitcoin halving event, approval of spot ETFs for Ethereum and Bitcoin, and more are laying the groundwork for the next альтсезон. Based on past experience, these conditions often trigger the start of altcoin season.

The Essence of альтсезон: More Than Just Rotation

альтсезон is typically defined as a period when the total market capitalization of altcoins surpasses that of Bitcoin, with market sentiment shifting toward альткоины. However, in recent years, this phenomenon has undergone profound changes.

Historically, альтсезон was often accompanied by capital rotation from Bitcoin to альткоины. However, recent market research indicates that the driving forces behind modern альтсезон have evolved from simple capital transfer to more complex ecosystem overlays—ample liquidity in stablecoins, increased participation of institutional investors, influx of new retail investors—these factors collectively boost the attractiveness of альткоины.

In particular, the surge in trading volume of stablecoins (USDT, USDC, etc.) has become an important signal for the arrival of a genuine альтсезон. Rather than passive rotation during Bitcoin price stagnation, it is the fundamental improvement of альткоины themselves that attracts real new funds.

альтcoin Season vs Bitcoin Season: Market Focus Shift

альтсезон Period: Market focus shifts to alternative tokens, especially projects with innovative narratives. Mainstream альткоины like Ethereum, Solana, Polygon lead the rally, followed by small-cap projects. This stage is characterized by larger gains in альткоины relative to Bitcoin and a significant increase in trading activity.

Bitcoin Season: Market attention centers solely on “digital gold,” with альткоины fading into the background. Investors, seeking risk avoidance, concentrate funds into Bitcoin. In this scenario, Bitcoin dominance index (Market Share) rises noticeably.

The switch between these two market states essentially reflects changes in investor risk appetite. In a bear market, safety first; in a bull market, pursuit of gains.

Evolution of альтсезон: From ICO Frenzy to Ecosystem Maturity

2017-2018: ICO and Token Frenzy

This period represented the primitive form of альтсезон. Bitcoin’s dominance dropped from 87% to 32%, over 600 new projects raised funds via ICO, and the total market cap skyrocketed from $30 billion to $600 billion.

But the good times didn’t last. Regulatory crackdowns, project failures, technical infeasibility exposed issues, and альтсезон abruptly ended in 2018, leaving many investors with significant losses.

2021: DeFi, NFTs, and Retail Participation

In early 2021, Bitcoin dominance fell from 70% to 38%, with the total market cap reaching a record $3 trillion—marking the strongest альтсезон ever.

This time, the driving forces were different: explosive growth of DeFi ecosystems, NFT art boom, and even meme coins (мемкойны). Unlike the chaos of 2017, 2021’s альткоины were supported by more real-world applications.

2023-2024: Institutional Entry and Diversified Growth

From Q4 2023 to mid-2024, a new альтсезон is brewing. Compared to previous cycles, this round features:

Diversified Drivers: No longer driven solely by ICOs or NFT narratives, but multiple tracks such as AI tokens (Render, Akash), GameFi platforms (ImmutableX, Ronin), Solana ecosystem meme coins, and more.

Data Validation:

• AI-related tokens up over 1000%
• Solana ecosystem tokens up 945% annually
• Render, Akash, and other projects lead the AI sector
• Meme coins (DOGE, SHIB, PEPE, etc.) collectively up 40%+

Institutional Factors: Approval of over 70 Bitcoin spot ETFs has cleared barriers for institutional funds. While initial inflows are into BTC, long-term spillover into альткоины is expected.

How to Identify the Coming альтсезон

Core Signal Checklist

1. Decline in Bitcoin Dominance Historical patterns show that when Bitcoin’s dominance drops from around 70% to 50%, the probability of альтсезон starting is highest. More aggressive альткоины require this indicator to fall below 40% to truly explode.

2. ETH/BTC Ratio Rebound The Ethereum-to-Bitcoin price ratio is a leading indicator of альтсезон. When this ratio continues to rise, it indicates capital shifting toward Ethereum, likely spreading to the entire альткоины ecosystem.

3. Surge in Altcoin Trading Volume Not just price increases, but changes in trading volume better reflect real capital inflow. Especially, a significant increase in trading volume of альткоин and stablecoin pairs signals genuine new funds entering.

4. Industry Index Signals Blockchain Center’s альтсезон index (Altseason Index) tracks the performance of the top 50 альткоины relative to Bitcoin. When the index exceeds 75, альтсезон is officially announced. As of December 2024, the index has risen to 78, clearly indicating the market is in альтсезон territory.

5. Social Media Buzz The frequency of topics like meme coins, AI tokens, new blockchains directly reflects retail participation enthusiasm. Rising buzz → funds follow → альтсезон confirmation.

6. Market Sentiment Indicators Shifts from extreme fear to greed often signal the start of альтсезон. When most investors move from watching to active deployment, альтсезон has begun.

The Four Liquidity Phases of альтсезон

Professional traders generally recognize альтсезон as divided into four progressive stages, each corresponding to specific investment opportunities:

Stage 1: Bitcoin Accumulation Phase

• Performance: BTC slowly rises, альткоины stagnate
• Opportunity: Pre-bullish buildup, cautious observation
• Indicator: Increasing BTC volume, declining альткоины volume

Stage 2: Ethereum Leads

• Performance: ETH begins independent rally, DeFi activity surges
• Opportunity: Track Ethereum’s innovative applications
• Indicator: ETH/BTC ratio significantly rising

Stage 3: Mainstream альткоины Roar

• Performance: Solana, Cardano, Polygon, and other major projects rally together
• Opportunity: Focus on ecosystem-mature альткоины
• Indicator: Multiple альткоины achieve double-digit gains

Stage 4: Small-cap альткоины Explode

• Performance: Smaller projects show parabolic moves
• Opportunity: High-risk, high-reward speculative phase
• Indicator: Bitcoin dominance drops below 40%

Historical Patterns and Future Outlook

Based on historical cycles, the last альтсезон was in 2021. This suggests the next full альтсезон cycle should occur around 2025-2026. However, current signals indicate альтсезон has already started early—at least in certain tracks (AI tokens, meme coins, Solana ecosystem) showing typical альтсезон features.

Key catalysts include:

• Policy: Possible pro-crypto stance from the new US administration
• Technical: Bitcoin testing $100,000, breaking through could boost overall market sentiment
• Funding: Institutional funds initially flowing into BTC, but long-term spillover into альткоины inevitable
• Market: Global crypto market cap reaching $3.2 trillion, a new all-time high

How to Profit During альтсезон

Trading Principles

Deep Research Over FOMO During альтсезон, popular projects are highly sought after. True gains come from identifying undervalued projects, not chasing already doubled tokens.

Diversify to Reduce Risks Don’t put all funds into a single альткоин. Use a “core + satellite” strategy—core holdings in Ethereum and blue-chip альткоины, satellite positions exploring emerging tracks.

Set Clear Take-Profit Points альтсезон features rapid rises and falls. Predefine target prices and take profits in stages. Common approach: sell 1/3 at double, another 1/3 at triple, and handle remaining positions above fivefold profit accordingly.

Beware of Leverage Traps Margin trading during альтсезон is a double-edged sword. High leverage amplifies gains but can also lead to instant liquidation. Without sufficient experience, avoid using leverage over 3x.

Sector Selection Strategy

First-tier Tracks: Ethereum, Solana

• Ecosystem mature, many applications
• Lower risk, stable returns
• Suitable for long-term holding

Second-tier Tracks: AI, GameFi, DePIN

• High growth potential, large upside
• Moderate risk, attractive returns
• Requires ongoing technical tracking

Third-tier Tracks: Emerging meme coins, small-cap projects

• Huge profit potential (sometimes 10x+)
• Very high risk (possible total loss)
• Suitable only for high risk tolerance investors

Risks and Traps of альтсезон

High Volatility Risks

альткоины’ prices fluctuate far more than Bitcoin. A single альткоин can drop 50% in a day—this is normal. Without strong psychological resilience, it’s easy to panic sell during downturns, locking in losses.

False Prosperity and Rug Pulls

альтсезон attracts many speculative and scam projects. Some developers hype new concepts (like new blockchains, DeFi protocols), push prices up sharply, then “exit scam” at high levels—investors’ funds are wiped out.

Regulatory Uncertainty

While US and other jurisdictions may adopt friendlier policies, global regulation remains uncertain. Sudden regulatory events in certain countries can trigger chain reactions in the market.

Information Asymmetry

During альтсезон, hundreds of new projects emerge. The ability to access and verify information directly impacts investment success. Most retail investors lack the professional skills for in-depth evaluation.

Practical Tips to Mitigate Risks

1. Limit Single Positions: Invest no more than 5-10% of total funds in one альткоин

2. Stick to Discipline: Predefine buy/sell points and stop-loss levels; avoid changing plans due to market swings

3. Regular Review: Weekly review of your portfolio to ensure alignment with initial strategy

4. Learn Fundamentals: Only invest in projects whose core value you understand

5. Keep Cash Reserves: Don’t deploy all funds early in альтсезон; reserve ammunition for future opportunities

6. Avoid Overtrading: Frequent trading incurs high fees and can erode gains

Interaction Between альтсезон and Policy Environment

Regulatory environment has a profound impact on альтсезон, but this influence is not simply positive or negative.

Negative Example: In 2018, crackdowns on ICOs worldwide directly caused альтсезон to falter. Investor confidence collapsed, and альткоины’ market cap fell by 90% from highs.

Positive Example: In 2024, US SEC’s approval of spot Bitcoin and Ethereum ETFs opened the floodgates for institutional funds. While initial inflows favored BTC, long-term spillover into альткоины is inevitable.

Policy Outlook: If the new US government adopts a pro-crypto stance, including clear regulatory frameworks and support for certain альткоины projects, it could significantly extend the альтсезон cycle.

This means monitoring global policy trends is not optional but essential.

Summary: The Opportunity Window of альтсезон

Based on current market signals—declining Bitcoin dominance, альтсезон index rising to 78, explosive growth in AI and meme coin tracks, gradual institutional entry—the next full альтcoin season has already begun in parts.

For investors, this implies:

• In the short term, focus on undervalued альткоины or emerging tracks
• In the medium term, core holdings in Ethereum and blue-chip альткоины
• In the long term, avoid being blinded by альтсезон prosperity and prepare for bear market corrections

альтсезон will come again and again, each time intertwined with opportunities and traps. Successful investors are not those who just pick the right direction, but those who can seize opportunities and control risks simultaneously.

In this upcoming альтсезон, being prepared and choosing strategies aligned with your risk tolerance may be the best way to respond.