Here Is When Altcoin Season Begins

Since the rise of BTC to new all-time highs, many people have been wondering when altcoin season will occur. However, only a few coins and tokens, along with a significant number of meme coins, have experienced substantial gains. This has led to speculation that altcoin season may never come since the flows into Bitcoin ETFs may not find their way into the rest of the crypto market. Nevertheless, there is more to this story.
Today, we will explain what altcoin season is, why it has not happened yet, when it could begin, how to identify when it starts, and which altcoins you should keep an eye on. Missing out on this information could result in a missed opportunity.
Many believe that altcoin season just means a period when lots of altcoins are pumping. As such, you could argue that altcoin season is already here because, well, lots of altcoins have been pumping. Clearly, this definition misses the mark, so allow me to propose a more accurate one.

What is Altseason?

An altcoin season is a prolonged period where most altcoins significantly outperform BTC. This is something that can be easily measured by comparing an altcoin's price to BTC, such as, for instance, ETH/BTC. If you look at the BTC pair for most altcoins, you'll see that they haven't actually been performing very well. To be clear, this doesn't mean that they haven't pumped in fiat terms. It just means that they've pumped less relative to BTC.
ETH is the elephant in the room in this regard. It continues to fall against BTC. This has been concerning for many crypto traders and investors because historically BTC rallies are followed by a rotation into altcoins. In plain English, after BTC pumps, traders will take a portion of their BTC profits and invest them into altcoins, resulting in a period where most altcoins outperform BTC.
Photo: ETH/BTC chart cc. Binance
In the past, the trend has been that investors first put their money into Ethereum (ETH), then into other large-cap cryptocurrencies, followed by mid-cap and small-cap cryptocurrencies. However, this rotation is not always exact, but generally follows the pattern that as the markets continue to rise, people tend to invest in riskier cryptocurrencies. This time, however, there has been a lack of movement into ETH, which is evident from the weak ETH-BTC pair we mentioned earlier.
It appears that large amounts of capital are flowing into microcap meme coins, bypassing mid-caps and small-caps. While some altcoins have outperformed Bitcoin, such as SOL, most other altcoins, including ETH, have underperformed. This suggests that the altcoin season may not have arrived yet. The smaller the market cap of a crypto, the riskier it is because it can experience higher and faster rallies, but it can also suffer more significant losses.
It's a matter of weighing the risks against the rewards. The high gains of 100x that we often hear about and dream of are usually only possible with altcoins that have smaller market caps. That's why the 'altcoin season' is such a big deal. However, it's becoming increasingly evident that this crypto cycle is different from previous ones, and this could have significant implications for altcoin returns. Why aren't we seeing the same rotation that we saw in previous cycles? And when can we expect the altcoin season to arrive?

Why Hasn't It Happened Yet?

As mentioned earlier, some people believe that the existence of spot Bitcoin ETFs is preventing the emergence of an alt season. This is because, in theory, investors cannot move their money out of the ETFs and into altcoins. However, in reality, some spot Bitcoin ETF investors could be cashing out their gains, transferring them to a crypto exchange and purchasing altcoins. It is important to note that most investors in spot Bitcoin ETFs are experienced institutional investors, not retail investors. This means that their preferences for altcoins are likely to be different from those of the average crypto enthusiast. For example, SOL has seen significant institutional demand and this could be why it has been one of the few altcoins to outperform BTC.
In other words, you haven't taken anything away from the crypto market, you've just unlocked a new main character, so to speak. Now, the other main characters in the crypto market are crypto whales, which have been the primary drivers of the market up until this point. It's the rotation out of BTC into altcoins by Crypto Whales that's caused previous altcoin cycles and retail investors that have caused altcoins to hit their blow-off tops. Logically then, the absence of an alt season is not due to the spot Bitcoin ETFs but due to Crypto Whales and retail investors.
There are dozens of statistics to suggest that retail investors are still waking up to the crypto rally. These include the retail trading volume on crypto exchanges, the popularity of crypto exchange apps, searches for crypto-related terms, and even the views on this article. These metrics are still far below the levels that would suggest that new retail investors are entering the crypto market en masse. And the key word here is new retail investors. There are millions of retail investors from past cycles who are still around or coming back sooner, but we're missing all the newcomers.
For altcoins to really pump, we need the marginal buyer. Put simply, we need new people for our altcoin bags to pump, probably because most of us have already allocated as much as we can to our favorite coins and tokens.

How to tell it's here

To determine the beginning of an alt season, you need to monitor various indicators such as retail trading volume, popularity of crypto exchange apps, Google searches, and community opinions on social media. When you observe that all of these indicators are increasing, it is a sign that the alt season is about to start. Currently, there is an argument that the alt season has already begun, as search terms like "buy crypto" are gradually increasing for the first time in years, although they are still significantly lower than their previous highs. However, it is challenging to predict whether this is the start of a new alt season or just one of the few speculative waves that usually lead up to it. One way to confirm this is by analyzing how crypto projects are promoting themselves, especially if they are making significant announcements.
It's also possible to predict when an altcoin season is about to happen by looking at certain indicators and assessing the timing of the crypto cycle. However, this can be tricky due to the impact of spot Bitcoin ETFs on the cycle. In general, the crypto market follows a four-year cycle, and we should currently be in the early 2020 phase, which is characterized by prices gradually increasing and experiencing a flash crash due to an existential shock before rising again. Nevertheless, it's possible that the cycle has accelerated, and we might be closer to the late 2020 stage, not only because of the spot Bitcoin ETFs but also because many people have already experienced two crypto cycles and know what to expect. This means that we may not have to wait for a full year for the altcoin season to start, as was the case in 2020. Instead, it could happen in just a few months. However, it's important to keep in mind that the crypto market may still be on the same schedule, which would mean that we are all just early to the alt season.