The market is a cyclical phenomenon that has not been broken and will never be broken. An absolutely living organism whose lifeblood is money.
First, let’s start with a definition – what is an “alt season”? It’s a market cycle when major capitals are focused on altcoins after fixations on bitcoin.
In the cryptocurrency market, the asset-to-asset path of money is already entrenched. At the beginning of the cycle, major capitals buy back bitcoin. After a fixation on the main cryptocurrency, money flows into the fundamental altcoins, and after them, capitals focus on the rest of the coins.
Hence the concept of “altcoin season”. In this time frame, coins show strong growth and give x’s. At the same time, bitcoin no longer shows much growth, but on the contrary, it is either in consolidation or has a downward movement. This is justified by the fact that large capitals are withdrawing from the main cryptocurrency.
To determine the altcoin season, the dominance of bitcoin will help us. The graph shows the share of market capitalization of the main cryptocurrency in relation to the entire cryptocurrency market.
History says that when bitcoin dominance declines, altcoins rise. The index should be below 40-50%, and show strong downward movements.
One example was on June 13, 2022. Bitcoin’s dominance began a rapid decline, indicating that capital was exiting the asset. On the same day, the main altcoin gave a strong movement of more than 100%.
After the main altcoin showed growth and other cryptocurrencies.
To track when bitcoin’s dominance starts to fall, we’ll need to technically parse the chart and understand where the trend is headed.
The indicator has almost reached the retest of the former support, which is an important level. After breaking the support, the price did not retest it, and now it is a resistance level. There is also a smooth approach to the sloping level, which defines the upward trend. If the price continues to consolidate at the support level, the probability of an impulse breakout will increase.
Another reason for the altcoin season is the increase in the capitalization of altcoins, provided that the bitcoin capitalization stands still or decreases. You can observe the indicators on the Coinmarketcap website.
The main page of the website has data on asset capitalization. Observe the assets for a week and record the capitalization figures every day. Calculate the average values, and when capitalization is higher than normal by more than 20-30%, this will be the basis for entering a position.
