Alt Season or Alt Correction?

The current market capitalization of the cryptocurrency market inspires hope in the hearts of digital asset holders. Since the beginning of the year, the altcoin market has grown by 90%, reaching a market capitalization of $111 billion.

While the market is experiencing favorable times and providing an opportunity for crypto supporters to earn profits, we would like to talk about the big picture in general terms. More specifically, we will touch on the issues of market capitalization, the dominance of Bitcoin, and using the examples of previous alt seasons as our guide, we discuss what we may expect of altcoins in the near future.

History of Previous Alt Seasons

March-June 2017

After completing the correction, Bitcoin began his formation again and continued on the same path. Bitcoin proceeded to update its historical figures in the following months with domination reaching the 67% mark.

During this period, from June to December 2017, altcoins realized significant and rapid growth before bitcoin stole the show again. The bitcoin dominance drop bounced to reach peak values ​​from 60% to 90% in just a few months; it was the best of Bitcoin during this period.

December 2017-January 2018

After an absolute maximum, Bitcoin gradually began to decline to $15,000- $12,000 with small stops and pullbacks. Meanwhile, part of the capital from King cryptocurrency began to flow into altcoins. The growth of alts lasted less than a month, but during this period, most cryptocurrencies were able to provide the same increase as at the beginning of 2017.

The second currency, by market-capitalization, is Ethereum, which grew by 400% to Bitcoin in a month.

The remaining altcoins, which had a small capitalization, showed incredible growth. For some, it reached tens of thousands of percent in just a few weeks. During this time, most altcoins recorded new highs before the cryptocurrency market changed the bullish mood to a bearish one. At the peak, the total market value, including Bitcoin reached $835 billion! And this was the last significant alt season in the history of the crypto industry.

With the beginning of the bearish trend, another altcoin season followed in April, which lasted less than a month until May 2018. This mini alt season did not give us new highs; rather, it seems it was the last opportunity for investors to sell off their assets or at least acquire more Bitcoin before the start of crypto-winter. The market for the year lost more than 85% of its value. Many investors became disillusioned with digital assets and left the industry with heavy losses. On December 16, 2018, capitalization reached $100 billion.

From this, we can conclude that the period when the value of the Bitcoin dominance index is below 40% is the time when it is necessary to sell altcoins for Bitcoin. It is no coincidence that the strongest season is January 2018 after Bitcoin’s strong take-off in November-December 2017. And the weakest is May 2018, when in April Bitcoin was in a correction of a downtrend. The alt season occurs when Bitcoin stops after a long growth. The longer and stronger the growth, the more pronounced the increase of altcoins will be.

April-July 2019

Thus, we can see that starting in April 2019, when the dominance of Bitcoin was at around 50%, investors still preferred to be in the first digital currency. Increased demand and interest from institutional investors led to a value of $14,000.

Has Alt Season Already Arrived?

But this trend changed from September-October last year. Although bitcoin’s value continued to decline, altcoins gradually began to show a slight increase, after a two-year fall.

Conclusion

On the BTC domination chart below, we see funds as they move between bitcoin and alts and can draw some conclusions about the current state of the market and the prerequisites for the upcoming alt season.

For the onset of the alt season, there must be no strong movements in Bitcoin. It should be in a small channel or slow decline, which will gradually reduce the dominance of bitcoin and allow alts to get out of a protracted downtrend in the coming months.

If there is a robust growth of Bitcoin, as happened between April and July 2019, all capital goes into it, and alts standstill or even fall. If there is a substantial drop in Bitcoin, the market will panic, and everything will collapse.

But for many alts to reach their highs, the market needs new capital, new arrival of users, and positive news background. As a general rule, the excitement for cryptocurrencies often occurs when bitcoin updates its historical maximum, as seen both at the beginning and the end of 2017.

The information contains analysis and forecast of the cryptocurrency market, which are associated with high risks. This information is presented for informational purposes and in no way should be construed as a recommendation to buy or sell these assets. You must conduct your own thorough research before making any investment decisions. All risks, losses, and expenses associated with investing, including the complete loss of the main deposit, are your responsibility.

Trading blog. Tools, bots, strategies.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store