How to Identify the Start of an Altseason
Altseason, also known as altcoin season, is a time when people in the crypto market move their money from Bitcoin (BTC) to altcoins (any cryptocurrency other than Bitcoin). This causes the prices of most altcoins to go up a lot.
Altseason is one of the regular cycles in the cryptocurrency market. It’s often seen as the peak of a bull run (a period when the market is generally going up). Historically, altseason doesn’t last very long because price increases naturally don’t continue forever.
When altseason happens, altcoins perform much better than Bitcoin. This gives people a chance to spread out their investments by buying different altcoins. A big jump in demand for altcoins is one of the main reasons altseason occurs. Besides higher demand, several other things can trigger an altseason.
Signs of an Altseason Happening
Here are some signs that an altseason might be near:
- Bitcoin Dominance Decline
After Bitcoin’s price goes up a lot, its price usually starts to become stable. With less potential for big price jumps in Bitcoin, people in the market start looking for other ways to get higher returns, and altcoins become an option.
When investors begin to move their money from Bitcoin to altcoins, Bitcoin’s dominance will go down. At the same time, the altcoin market share will go up. If this trend continues, it could signal that an altseason is coming.
- Increase in M2 Money Supply
The M2 Money Supply, which is the total amount of money moving around in the economy, tends to go up when cryptocurrency prices rise. When the M2 Money Supply increases, it means there’s a lot of liquidity available in the market.
This situation encourages people to put their money into places where they can get higher returns, and altcoins are one of those places. One government policy that can increase the M2 Money Supply is when a central bank, like the Federal Reserve, lowers its main interest rate.
- Increased Altcoin Trading Volume
Another sign that an altseason might start is an increase in altcoin trading volume. When more altcoins are being bought and sold, it shows that more people are adding altcoins to their investments. If altcoin trading volume keeps increasing steadily, it can be an early hint that an altseason is beginning.
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Previous Altseasons
- 2017
The first altseason happened in 2017. During this time, many people wanted altcoins because of the rise of Initial Coin Offerings (ICOs), which are like new token launches by different crypto teams. New cryptocurrencies like Ethereum (ETH), Ripple (XRP), and Litecoin (LTC) appeared, which greatly increased the demand for altcoins.
In this phase, Bitcoin’s dominance fell from 87% to 32%. At the same time, the market value of altcoins went up from 13% to 68%. This also made the total crypto market value jump from $30 billion to $600 billion, with many altcoins reaching their highest prices ever.
- 2021
The next altseason took place in 2021. During this period, there was a lot of money in the economy (M2 Money Supply) because of the Federal Reserve’s quantitative easing and other fiscal policies. After Bitcoin reached its highest price ever in 2021 and its price started to stabilize, investors looked for opportunities besides Bitcoin. With many new individual investors joining the market, altcoins became very popular, leading to big price increases for most of them.
During this time, Bitcoin’s dominance dropped from 70% to 38%, while the market value of altcoins rose from 30% to 62%. Also, the altcoin season index hit 98 on April 16, 2021.
Will an Altseason Happen in 2025?
It’s hard to predict exactly when an altseason will happen. Past data is only a guide; there’s no guarantee that the same trends will happen again. Plus, the crypto market is always changing, and global economic conditions make predictions even tougher.
It’s important to remember that the crypto market in 2025 is different from how it was during the altseasons of 2017 and 2021. Big institutional investors are now in the crypto market through Bitcoin Exchange Traded Fund (ETF) products, which has made Bitcoin’s position stronger. Right now, Bitcoin’s dominance is still at 63%, showing that investors still see Bitcoin as their main choice.
From a bigger economic view, the Federal Reserve’s policy on cutting interest rates is one thing that affects how investors act. Data from the CME Fed Watch Tool suggests that market participants expect the next interest rate cut to happen at the Federal Reserve’s meeting in September.
Given all these conditions, will an altseason occur in 2025?