Understanding Altcoin Season: Significance and Implications for Exchanges

There are a few similarities between the cryptocurrency market and traditional markets. One of them is that they all experience bull runs, during which investors are more optimistic and willing to invest. 

Altcoin season occurs during the bullish period in the crypto space. During this season, investors have a heightened interest in Bitcoin alternatives like Ethereum (ETH), Dogecoin(DOGE), Shiba Inu (SHIB), and Solana (SOL). 

This period can have significant implications for exchanges, with increased trading volume of altcoins and enhanced revenue opportunities, making it important to track. 

In this post, we’ll explore the ins and outs of altcoin season, looking at some of its indicators and the reasons why it gets so much hype. 

What Is Altcoin Season?

Altcoin season, also known as altseason, is a period when the market capitalization of altcoins is higher than that of Bitcoin (BTC). Typically, investor interest moves beyond Bitcoin and Bitcoin futures to extend to altcoins. 

This phenomenon results in enhanced trading activity for altcoins and, consequently, an increase in their prices. During this season, the price appreciation of altcoins is typically higher than that of Bitcoins. 

Recent Examples of Altcoin Seasons

It’s normal to be skeptical about altcoin season because of the unpredictable nature of the crypto market. However, historical Bitcoin and altcoin performance has shown us that altseason is real. 

Here are some recent examples of altcoin seasons:

Late 2017 – Early 2018

During this period, Bitcoin’s dominance fell from 86.3% to 38.69%, while its price dropped from over $20,000 to under $6,000. The fall in Bitcoin’s dominance signaled the rise of altcoins and their value in the crypto market. 

This season was brought on by a boom in initial coin offerings (ICOs), with many blockchain projects releasing their tokens. Some of the most popular altcoins released were Tezos and EOS, which raised $232 million and $4.1 billion, respectively. 

Early 2021

After the pandemic, many traders and investors sought investments beyond Bitcoin. This sparked interest in non-fungible tokens (NFTs), DeFi projects, and memecoins, with altcoins like Shiba Inu and Solana attracting a lot of investor interest. 

During this period, Bitcoin’s dominance fell from 70% to 38%, while altcoins’ market share grew from 30% to 62%.

This movement reinforces the idea that altseason occurs when cryptocurrency and fintech investors seek digital assets beyond Bitcoin, when technology advances, and when new blockchain projects launch. 

Key Indicators That Altcoin Season is Coming

The truth is, you can’t accurately predict when exactly altcoin season will occur during a bull market. But there are some signs that could signal a potential altseason, including:

• Rising altcoin dominance: An increase in altcoin dominance relative to the total cryptocurrency market cap can signal the beginning of an altcoin season. This shift could indicate investors are becoming more interested in altcoins. 

• Decreasing Bitcoin dominance: As you can see from other altcoin seasons, a decrease in Bitcoin‘s market dominance is often a precursor to the altcoin season. This shows investors are paying more attention to Bitcoin alternatives. 

• Increased trading volume in altcoins: Because of the focus on altcoins, you’re likely to see an increase in altcoin trading volume, with investors buying and selling these cryptocurrencies more than they do Bitcoin. 

• Strong performance of specific sectors: The early 2021 altcoin season was partially brought on by technological developments. So look out for advancements in sectors that issue tokens, such as DeFi or gaming. They could drive investor interest in the altcoin market, setting the stage for altseason. 

• Positive overall market sentiment: Altcoin season can result from increased investor interest in the cryptocurrency market in general, as indicated by positive sentiment and media coverage about cryptocurrencies. The more investors know about the crypto landscape, the higher their likelihood of investing in altcoins. 

The Impact of Altcoin Season on Exchanges

If you make strategic moves, altcoin season can drive up revenue for your exchange by increasing trading volume and attracting more investors. Let’s take a deeper look at the period’s impact.

Increased Trading Activity

There’s bound to be an increase in the selling, buying, and transferring of altcoins during the altseason. So you’ll see a surge in trading activity in your exchange. This could mean increased liquidity, as well as price volatility. 

Diverse Trading Pairs

During altcoin season, investors are typically optimistic about alternative currencies.  They’re more likely to invest in altcoins to diversify their portfolios and profit from arbitrage opportunities. 

Thus, offering a wide range of crypto trading pairs can increase your trading volume. Some pairs you can offer include: 

• BTC/ETH: Allows investors to transition between Bitcoin and Ethereum 
• BTC/BNB: Helps them move between Bitcoin and Binance Coin
• ETH/ADA: Facilitates trades between Ethereum and Cardano
• LTC/USDT: A stablecoin pair that helps investors hedge against market volatility 

Enhanced Revenue Opportunities

Trading volume and exchange revenue are directly correlated. As such, an increase in volume can mean significant revenue. 

One of the best things about altcoin season is that you don’t just have the potential to earn from transactions. You can also increase your revenue by charging listing fees for new tokens. If past altseasons are anything to go by, new token releases are expected. 

Market Positioning and Competitiveness

The crypto market can be an incredibly competitive space. Luckily, there are many things you can do to stand out and strengthen your market position. Taking advantage of altcoin season to attract traders is one of them. 

You can attract investors by offering a wide range of trading pairs and marketing your altcoins with targeted ads. Another great approach is educating beginners interested in crypto about the fundamentals and benefits of altcoins. 

Learn How AlphaPoint Strengthens Cryptocurrency Exchanges

Altcoin season is an exciting time for crypto businesses, when the increased interest in altcoins could mean higher trading volumes and revenue.  

Keep an eye on the market for the indicators we’ve discussed here and tailor your offerings to meet the needs of investors looking to diversify their portfolios with these cryptocurrencies. 

With AlphaPoint, we can help you take advantage of the next altcoin season to increase your profits. We offer fully customizable white-label crypto exchange software that can cut your exchange development time by months or even years, allowing you to launch your altcoin platform faster. 

Want to be a part of the next altcoin season? Schedule a demo with AlphaPoint today to see how easy it can be to launch your exchange!