Understanding the Timing of Altcoin Seasons in Bitcoin's Cycle

Altcoin

With Bitcoin's recent movements, many traders are eagerly anticipating the start of an altcoin season. Crypto analyst Crypto Nova shared insights that offer a fresh perspective on when this phase typically begins. Her analysis, supported by charts from the years 2017 and 2021, suggests that altcoins historically shine when Bitcoin’s price is already rising, rather than after it peaks. The provided charts illustrate previous cycles and emphasize the significance of Bitcoin's upward momentum.

Key Insights about Altcoin Seasons

Historical Patterns: Altcoins often perform best during the strong upward movements of Bitcoin, not after it peaks.
Contrary Analysis: Many analysts expect a drop in Bitcoin dominance to signal an altcoin season, but technical analysis indicates otherwise.
Timing Matters: Past altcoin seasons occurred while Bitcoin's price was still increasing, showcasing a correlation between Bitcoin's price action and altcoin performance.
Current Trends: Bitcoin is currently in a downtrend, suggesting that an altcoin season is unlikely until a confirmed bottom is established.

The Dynamics of Altcoin Surges

Historically, the most robust and explosive altcoin seasons did not follow a significant price drop in Bitcoin. Instead, they emerged during Bitcoin’s strongest expansions.

The 2017 cycle serves as a prime example. During this period, Bitcoin's dominance began to wane even as its price soared from approximately $1,000 to nearly $20,000. The accompanying chart reveals a dramatic decline in dominance from 95% in early 2017 to below 40% in early 2018, coinciding perfectly with Bitcoin's remarkable price rise. Notably, altcoins started to outperform Bitcoin well before it reached its peak just short of $20,000.

Bitcoin
Source: Chart from Crypto Nova on X

A similar trend was observed in 2021, where Bitcoin dominance peaked in January and started to drop despite Bitcoin's surge from around $30,000 to a mid-cycle high of over $60,000. Although the rise of altcoins lagged behind compared to 2017, most of their performance still coincided with Bitcoin’s rapid price increase, rather than after a slowdown.

The charts below illustrate this correlation clearly: as Bitcoin prices reached new heights, dominance percentages experienced a downward shift.

The Importance of Bitcoin's Market Structure

Nova emphasized that it is a mistake for traders to solely concentrate on Bitcoin dominance without factoring in the overall market structure of Bitcoin itself. Dominance does not automatically decrease when Bitcoin trades sideways or hits a peak.

Instead, a decline in Bitcoin’s dominance generally occurs during a sustained and robust uptrend, particularly when altcoins are attracting more capital than Bitcoin. An altcoin season is unlikely to materialize until Bitcoin establishes a confirmed bottom and its upward movement compels inflows into altcoins.

Currently, Bitcoin is facing a downturn, and until there is a trend reversal, dominance metrics alone won't spur altcoin momentum. This viewpoint challenges the common narrative circulating online that an altcoin season is imminent.

At present, the cryptocurrency market is still primarily influenced by Bitcoin, with the CMC altcoin season index at 19 and Bitcoin dominance at 58.7%.

Altcoin
Overall crypto market cap excluding BTC at $1.2 trillion | Source: TOTAL2 on Tradingview.com