After the BTC Spot ETF was approved, we witnessed a decline in BTC price from $49K to around $42K - 43K while Altcoins did not have a huge decline. Many community members are expecting that we have begun Altseason - the boom period of Altcoins. There are many different definitions of Altseason, but I will refer to the Altcoin Season Index on BlockchainCenter:
If 75% of the Top 50 coins performed better than Bitcoin over the last season (90 days) it is Altcoin Season. Excluded from the Top 50 are Stablecoins (Tether, DAI…) and asset backed tokens (WBTC, stETH, cLINK,…)[1]According to this definition and available data, current Index = 78 > 75 and we are in Altseason. Should we switch to investing in Altcoins to follow the Altcoins boom and gain x10, x50, x100 profits???
I do not think so. I don't dare give a definition of Altseason, but here's what I expect from Altseason:
- BTC halving occurs, confirming the start of a new cycle.
- BTC price has reached a high price to confirm the growth trend, BTC.D increased sharply.
- BTC price goes sideways, money flows to Altcoins.
- Most of the top altcoins increased in price stronger than BTC, BTC.D decreased.
Currently, we still do not have BTC Halving and BTC price has not created a new ATH, and most Altcoins have not created new peaks. BTC.D is still in an uptrend, showing BTC's bullish advantage over Altcoins. So I don't think Altseason has begun and we should still be cautious with investments in Altcoins, at least until the BTC halving.
So what is the problem with the Altcoin Season Index on BlockchainCenter?This is an index determined by the growth rate of the top 50 Altcoins compared to Bitcoin in the most recent 90 days. This index is very susceptible to noise for a number of reasons:
- The 90 days period is too short, although it represents a season in nature, it is not enough to represent the Altcoins's uptrend in crypto market with 4-year cycle.
- The capitalization distribution among the top 50 altcoins is uneven. The strong growth of the majority of small-cap Altcoins is not representative of Altcoins's trend relative to Bitcoin.
We need a solution to guide the process of investing in Altcoins. My solution: change your perspective on Season.- 1 year = 1 weather cycle with 4 seasons, each season lasts 3 months = 90 days.
- 1 crypto market cycle = 4 years, each year represents 1 crypto season.
As such, Altcoin Year Index should be used. Data becomes less noisy and easier to track. This index is only at 27, showing that we are not yet in Altseason, but it is recovering to above 25, meaning that the growth potential of Altcoins right now is huge. We can start tracking Altcoins and prepare to shift our investment from BTC to Altcoins.
That is my subjective opinion to evaluate the market, how about you? Do you think Altseason has begun? What are your criteria for Altseason?
[1]
Altcoin Season Index