Altcoin Season | Understand it and Ride the Next Wave

A great part of the crypto-trading community only focuses on popular coins like Bitcoin and Litecoin. There is, however more to the industry than just those two. There are thousands of these coins in existence, and hundreds more come up every day, each offering new benefits. The trendy lingo for this collection of lesser-known coins is ‘Altcoins’. They, however, carry great upward potential and can get you attractive profits when they make a collective price rise.    

About Altcoin season

The altcoin prices usually behave in a slight correlation with bitcoin. There are seasons when the bitcoin price is on a steady decline, and people usually turn to the other coins to look for new deals or to simply diversify their coin portfolios. ‘Altcoin season’ is that period when most of the altcoins are on the rise for a prolonged spell. That phenomenon first came to the limelight between 2016 and 2017, and traders who had stock-piled them made a great kill. Altcoin season has kept on occurring again in smaller, more frequent, but still profitable waves.    

Institutional plays that can favor altcoin season

It will be interesting to see how the next altcoin season plays out. Having in mind that there has been a more institutional investment in the crypto sphere lately. The big boys no longer want to waste away sitting on the substitute bench. We have seen that in 2019 with the inception of a Bitcoin futures exchange called ‘Bakkt’. Institutions that were previously interested in profiting from bitcoins without necessarily owning them can also take advantage of the newly launched ‘Bitcoin Trust’. Bitcoin Trust was launched by VanEck and SolidX.    

Why many institutions rush to buy Bitcoins before any other cryptos may be a bit obvious. Bitcoin is usually considered to be the go-to token when first investing in its asset class. It is also viewed as the most liquid and easily accessible of the cryptos. Regulatory backing and clarity have continued to grow. Making it is considered as a trade-able commodity on US and Chinese financial markets. This continued attraction to bitcoin is also a blessing in disguise for the altcoins.

Having the increased buying power coming into the bitcoin market, it is expected that an upsurge in Bitcoin prices can be more pronounced when it is a bullish season. The opposite scenario is also true as prices can fall abruptly if the institutional players all decide to sell at once, as is the case with currencies and stocks. Cryptocurrencies, however, get an added advantage as they are increasingly becoming a means to diversify portfolios that were previously dominated by hedge instruments like gold and valuable metals.

Altcoin season is not a Pump-and-dump gimmick

Unlike in other financial markets, altcoin season cannot be considered a pump-and-dump strategy. There are no fears that people could be hyping one worthless asset just so that they can sell it on at a higher price. Instead, altcoin season is usually characterized by many coins gaining value at the same time. It, in turn, leads to a blanket increase in the altcoin market.

Some cautions to take are that the altcoin season usually does not last for a long time. Traditionally, we have seen the altcoin season to be usually shorter compared to the trends when Bitcoin is on an upward curve. You also shouldn’t consider buying Altcoins blindly but instead. Take some good research and find out the coins which have good market capitalization and some unique features. The fundamentals behind an altcoin are what will make it stand the test of time.

Consider diversifying your portfolio early enough so that you can benefit from the altcoin season. It may not be wise enough to make last-minute purchases in the hopes of riding the altcoin season wave. Look at it as a way of profiting from alternative coins already in your possession that you can sell off at an attractive price.