When AltSeason? If you are a part of the Twitter Cryptoverse or a lurker on crypto Reddit you will often come across this common question. As Bitcoin continues to rally (well, except for the brief drop today), many investors are waiting on the sidelines as they long for altcoin season - a period of time when altcoins outperform Bitcoin.
The last altcoin season was during mid-December 2017 - after Bitcoin had placed its ATH and started to fall. Not long after Bitcoin had placed its ATH, the altcoin markets started to rise against BTC. This meant that everybody started to flood back into the altcoin market, causing an epic surge for the majority of altcoins.
If you do a little research on when analysts believe AltSeason may occur you will uncover a whole range of opinions. The majority of analysts believe it is just around the corner (although they have been saying this for a very long time). Other analysts believe that we are still in the accumulation phase and that altcoin season will not occur until 2020.
The mechanics of altcoin season
To understand why market cycles like AltSeason occur, it is important to grasp a very basic knowledge of market behaviours regarding fear and greed. As a quick overview - when Bitcoin had started to rally in April 2019, many altcoin holders were hopeful that this would be a positive sign for their altcoins. However, as Bitcoin continued to soar, the majority of altcoins started to capitulate against Bitcoin. This caused a vicious cycle as altcoin holders decided to drop their altcoins in favour of holding Bitcoin.
Many holders were just influenced by the fear of missing out (FOMO) on the Bitcoin price increase. Other altcoin holders are simply just hedging their positions as they know they can pick their altcoins up at cheaper rates when Bitcoin starts to slow down. Some investors have even started to exit altcoins after regulatory pressure had caused Binance to restrict US customers from their exchange. Regardless of the reason, this cumulative effect of everybody selling their altcoins has left the industry bleeding out as Bitcoin continues to leech value from altcoins.
However, when things start to turn around and the Bitcoin price increase starts to dampen, investors will start to flock back into their previous altcoins of choice - all at the same time - creating a huge influx into the altcoin markets and thus causing altcoin season.
The Bitcoin Dominance Problem
As Bitcoin has been soaring and sucking value from the altcoin markets, the dominance for BTC in the overall crypto markets has reached fresh multi-year highs. This is a huge problem for AltSeason as we will need BTC Dominance to fall if we would like AltSeason to begin.
However, I expect the Bitcoin dominance to reach some sort of resistance at the 66% level as this is a bearish .618 Fib Retracement of the overall 2017-2018 BTC dominance decline. The fact that BTC dominance has approached this level this week may be a sign that AltSeason is only around the corner - especially if BTC fails to break above $14,000.
The Bitcoin dominance will be a strong indicator for altcoin season as AltSeason starts when BTC dominance fades.
Is Bitcoin About To Fall Below This Consolidation Pattern?
Another positive sign that AltSeason is literally around the corner (and by that I mean in the next 2-3 months) is that Bitcoin is currently trading in a consolidation pattern and if it breaks below - we could see BTC fall which would bring value back into altcoins.
Looking at the daily chart above, we can see that since reaching the resistance at $13,000 in June, Bitcoin has been in a period of consolidation - trapped between the boundaries of the highlighted triangle. Each time Bitcoin drops, it has been supported strongly by the rising trend line. We can see that on the initial drop, Bitcoin had found support at the .5 Fibonacci Retracement level.
However, we can also see Bitcoin has recently met resistance around $13,000 which could be a sign of bullish fatigue. Right now, we have found support at the rising trend line once again but if we break beneath, this could be a strong indicator of AltSeason approaching.
If we break beneath the support line, I will be looking for further support at $11,000, $10,315, $10,000 and $9,679. AltSeason could even potentially start to bubble once Bitcoin breaks beneath $11,000 and trends toward $10,000. A clean break and close beneath $10,315 should confirm Bitcoin has entered into a short term downtrend. However, in my opinion, for the real AltSeason to begin we will need to see Bitcoin drop below the .618 Fib Retracement support at $9,679 to prove that we will be trending lower for a while.
Will AltSeason Be The Same As Last Time?
In the last AltSeason we had seen cryptocurrencies such as Ethereum increased by over 1000%, Litecoin was up 700% and Ripple was up over 5000%. Will this AltSeason be the same? Most likely not. For AltSeason to be similar to this we would need to see a large influx on institutional investment into the altcoin industry. The projects that would be able to attract the investment would thrive and the projects that fail to attract their investment will fall.
This all may be a while off, however, we can still look forward to the upcoming AltSeason when Bitcoin starts to slow down causing everybody to re-enter into their altcoin positions. There should be a fair amount of opportunities for most people to profit.