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The altseason index: what do you need to know?

The altseason index: what do you need to know?

The altseason is a concept actively used by analysts and experienced traders. What are the main characteristics of this period? What is an altseason index, and what do investors need it for? Let’s find out!

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Author: Kateryna Salnichenko

Date: 22 September 2022

Category: Fresh

Bitcoin (BTC) is not only the first but also the key cryptocurrency in the market. Its dynamics directly impact the state of other virtual currencies and investor activity. However, alternative digital currencies, altcoins, are increasingly in the spotlight.

Despite high volatility and differences in trading strategy, they can be a profitable investment. Today we will talk about such a phenomenon in the crypto market as an altseason.

Altseason: the reasons for the emergence and signs

Alternative coins or altcoins are all digital assets except Bitcoin (BTC). This category includes stablecoins, PoW coins, meme coins, fan tokens, DeFi tokens, etc. The period of active growth of altcoins against the background of a decline in the bitcoin dominance index is called the “altseason”.

Why does an altseason begin?

The altseason comes after a period of intense bitcoin growth. Its main reason is the desire of investors to get the maximum profit from investing in “cheaper” assets. Altcoins represent these assets. The altseason is characterized by the growth of quotations by tens and hundreds of percent, called “X’s” by experienced crypto community members.

Additional reasons for the rise in the popularity of altcoins include high-profile events in the crypto sphere (burning, hard fork, halving, ICO) and hyped ways to generate a passive income (cryptocurrency and NFT farming).

Signs of the altseason

Bitcoin’s reaching another all-time high.

Bitcoin’s dominance index is falling.

An increase in the capitalization of altcoins.

Please note that altseasons are cyclical and relatively short in duration. On average, they last for two or three months, resulting in a decrease in altcoin indices and high bitcoin capitalization.

What is an altcoin index?

How to understand if an altseason is coming? The easiest and most reliable way is to determine the altseason index.

The altseason index is the ratio of bitcoin’s capitalization to the capitalization of all digital currencies, expressed as a percentage. It demonstrates such processes in the crypto market:

0-45% – bitcoin dominance;

45-55% – parity between bitcoin and altcoins;

55-75% – a tendency toward altcoin dominance;

>75 % – altseason.

To determine the altseason index, the performance of the top 50 altcoins recorded over the last 90 days is evaluated. Stablecoins and asset-backed tokens are excluded from the list.

The value of the altseason index increases as altcoins grow. If more than 75% of the coins on the list show a positive trend, then the beginning of the altseason is fixed.

The easiest way to determine the altseason index is to use specialized services, such as blockchaincenter.net. At the time of writing, the altcoin season has not yet officially started, but there is a trend toward altcoin dominance.

Source: blockchaincenter.net

Source: blockchaincenter.net

The service assesses the dynamics of altcoins over 30, 90 days, and 12 months. The histogram shows the correlation between bitcoin and alternative coins more clearly. 

Source: blockchaincenter.net

Source: blockchaincenter.net

The service also offers a list of the top 50 altcoins that show the most active growth within 90 days and will probably define the beginning of the next altseason. With its help, it is easier for investors to decide which cryptocurrencies to prefer in the upcoming months. 

Source: blockchaincenter.net

Source: blockchaincenter.net

Conclusion

The altseason index is an indicator that should definitely be considered when choosing cryptocurrencies for trading. Don’t miss the beginning of the altseason, because you can make really profitable deals during this period!

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