Altseason is a crypto-market cycle phase investors absolutely love. This is a period where altcoins tend to rally, offering gains in the multiples. However, an altseason has a lot of components working together and each of these parts needs to be in the right place to kick-start an altseason.
It all comes together
The cycle for cryptocurrencies, like stock markets, comprises of a bull run and a bear run. However, these distinctions get blurred when taking a nuanced approach. For example, the typical bull run includes Bitcoin and altcoins rallying together. However, in actuality, when BTC starts pumping heavily, altcoins take a backseat and only rally when the big crypto cools down for the next leg-up.
However, as the bull run matures, both asset classes rally in tandem.
The leading factor behind an altseason is capital rotation from investors trying to maximize their profits. Now that Bitcoin has established its presence and moved past the $45,000-hurdle, there is a good chance altcoins will rally. In fact, many altcoins are already rallying by >20% in a single day.
Another observation is that the dominance of Bitcoin reduces during an altseason. Currently, the dominance of BTC is hovering around 42% after a rejection at 44%. From the looks of it, this retracement will extend, pushing BTC dominance to 39% or 40%.
Such a southbound move is a sign that capital is flowing from BTC to altcoins.
Source: BTC Dominance, TradingView
Bitcoin and altcoins have a say
Another factor that backs the assertion that an altseason is starting is Bitcoin’s price. Although there is a good chance BTC might hit $53,000, there is no proof or supporting arguments that indicate that the rally will extend beyond this level.
As seen in the chart attached below, Bitcoin’s price has three major areas of
