Altcoin Season: When Altcoins Are Set to Explode

Highlights 

• An altcoin season is a rare occurrence when an altcoin or set of Altcoins tends to outperform Bitcoin in a set period
• Altcoin seasons happen rarely, but a good indicator of an impending season is when Bitcoin’s price peaks

The value of many cryptocurrencies ebb and flow in conjunction with the world’s largest cryptocurrency – Bitcoin.

Observing the price performance of the wider crypto market this year shows many altcoins (alternative digital currencies to Bitcoin) have experienced similar trajectories to that of Bitcoin.

Is a Shocking Altcoin Season on the horizon

What is an Altcoin Season?

Occasionally, an altcoin will buck the trend. For example, Axie – the native token of the Axie Infinity blockchain – has continued to see huge gains throughout 2021 despite the wider market experiencing dramatic corrections mid year.

Similarly, an altcoin will outperform Bitcoin over a set period. This is called an altcoin season. And such is the nature of crypto and particularly altcoins, these digital currencies can rise from relative obscurity to stardom in the space of a very short time.

BlockchainCenter has a more specific definition which says an altcoin season is when 75 per cent of the top 50 coins perform better than Bitcoin over a 90 day or more period.

Altcoin seasons happen rarely but a good indicator of an impending season is when Bitcoin’s price peaks. In the following weeks, certain altcoins can see tremendous growth.

The idea is investors take their bitcoin gains which they’ve been accumulating on the uptrend and then invest that money in more speculative altcoins that have high return potential.

The question is: when will Bitcoin hit its peak? Some pundits believe the digital currency could hit US$100,000 by years end.

Against this backdrop, let us understand few altcoins gathering investors’ attention of late.

• Aave

Aave is a decentralized money market protocol where users can lend and borrow cryptocurrency across 20 different assets as collateral.

Aave’s native token is called AAVE and is a governance token for the platform. Those who own AAVE get to decide the protocol's developmental direction and other holders.

AAVE has already experienced an altcoin season in 2021 having seen solid growth for around a month after Bitcoin’s crash in April. From the beginning of Bitcoin’s crash on April 14, AAVE went from approximately US$400 to a record high of around US$630 on May 19 before a dramatic drop off.

Maybe it is Aave platform’s lending and borrowing faculties that make its digital currency the one to watch when Bitcoin price finally peaks.

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• Ethereum

Ethereum has had a positive year so far in 2021 and has significantly closed the gap between itself and Bitcoin.

Ethereum’s price continued to soar earlier this year about a month after Bitcoin’s price plummeted in April.

On April 14 when Bitcoin’s price began to plummet, Ethereum was valued at around US$2,435. It continued to rise to US$4,168 on May 11, when it began to slump.

The rise in popularity of NFTs has bolstered Ethereum’s user base despite its Ethereum 2.0 upgrade possibly being postponed until 2023.

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• Solana

It’s been a big week for Solana with its native token – SOL – jumping two places to be the sixth largest cryptocurrency in market capitalisation.

Solana is a highly functional open source project that banks on blockchain technology’s permissionless nature to provide decentralized finance (DeFi) solutions.

Solana was officially launched in March 2020 by the Solana Foundation and is  headquartered in Geneva, Switzerland. 

In May, Solana’s price continued to rise while Bitcoin dropped with Solana not experiencing a significant drop in price until about May 19 – more than a month after Bitcoin’s turn.

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• Avalanche

Avalanche is a DeFi platform that aims to be something of a global assets exchange, allowing anyone to launch or trade any form of asset and control it in a decentralized manner using smart contracts and other cutting-edge technologies.

The price of Avalanche’s native token – AVAX – has had a much more ridged and varied year. While it’s price initially sank in unison with Bitcoin’s, it quickly recovered.

• Cosmos

Cosmos addresses some of the problems facing the blockchain industry by offering an ecosystem of connected blockchains. It thus addresses the speed, cost and scalability issues faced by the likes of older blockchains like Bitcoin.

Like Avalanche, Cosmos dropped in concert with Bitcoin in April but quickly recovered to go from US$17.79 on April 23 to reach a record high of US$29.59 on May 8.

Although, these altcoins may not necessarily repeat the same pattern, they are certainly worth keeping an eye on for when Bitcoin inevitably turns the corner.