Cryptocurrency News

Bitcoin Season Has Outperformed Altcoins for Almost Two Years

By July 20, 2023 No Comments
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Bitcoin season is here to stay; at least, that’s what we see from recent market analysis. This seems to be the biggest timelapse in cryptocurrency history when altcoins didn’t outperform Bitcoin, again making it one of the strongest digital coins in existence.

Reaching higher levels of performance against Bitcoin can be challenging, especially when talking about market capitalization since it’s the first digital currency and appeared during times when people were asking for financial alternatives.

Bitcoin indeed offers a reliable store of value option, but altcoins come with numerous other opportunities. For example, if you buy Ethereum, the second most popular cryptocurrency and best altcoin, you can use the coins for in-game assets in decentralized games, DAOs, DeFi applications, and so much more. At the same time, you’ll have access to plenty of resources and communities on the Ethereum blockchain, which leverages one of the most efficient tools, smart contracts.

Still, Bitcoin is leading the market. But why?

What exactly is Bitcoin season?

In simple terms, Bitcoin season is a certain period of time when prices increase in comparison with altcoins, which are, of course, outnumbering Bitcoin. On the other hand, altcoin seasons occur when the usual top 50 cryptocurrencies perform better than bitcoin in a span of at least three months. The last altcoin season was in 2021.

An altcoin season isn’t easy to spur out of a few coins outperforming Bitcoin. That’s because the first digital coin currently values almost half of the cryptocurrency economy, while Ethereum barely accounts for 20%.

Do seasons guarantee better profits?

Although seasons happen when prices increase and coins have more value, that doesn’t mean volatility won’t appear. Investors and traders can diversify their portfolios more efficiently during this time, but they still need to be careful with the strategies adopted.

Bitcoin starts to lose dominance during the altcoin season, which may affect the remaining coins for some time. At the same time, when Bitcoin is doing badly, it may be because the economy is also going through difficulties, which overall is not the best time to make considerable investments.

What factors trigger an altcoin season?

It’s more likely that Bitcoin stays on top of the competition most of the time, but sometimes certain factors can affect its power, increasing the way altcoins perform. In most cases, these factors have to do with Bitcoin.

For example, when Bitcoin’s price stabilizes, investors might want to sell these coins for altcoins, which are more profitable at that moment. This action may lead to the start of an altcoin season following an upwards Bitcoin price movement. This element of market dynamics should be studied by anyone investing, as it can provide the right information at the right time.

An altcoin season can also occur when NFT or DeFi trends rule the markets. That’s because most of these digital assets are built on the Ethereum blockchain, which best creates tools like smart contracts that can pave the way toward decentralized applications and asset diversification. 

Blockchain ecosystems are evolving continuously, and they usually use Ethereum-like altcoins or native tokens to operate within the ecosystems.

What to look for before the start of an altcoin season?

Altcoin seasons don’t simply appear on the market. Otherwise, it would be one of the most disastrous events for investors because they’ve no time to prepare for their next move. Some key metrics are observable when it comes to predicting such a period.

First, the Bitcoin bull market is flourishing. Considering last year’s stats, it seems like every time Bitcoin’s bull run ended, altcoins had a roaring success. This can be explained through the movement of investors that buy altcoins since they’re more affordable.

However, not only Bitcoin triggers this event. Large market cap altcoins may experience a surge in prices, such as Ethereum, which is a famous alternative to Bitcoin. When the price of ETH increases, money also flows to other smaller altcoins, which can be an infinite profit maker.

Finally, if you’re up on what happens in the crypto market daily, you may notice that more blockchain and digital trends are happening, which can be a significant factor in an upcoming altcoin season. This explains why Bitcoin has been trending for such a long time since the rise of DeFi, metaverse and AI triggered cryptocurrencies, blockchains and exchanges to develop.

Bitcoin vs. Altcoins: which is better for investing?

Stating which is better is difficult because these assets have different use cases and advantages, so the best thing to do is blend them to create a balanced portfolio. That’s because while Bitcoin is the most reliable store of value out there, its increased volatility can put a strain on people’s investments. On the other hand, altcoins might not have much value or use case, but their purpose is different, so they operate in different environments.

Regarding risks, Bitcoin has more issues than volatility. Its technology is also an impediment, considering its blockchain still works through PoW, which is one of the slowest consensus mechanisms. At the same time, Bitcoin hasn’t really dealt with scalability and updates, like Ethereum, for example.

On the other hand, altcoins have the same problem with volatility. Still, they’re also less accepted worldwide compared to Bitcoin, which has already become legal tender in some countries like El Salvador. Plus, altcoins leverage less liquidity, making buying or selling at a good price challenging.

In the end, a blend between the two solutions is best. While Bitcoin can offer more stability within the portfolio, altcoins provide diversity, which is efficient for keeping up with the latest trends and therefore allows the portfolio to develop as numerous assets fluctuate on one’s account.

Bottom line

The Bitcoin season has been active in the past two years, surpassing the value of altcoins. And although we don’t know how long this will go on, some key metrics will help investors get an idea of the beginning of an altcoin season which is one of the best times for investments as bitcoin prices are more affordable.