Bitcoin has set new all-time highs (ATHs) amid the current bull run. While we don’t know how high Bitcoin will rise, many believe that new lows have been set. Meanwhile, others are also saying that the alt season is coming, as shown by the rally of many altcoins. Is it true? We’ll find out here.
But before we discuss whether the alt season has started yet, let us first find the answer to the question, “What is an alt season?”
What is an alt season?
An alt season has to do with altcoins. These are basically all cryptocurrencies besides Bitcoin. Technically, an alt season refers to a time wherein various altcoins are witnessing rallies left and right. Specifically, this happens when BTC decreases its market dominance.
Currently, BTC has shown some significant increase and set an all-time high. However, the situation may change in 2021. Traders and investors are searching around for new opportunities and undervalued assets with strong growth potential.
The previous alt season happened from late December 2017 to January 2018. With 2020 being a great year for most altcoins, many wonder if the alt season is back. 2021 may become a year of altcoins as the majority are still moving within a strong bullish trend.
During an alt season, the crypto market experiences an influx of new investors in the crypto space. With the fear of missing out (FOMO), people look for opportunities to buy and profit from altcoins. During the alt season, crypto enthusiasts invest in altcoins with the anticipation that they have the potential of earning gains.
Historically, when BTC surges, altcoins tend to rally with larger upside price movements. In particular, there has been a lot of hype around DeFi projects such as Chainlink, Aave, and SNX. Notably, altcoins performed well in the first quarter after BTC peaked in December. Traders such as Salsa Tekila note that the higher the BTC price goes the more attractive altcoins become.
The higher $BTC goes, the more attractive altcoins become. BTC market cap currently 6.5X ETH market cap. $ rotation factor is plausible, especially coming in 2021 with $ETH staking popularizing. Peak odds would be catching altcoins while they nuke during a grand bitcoin finale. pic.twitter.com/5FqAwCTRQs
— SalsaTekila (@SalsaTekila) December 25, 2020
Moreover, fueled by outsized yield farming returns and a myriad of nascent experiments in decentralized lending, signs are pointing to the revival of the alt season.
When did the last alt season happen?
Not many altcoin seasons have occurred. However, the most memorable alt season was from December 2017 to early January 2018. In the fourth quarter of 2017, multiple altcoins suddenly skyrocketed.
In 2017, BTC dominance fell below 50%, ushering in the 2017 ICO craze where hundreds of altcoins made some fortunes and broke others’ hearts. The bullish investment in the crypto industry in 2017 prompted an alt season.
Altcoins also enjoyed immense gains for a total of approximately 10 weeks, which translates into 19% of the year. They rallied in May 2017 for about a month. Also, they did the same in August 2017 and December 2017 for a few weeks each.
Which altcoins pumped during the last alt season?
Multiple reasons have led altcoin markets to surge. Though BTC gained by more than 1,000% in the last alt season, most altcoins experienced more gains. Firstly, Ripple (XRP) performed exclusively well with a groundbreaking record of more than 34,000% gains. Following XRP was NEM which had exclusive gains of 31,765%.
The top-performing altcoins in 2017 include:
|Altcoin||2017 Gain by Percentage|
In this alt season, which altcoins are expected to go up?
Altcoins are poised to break out as the new alt season approaches. Tokens such as Chainlink have grown by 200% and are expected to keep going up.
Ethereum (ETH) is expected to pump up in 2021. The second-largest digital asset gained over 450% to become one of the best performing digital assets out of the top-10.
The development of Ethereum 2.0 and increased interest from institutional investors are likely to unleash ETH’s bullish potential and drive the price higher in 2021. Additionally, piling real-life use cases for the Ethereum blockchain has made ETH a long term investment opportunity.
Crypto Quant CEO Ki Young Ju noted that ETH is undervalued. Nonetheless, it has potential. ETH is next on the institutional investment list.
$ETH is undervalued in terms of institutional buying.
Institutional investors would eventually consider $ETH for their portfolio next to Bitcoin.
27% gap here. They will buy more $ETH.
— Ki Young Ju 주기영 (@ki_young_ju) December 29, 2020
Litecoin (LTC) is another strong candidate for the alt season in 2021. At the time of writing, LTC is changing hands at $138. The direction of the breakthrough defines the further momentum of the asset. The bullish forecast means that LTC is poised for impressive growth.
Factors that influence the altcoin season
The majority of altcoins have recorded significant price gains in the year 2020. Major altcoins like Ethereum and other crypto assets such as Chainlink and Cardano (ADA) have recorded some increases in price. With altcoins generating double-digit percentage gains there for a while there is a possibility for an alt season.
The decline in BTC market cap dominance
Market analysts predict that if the support sees a further decline, that will more or less guarantee an alt season.
— Menno Pietersen (@MennoPP) January 2, 2021
With the above, some analysts believe the alt season should be around the corner. The last time was around 70% all the way down to 35% in BTC dominance of the market cap. Hence, an alt season is around the corner.
Increase in market trends for DeFi
DeFi is undoubtedly a booming industry in the crypto market. Actually, DeFi might be ushering in the next ‘alt season’ The total value locked (TVL) at the time of writing has surpassed $15B.
DeFi-related projects and cryptocurrencies have pointed towards an imminent bullish crypto run. As a result, its path-breaking ability, growth, and the adoption of its projects have attracted multiple investors over the months. With DeFi showing an increase in market holdings, an alt season is expected to take place.
Increase in investor funding
Regardless of the world being hit by the pandemic and experiencing an economic shutdown, the crypto world managed to prevail. The 2017 alt season can be traced back to bullish investment in the crypto industry, motivated by Bitcoin’s success.
Similar to the 2017 alt season, multiple investors have managed to make substantial investments toward altcoins in 2020. These factors coming together offer a glimpse of an upcoming alt season.
Media coverage and fan support
Since mid-year 2020, media reports have been speculating an alt season. Such coverage creates an impact on the alt season bull run. Moreover, this increases the percentage of crypto enthusiasts and investors for altcoins. Furthermore, it will double the altcoin investments, setting the stage for an altcoin season.
Additionally, many altcoin supporters have taken it to tweet about the progressive increase in their favorite altcoins. Such actions drive enthusiasm and interest in the crypto world. Hence, the increase in interest in altcoins.
Difference between the 2017 and 2020 alt season
Not many altcoin seasons have occurred over the past years. However, in 2017 altcoins experienced an upward trajectory resulting in an alt season. 2020 seems to have similarities as to what happened in the 2017 alt season.
In particular, BTC rose in price setting a new all-time high of $19,834.93. Following then, a number of altcoins performed well and continued to rise even when BTC began to slump.
Similarly, in 2020 BTC has also hit a new ATH. Interestingly a number of altcoins have and are still performing well in 2020. Hence the anticipation for another alt season from traders and investors. A majority of Altcoins did fantastically well showing an upward trajectory.
Unlike the 2017 alt season which saw most altcoins succeeding, 2020 might not replicate that scenario. Crypto assets with significant price gains and more investment opportunities will constitute the alt season. As a matter of fact, those that do not offer any lucrative facility will fade out. Here altcoins with relevant features will lead the altcoin bull run.
Regulatory impact on the altcoins
Though altcoins have seen an increase in 2020 there have been some bumps along the way. The regulations imposed on various crypto-assets do sometimes also hinder significant progress in the crypto market. Hence, it has a negative impact on the alt season.
In particular, the SEC’s lawsuit against Ripple has also changed the current altcoin landscape. Also, this saw Bitwise and others liquidate its XRP position.
Please note: In light of US Securities & Exchange Commission’s enforcement action against Ripple Labs & 2 of its executives, we have suspended all #XRP payment in and trading services on the OSL platform, effective immediately and until further notice.https://t.co/EXJJEHMawn
— OSL (@osldotcom) December 23, 2020
Exchanges have begun halting XRP trading in light of the SEC’s lawsuit against Ripple. Other exchanges such as Coinbase are yet to follow suit this January. Such lawsuits have had an impact on the price of XRP.
Despite all the regulations in 2017, altcoins managed to outperform and it led to an alt season. Similarly, regardless of the lawsuits and regulations in the crypto industry, 2021 could act as the next top for the alt season.
Altcoins that could outspace Bitcoin in the coming years
Currently, there are more than 8,000 cryptocurrencies across the globe. Nonetheless, altcoins have shown impressive gains since the start of 2020. Furthermore, there are altcoins that are poised to perform better than BTC in the coming years. It’s been a sea of green in the altcoin markets.
When it comes to market cap Bitcoin remains to hold the trophy. Despite that, when it comes to crypto price there is already one altcoin that beat BTC before. This reinforces how altcoins have performed well.
Also, there are altcoins that have posted bigger gains in December 2020 than BTC. The gains are either hourly or weekly. Among the altcoins that surpassed BTC by percentage, gains are ETH, XRP, Litecoin, Chainlink, Monero, and DeFi’s own Yearn.Finance (YFI).
Moreover, LTC/USDT has shown outstanding performance amid the BTC boom hence it shows a great future ahead. Additional YFI increase in price and investments is a good sign for a positive future ahead.
However on the other hand some traders are positive that the alt season might not happen in 2021. The money in Bitcoin actually flows to the altcoins which results in a lower Bitcoin dominance. However, Bitcoin has seen an increased interest and aggressive buying activity from institutions. Therefore, profits won’t cycle back into the altcoin market.
Bitcoin is now 25% above its 2017 high, and Ether is still 50% below its 2017 ATH. https://t.co/IIuU9KEEs0
— Ansel Lindner (@AnselLindner) December 25, 2020
Despite his bullish outlook for alts, Pelecanos warned that many alternative cryptocurrencies have failed to attract meaningful adoption, stating:
“Some altcoins represent projects that are no longer functioning, yet other projects have seen tremendous development on both adoption and tech.”
Over the last year alone, DeFi has grown, offering an entire ecosystem of alternative financial products outside of traditional finance. To conclude, it’s undeniable that the majority of the action in this year’s Alt Season will be in this area.
Major DeFi token LINK (Chainlink) has shot up from just over $6 to $12 at the time of writing. Other DeFi tokens such as Aave (LEND), and Band Protocol (BAND) have shown great gains and they’re far from the only ones.
We will of course see some retail FOMO in 2021’s Alt Season. Moreover, investments from highly reputable firms give alts more credibility than ever before.
The world has experienced a pandemic, rapid job losses, and keeping money in a bank didn’t give a near-negative yield. Therefore, investors are turning to alternative assets. With all these factors at play, the 2020-2021′ alt Season could really have a positive impact on the crypto industry.
Disclaimer: The views and opinions expressed in this article are solely the author’s and do not necessarily reflect the views of CoinQuora. No information in this article should be interpreted as investment advice. CoinQuora encourages all users to do their own research before investing in cryptocurrencies.