I noticed that many newcomers in crypto get confused about what altcoins are and why everyone talks about them during the altseason. I decided to understand and share what I found.

Altcoins are essentially all cryptocurrencies except Bitcoin. The name speaks for itself — alternative coins. Historically, Bitcoin was the first, and then the others followed. An interesting feature: the entire industry is somewhat tied to BTC. When Bitcoin drops, altcoins usually fall together with it. It acts as an anchor for the entire market.

The most well-known alternatives are Ethereum, DOGE, ADA, XRP, LUNA, and others. The first altcoin in history is considered to be Namecoin, which appeared in 2011. The token still exists but no longer shines as brightly.

Altcoins can be divided into several categories. There are stablecoins, which are pegged to the value of fiat currencies, like USDT and USDC. There are DeFi tokens for decentralized applications — UNI, AAVE, CRV. Meme coins like DOGE and SHIB. Coins based on Proof-of-Work protocol — LTC, ZCash, XMR. And tokens based on Proof-of-Stake — NEAR, ADA, AVAX. Plus many other categories that are constantly emerging.

Now, about the most interesting part — the altseason. This is a period when altcoins grow much faster than Bitcoin. You can make serious profit in a short time. A good analogy is the flower business, which earns most of its profit only during holidays.

Altseason usually begins when Bitcoin has already shown good growth and investors start transferring profits from BTC into other coins. Capital begins flowing into altcoins, they "shoot up" and show rapid growth.

How to understand that the altseason has already started? There are special services with metrics. One of the key indicators is Bitcoin dominance. This is the percentage of BTC's market capitalization relative to the entire crypto market. The higher this indicator, the more money is in Bitcoin and less in altcoins. Since 2017, Bitcoin has started losing its positions. When the dominance index drops below 50 percent, it signals the start of altcoin growth.

There is also the altseason index — perhaps the simplest way to understand if we are currently experiencing an altcoin season. It shows the percentage of altcoins that have grown more than Bitcoin over the last 90 days. If the altseason index reaches 75 percent or higher, we are definitely in an altseason. If the altseason index drops below 25 percent, it indicates a Bitcoin season, when money flows back from altcoins into BTC.

When choosing altcoins for trading, you need to look at several things. First — market capitalization. A high valuation now does not guarantee growth. You need to look at historical data: has the capitalization fallen before? If yes, it means demand for the token is decreasing. You can check this on specialized websites with data on all coins.

Second — the project’s technology. Most projects that appeared after Bitcoin don’t come up with anything original. Ethereum solved Bitcoin’s problems — it’s more energy-efficient. Polygon, in turn, addresses the issue of high Ethereum fees. It’s important to understand this.

Third — the project’s goals. If the project has a clear purpose and a plan for implementation, that’s a good sign. Fourth — the team. If the team is anonymous, that should at least raise doubts. You should look for a strong community around the project and media coverage.

Fifth — tokenomics. This is very important. You need to find out how many coins are in circulation, how many will be issued, and when. If only 10 percent of the total supply has been released, future issuances will put pressure on the price. If 90 percent has already been released, there will be less pressure.

Also, watch the daily trading volume. And by the way, don’t limit yourself to just one exchange. Some tokens first appear on less-known platforms. For example, GMT was initially only on a few exchanges with lower trading volume.

In 2021, one of the brightest altseasons took place. Here are the coins that grew the most: Gala by 10,891 percent, Axie Infinity by 10,598 percent, Solana by 7,998 percent, Fantom by 7,155 percent, Polygon by 6,805 percent. Others included RGT, Terra, DOGE, PancakeSwap, Sandbox. The 2021 altseason lasted until June and was the longest since 2017. Back then, the altseason index often reached 100 and stayed at that level.

What’s important to remember: no one knows exactly which altcoins will grow in the next altseason. But it’s a good chance for quick profits. The main thing — do your own research. The crypto industry provides enough tools for that.

And one more point: coins that grew in the last altseason are not guaranteed to grow in the new one. The market changes, new projects appear, old ones lose popularity.

In conclusion: an altseason is a market condition when altcoins show rapid growth. The main indicators are the weakening of Bitcoin’s dominance and the altseason index. Capital flows from Bitcoin into altcoins when investors close their positions. Do your research before choosing coins. And remember, past seasons’ results do not guarantee future results.

Which altcoins are you expecting in the new season? Share your opinion in the comments.