Just now, while looking at market data, I noticed a particularly interesting phenomenon—over the past few weeks, the flow of funds between Bitcoin and altcoins has been really obvious. This made me think of a tool that many traders are using, called the Altcoin Season Index, and today I want to talk about this thing.

In simple terms, this index is used to measure whether altcoins are "in charge." It tracks the top 100 market cap altcoins and compares their performance over the past 90 days with Bitcoin. If more than 75% of these coins have outperformed Bitcoin, it indicates that we have entered altcoin season, or altcoin season.

The logic of the index is quite straightforward—scores range from 0 to 100, divided into three zones. 0 to 25 means Bitcoin dominance, 25 to 75 is a neutral state where no one has a clear advantage, and 75 to 100 is the dominance of altcoins. Looking at it this way, the flow of funds becomes very clear.

Why is this indicator so important? Because it directly reflects market fund rotation. When altcoin season arrives, coins like Ethereum, XRP will significantly outperform, and volatility will increase, which means more profit opportunities. But conversely, if Bitcoin season comes, most altcoins will be suppressed, and preserving capital becomes more important than chasing gains.

From a trading perspective, my own approach is this—when the altcoin season index shows the market entering the altcoin phase, I will increase my allocation to these assets, after all, opportunities are right in front of me. But at the same time, risk cannot be ignored. By combining indicators like RSI, MACD, and the market fear and greed index, you can gain a more three-dimensional understanding of the market.

However, one thing to remind is that although this index is useful, it’s not foolproof. Market rotation can sometimes be very sudden, and even during altcoin season, not all altcoins will rise. News, liquidity, macroeconomic factors can all disrupt the rhythm. The index reflects the overall trend, not guarantees for individual assets.

Ultimately, the altcoin season index is just to help you understand what the market is thinking. Grasping the switch between Bitcoin dominance and altcoin explosion often determines your trading success or failure in this highly cyclical crypto market. Instead of passively waiting, it’s better to actively use tools to sense the market pulse.