Preparing for the altcoin season: key trends to watch

Preparing for the altcoin season: key trends to watch

It might be too early to plunge head-first into altcoins, but the main narratives of the season are already shaping up. Here’s what an altcoin season means and what cryptos are worth keeping an eye on in anticipation of its approach.

Bitcoin is undoubtedly the leading light of the crypto market, and it is still the one that sets the pace for the entire cycle. However, there have been moments in the past Bitcoin bull runs when its growth was outpaced by other cryptoassets – the altcoins.

New blockchain-related technologies, new project launches, the development of the web3 ecosystem, as well as – of course – increased speculation, all this amid the Bitcoin-induced euphoria, produce a phenomenon known as the altcoin season. The FOMO affects both retail users and seasoned VC investors, who carry the altcoins to stunning heights… until the rally is exhausted, and everyone realizes the coins were overbought, leading to their crash.

This ebb and flow is typical for any asset traded on the open market. And as long as each new low is higher than the last, we’re looking at healthy dynamics of legit assets that evolve with the market. However, in the altcoins case, these fluctuations are extreme, since the technology is new, product-market fit is hard to measure, and the scams are relatively easy to promote. Those who followed the crypto space during its previous cycle, surely remember Terra’s spectacular crash (bad tech or a premeditated scam, the reasons are still unclear).

Still, the projects that have made it through the bear market(s), all while developing their tech, client base, and partnerships, are likely to stay. What’s more, they are likely to skyrocket at a moment when traders will deem Bitcoin’s growth alone insufficient. The new projects that haven’t yet stood the test of time are also poised for spectacular price spikes: the bigger the risk, the bigger the reward.

Let’s see when we could expect a new altcoin season, and what cryptoasset narratives we should pay attention to.

Wen altcoin season?

The term “altcoin season” took off in late 2017. Back then, Bitcoin’s dominance dropped from 83% to a mere 32% by January 2018, largely thanks to the ICO craze. Ethereum, Ripple, Litecoin, Cardano, and Stellar all saw massive gains as the total crypto market cap ballooned from about $30 billion to over $600 billion.

Fast forward to 2021, and we saw another altcoin season, this time fueled by the explosion in DeFi, NFTs, and memecoins. Ethereum and its pals like Polygon, Binance’s BNB, Solana, and even the infamous Terra got in on the action. Memecoins like DOGE and SHIB proved they were serious (pun intended) players, with the crypto market cap hitting an unprecedented $3 trillion.

Currently, Bitcoin market cap sits at $1.3 trillion, with other coins (tracked by the TOTAL2 index) not far behind at $1.2 trillion. Comparing Bitcoin market cap to TOTAL2 starting from the depths of 2019’s bear market illustrates well the interplay between these two parts of the market. Historically, Bitcoin rallies a couple of months before the halving, then dips and/or trades sideways for several weeks, before resuming its ascent to new highs. And at one moment during this ascent, altcoins surge.

While it’s tough to pin down exactly when the next altcoin season will kick off, some crypto analysts on X argue that it could be sooner rather than later, especially since Bitcoin already hit an all-time high last month.

We at D.Center think that Bitcoin still has a lot in store for us, and it is likely to dominate the agenda for a good while, especially since it is the only crypto (so far) that the spot ETFs in America can trade. Also, if the past cycle is anything to go by, BTC has almost a year before the alts take over.

Top altcoin narratives 2024

While we can’t say for sure when altcoin season will arrive, it’s looking pretty likely. It might be smart to start keeping an eye on some promising coins, both well-established and new.

Smart contract platforms. Solana and Avalanche are emerging as alternatives to Ethereum and BNB, attracting more and more web3 projects, which is reflected in their cryptos’ valuation. This may continue well into the altcoin season, although the pace might be slower: $SOL is now only 29% less than at its ATH in 2021, which is comparable to $ETH (26% less) and $BNB (13% less). $AVAX might hold more upside potential in this league, currently at 65% less than its ATH.

The blockchains using zk-rollup technology are drawing attention (and investment), with notably Polygon ($MATIC) and $NEAR. The zkSync’s coin, not yet launched, might join this club soon.

AI. The AI-related tokens are this season’s debutants, with The Graph ($GRT), Render ($RNDR), Singularity ($AGIX), ($FET), and Ocean ($OCEAN) leading in this domain, now valued at $26 billion as per Coingecko.

DePIN. Decentralized physical infrastructure projects like Filecoin ($FIL), Arweave ($AR), and Chainlink ($LINK), with a $32 billion market cap. $FIL looks particularly promising, with its price currently at -96% vs its ATH.

Memecoins. Yes, the silly coins adorned with dogs, frogs, hens, cats, and Joe Biden… sorry, Jeo Boden 😂, are still very much a thing, with a market cap standing at $67 billion. Those launched on Solana are stirring up particular excitement now, with Dogwifhat ($WIF) as probably the most successful one so far.

Crypto gaming. Immutable X ($IMX), Ronin ($RON), and the newcomer $BEAM are leading the charge among the blockchains tailored for web3 games, with a market cap now estimated at $29 billion. In this category, $IMX could show significant potential, currently at -70% vs its ATH.

DeSOC. On the decentralized social media front, Telegram’s $TON is making waves. It is now the 8th biggest altcoin, boasting a $17.5 billion market cap. It hit its ATH today.

RWA. The potential of tokenized real-world assets has been largely appraised, especially by the TradFi players. However, the sector is still very small, with only $9 billion market cap. Ondo Finance ($ONDO) and Mantra ($OM) are its two biggest projects.

As you might have noticed, the altcoins aiming to become a “better Bitcoin” have become derelict. This is for a reason – after years of theoretical debates and failed experiments, it’s clear that no cryptocurrency can truly rival Bitcoin’s monetary potential. However, other use cases, some of which we have mentioned above, hold genuine promise.

This is the main thesis we use to apprehend the crypto market and its movements.

Not a financial advice 😉