There are numerous trends in the world of cryptocurrency. While it is evident nearly all of the major currencies rely on Bitcoin’s value first and foremost, there is also a period when that unwritten rule is thrown out of the window. Traders often refer to such a trend as “Altcoin Season”, even though most people will agree such a thing does not necessarily exist. There is a very fine line between what is perceived as “Altcoin Season” and “pump-and-dumps”.
The Purpose of Altcoin Season is Making Money
It is safe to say no altcoin will gain value when Bitcoin is either bearish or extremely bullish. Although that situation can change over time, a bearish Bitcoin market will usually drag all alternative markets down with it. When the world’s leading cryptocurrency gains 5% in value or more, it takes a while for alternative markets to catch up. This is primarily because those currencies are losing value against Bitcoin directly.
When this situation suddenly turns around, a conundrum known as “Altcoin Season” is created. It is the time of year when flavor-of-the-week altcoins suddenly start to gain a lot of value regardless of how Bitcoin’s price is evolving. It is not entirely uncommon for alternative markets to gain a lot of value out of the blue, although such trends are usually referred to as “pump-and-dump schemes” first and foremost.
Unlike what the name would suggest, the “Altcoin Season” is not necessarily something which happens during a specific time of year. In fact, there is no such “Altcoin Season” every year either, as the year 2018 made that rather apparent. However, it is a period during which cryptocurrency traders tend to get overly excited about smaller-cap coins gaining value so they can increase their Bitcoin holdings in the long run.
No one will be surprised to learn the so-called Bitcoin Maximalists are not too keen on the “Altcoin Season” trend either. This is primarily because those users believe Bitcoin is the only currency which really matters, but also because it takes away trading volume and overall money from Bitcoin. There is nothing wrong with traders looking to increase their BTC holdings through these smaller-cap altcoins. However, that doesn’t warrant the use of the term “Altcoin Season” by any means either.
Until proven otherwise, it is nearly impossible to distinguish between the “Altcoin Season” and pump-and-dump schemes. Since most of the currencies gaining value during this “season” are currencies which usually serve no purpose, have no real use case, or no clear future, it is only normal they will be referred to as “shitcoins”. As such, one has to adjust the expectations of what an “Altcoin Season” is and isn’t.
While it is promising to see some markets move up during these rather bearish times, the term “Altcoin Season” can be incredibly misleading. Considering how most of these markets will effectively drop in value again fairly quickly, it seems wrong to think of these minor uptrends as an extended run. However, there is nothing wrong with trying to make money by any means necessary. For that specific purpose, “Altcoin Season” can be a lucrative opportunity.
Altcoin Season Might Be Closer Than You Think
Bitcoin (BTC) has closed above the 50 day EMA which is a very bullish development. The price could be on the cusp of a major breakout from here as it is now close to breaking past the 21 Day EMA. After the last parabolic advance of 2017 we saw the price decline below the 50 Day EMA when it topped out. It ended up closing below it and then eventually began its uptrend from there to rise above the 21 Day EMA.
The price has now closed above the 50 day EMA same as last time which means it is reasonable to expect that the same thing could happen this time and the price might end up rallying above the 21 Day EMA. The last time it happened, we saw the relief rally come to a halt around the 61.8% fib retracement level before the downtrend began. The same could happen again.
Currently, the 38.2% fib retracement from the recent top is a key resistance level holding the price. As long as we remain below this level, the price could trade sideways or even retrace to the 50 Day EMA before it can rally higher. That being said, there is no cause for alarm for the bulls as long as the price remains above the 50 Day EMA. The previous downtrend shook out a lot of bears but we have new overly ambitious bears here that are making the same mistake and they are very likely to get the same treatment.
If we take a look at Ethereum (ETH), we can see that it also has a lot of room for further upside. The price has closed below the 200 day EMA just as Bitcoin closed above its 50 day EMA. This is a bullish development for both cryptocurrencies and an indicator of further upside.
Bitcoin (BTC) dominance is on a decline which is another reason why we expected the price of Ethereum (ETH) and other altcoins rally a lot harder than Bitcoin (BTC) in the days and weeks ahead. If we take a look at Coinmarketcap, we can see that certain top cap altcoins have rallied a lot harder compared to Bitcoin (BTC).
This trend is expected to continue now that Bitcoin dominance has declined below the 200 Week EMA and is expected to close below it. If we see such a close in Bitcoin dominance, we could see a mini altcoin season. The Fear and Greed Index shows that we are up from Extreme Greed to Greed which is a sign of recovery in the market. If this trend continues, we are very likely to see further upside from here.
The Evolution From Altcoin to Shitcoin in 4 Steps
In the cryptocurrency industry, there are thousands of altcoins on the market today. Of those projects, half or less are still actively maintained today, creating a massive amount of “shitcoins“. Now is a good time to recap how an altcoin turns into a shitcoin over the course of weeks, months, and years. This process is still ongoing today, as nearly nine in ten new projects fail around the clock.
STEP 1: CREATING HYPE FOR NO REASON
When it comes to the different altcoins launched over the past ten years, the ones which didn’t create media-levels of buzz and excitement are still standing today. There are some exceptions in this regard, albeit nearly everything which portrayed itself as the “Bitcoin killer” has either been abandoned, forgotten about, or simply ceased to exist altogether. As such, any altcoin project which has a strong marketing machine behind it should be scrutinized, as it will potentially turn into a shitcoin sooner or later.
The ICO industry is a great example in this regard. Nearly all projects created a lot of hype and excitement following Etheruem’s successful sale, yet very few of them are still active today. Numerous exit scams have taken place, whereas other projects are simply not delivering what was initially promised. Now that ICOs are not as “hot” anymore, but replaced by STOs and IEOs, that situation will hopefully change. However, there is still a chance most IEOs will become a shitcoin as well, depending on whether or not the developers are even remotely serious about building a new ecosystem.
STEP 2: WILD PRICE RIDE
As has become apparent in the altcoin industry over the years, pumps and dumps are nothing out of the ordinary by any means. In the shitcoin world, there will be plenty of wild price fluctuations for no apparent reason, especially after moving up quickly for a very brief period. This will undoubtedly lead to a massive price dump, as investors, speculators, and insiders are cashing out in very quick succession. The coin will maintain some value afterward, as this cycle can occur more than once in the lifespan of a shitcoin.
STEP 3: ALL DEVELOPMENT CEASES
After the wild price fluctuations, one might see altcoins suffer from a lack of active development in the weeks and months ahead. This is only normal, as it is likely the developers cashed out their coins during the previous price spike as well. Community members might even try to take over the coin’s development when there is nothing going on, but that is another clear sign the project has become a shitcoin. Community takeovers hardly ever work out in a positive manner, let alone having them restore a currency’s value along the way.
STEP 4: LOSING ALL VALUE
Anyone who has ever kept a close eye on the altcoin industry will know there are a lot of price fluctuations to take note of. This is not uncommon as far as this industry goes, as all altcoins derive value from Bitcoin first and foremost. That also means altcoins can became worthless pretty quickly if there is nothing else to keep people excited at that time. On the road to becoming a shitcoin, losing all value is the final major sign of what the future may hold.
As to why the value crashes, there are several possible scenarios. Either the project never gained any traction, to begin with, or someone is manipulating the prices, or the developers are simply dumping their premine and moving on to create another shitcoin. There are many different plausible scenarios, yet it is evident most coins losing all value will never recover in a meaningful manner. Instead, new coins will be created to keep up appearances as to how “innovative” these altcoins can really get.
Altcoin Update: BCH, BSV and Monero Lead Bullish Charge
The bears are slowly giving away to a handful of altcoins, precisely the ones that have successfully built a strong momentum since the week began, as such, it will be no surprise that significant price breakouts will be attained before the weekend. However, some of the highest gainers are already making an interesting crossover.
Bitcoin Cash (BCH)
The 5th largest coin by market capitalization is retesting its last week’s previous resistance levels. On June 10th, Price broke out of the $400 mark to hit a high of $425 then fell all the way down below support levels of $350 and $300 to hit $269, consequently, market capitalization also lost more than $2 billion.
Meanwhile, in the last 24hrs, BCH has made a price correction and is soon to crossover to the $312 mark. Against the USD, the price has increased by 7.76% at press time and is likely to go higher or close around the $310 mark.
Bitcoin Satoshi Vision (BSV)
BSV has also taken the bull by its horns, as it is set to retest prior resistance levels. After hitting a high of $248 in June, the price took a slow decline that eventually landed it below $160 resistance level while market cap sustained a loss of more than $2 billion.
At press time, similar to BCH, the BSV coin against the USD has gained 7.21% and is just about to hit the resistance of $130. Once succeeded, the price will further head towards the $135 and prepare ahead for the $150 mark.
Monero XMR has been one of the best performers since the month began. After hitting a $119 in June, XMR is set to take off as market makes a bullish correction. The coin is currently up by 5.49% against the USD and is set above prior $84 support level while heading for a breakout between $99 to $96 mark.