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Many crypto investors eagerly await the arrival of “altseasons,” which, in the crypto canon, are periods in the crypto market lasting weeks to a few months during which altcoin prices go completely berserk to the upside, outrunning Bitcoin(CRYPTO: BTC). Two of the biggest altcoins, Ethereum (CRYPTO: ETH) and Solana, outpaced Bitcoin between July 19 and Oct. 19, a sign that the next altseason could be closer than it looks.
But most of the time when someone predicts an imminent altseason, it doesn’t come to pass. But whether or not an altseason arrives soon, I’m going to be buying a little bit of one altcoin anyway, and it’s NEAR Protocol (CRYPTO: NEAR).
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Bitcoin dominance is the metric to watch
In an altseason, growth spreads across nearly the entire altcoin field for weeks or months at a time, sometimes without significant corrections along the way. It’s said that during an altseason, you can throw a dart at a list of altcoins and then often make a decent profit by buying whichever one the dart lands on and holding it for a few months.
For instance, Ethereum, the biggest altcoin of all, exploded upwards by 427% in the first five and a half months of its epic run in 2021, and many smaller altcoins experienced even greater returns. This makes altseasons a great time to sell crypto, provided that you loaded up earlier, when coins were cheap.
The typical harbingers of an imminent altseason are a decline in Bitcoin dominance after a long period of it increasing, alongside a simultaneous increase in Ethereum dominance. Dominance refers to a coin’s share of the crypto market’s total value. In 2021, right before the altseason began, Bitcoin dominance topped out at close to 70% in early January, when Ethereum’s was close to 11%; by the end of 2021, Bitcoin’s dominance was just 39%, whereas Ethereum’s was near 20%.
The classic dominance signal hasn’t flashed yet, though. Bitcoin’s dominance was 58.6% on Oct. 19, and Ethereum’s was only 10.4%. Nonetheless, between July 19 and Oct. 19, all five largest altcoins increased in value, with Zcash growing by 102%, so there’s still some heft to the idea that an altseason may be approaching.
Why buy NEAR instead of an altcoin basket?
In the past, it may have worked to buy a bunch of altcoins and then patiently wait for an altseason. I believe that strategy is defunct, as there are now many more ways for higher-quality altcoins to differentiate themselves from inferior assets.
Source: finance.yahoo.com