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Altcoins and the Bull Market: Boom or Bust?

Every bull market cycle brings its fair share of "boom or burst" altcoins. Here's how you can diversify into altcoins and enjoy their potential gains while protecting your investment.

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Just like the earth completes a full spin around the sun every 365 days, so does cryptocurrency complete a full cycle moment during the BTC halving year. It is the season where all the charts are covered in green and it almost seems like everything you touch in crypto is literally gold.

Nothing has evidenced this more recently than Bitcoin briefly producing a new ATH (all-time high) and increasingly likely to hit another new all time high. As with previous bull markets, altcoins are the favorite pick for the nominal investor who can’t compete with the Michael Saylors of this world.

As Bitcoin's price reaches new heights, investors are diversifying their portfolios by exploring altcoins, seeking higher returns and new investment opportunities.

The Altcoin Saga

Altcoins often present innovative technologies and use cases beyond what Bitcoin offers. Projects such as Ethereum, Solana, and Cardano introduced smart contract capabilities, decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and more. Newer projects such as Avalanche, Arbitrum, and Chainlink aim to solve the scalability issue for blockchains with the promise of super-fast transactions, low fees, and interoperability between blockchains.

An earlier article by Blockhead highlighted five potential altcoins to invest in during the bull run. While the cryptocurrency market is known for its volatility, altcoins with their lower market capitalizations tend to experience even more significant price fluctuations. This volatility presents traders and investors with opportunities to capitalize on short-term price movements, contributing to the rapid growth of altcoin trading volumes.

Investing in Altcoins: Potential Picks for the Crypto Bullrun
Altcoins usually ride on bullish sentiment in the market to register massive gains. Here are five coins that should be part of your portfolio for the bullrun.

A comparison chart of the potential of altcoins in this new bull market by @stockmoneylizards on X showed that altcoins have the potential to hit a $5 trillion marketcap, based on historic performance in previous bull cycles. With the Bitcoin halving still 43 days away, the current surge by altcoins seems to be the start of a new altcoin season.

Memecoins: The Trigger for Altcoin Season

One of the biggest contributions to altcoin season are memecoins. Memecoins are cryptocurrencies that are highly speculative and supported by enthusiastic online communities.

Memecoins typically pay tribute to a meme, which is an interesting or funny idea captured in an image, video, or another form of media. The most notable memecoins such as Dogecoin, Shiba Inu, and Pepe have all eclipsed the $1 billion marketcap.

Top Memecoins by Marketcap | Source: Coinmarketcap

Data from Coinmarketcap show that memecoins currently have a marketcap of almost $52 Billion with a daily trading volume of $12 billion.

With altcoins having a total marketcap of $318 billion, memecoins currently hold a 16.3% share of the altcoin marketcap. This significant share of the altcoins marketcap presents an easy entry point for new crypto investors looking to ride the bull market.

Total Altcoin Marketcap | Source: TradingView

Has the Altcoin Season Begun?

A number of crypto analysts on X seem to think the altcoin season has begun. However, this chart from Blockchain Center suggests that the altcoin season isn’t in full flow yet.

Based on Blockchain Center’s parameters, the key indicator for the start of the altcoin season is for 75% of the top 50 coins to outperform Bitcoin over a 90 day period. Based on the chart below, altcoin season is just around the corner with 69% of the top 50 coins outperforming Bitcoin.

How Can You Profit From Altcoin Season?

The altcoin ecosystem presents a vibrant and dynamic pool of digital assets, each with its own unique characteristics, purposes, and potential for growth. While altcoins may display the potential for super-fast gains, it is also important to note the possibility for quick losses.

A proven strategy to maximize altcoin season is to invest in altcoins with a verifiable track record, strong use-case, and a vibrant social community. A mix of these dynamics serve as a catalyst for solid profit making opportunities on altcoins.

Another key thing to pay attention to in altcoin season is research and security. Before investing in any token, make sure to research the token properly. Check their website, social media pages, and read their whitepaper. Also ensure to check for active communities on popular crypto social channels such as Telegram, Discord, and Reddit.

Altcoin season also brings with it a lot of fraudulent players. With lots of retail investors looking to get into the action on cryptocurrency, the likelihood of investing in a scam is greater. Protecting your wallet keys and seed phrases are important. Also, using sites such as a HoneyPot Scanner to check potential contract addresses for security flaws or in crypto terms “honey pots” is vital to avoid falling for scams.

Diversifying your altcoin investments across multiple projects and categories is important to mitigate the shocks from volatility. It is also important to minimize exposure to many asset classes in the same category. Potential categories to watch for altcoins in this bull run are projects in decentralized physical infrastructure network (DePIN), AI (artificial intelligence), data privacy, and Real World Asset (RWA) tokenization.

With a solid risk management strategy and thorough research, investors can navigate the altcoin season and potentially reap substantial rewards in this crypto bull market.

Is It Altcoin Season Yet?
Understanding and leveraging narratives can be crucial for investors looking to navigate the volatile and speculative nature of altcoin seasons.