Key Points
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There is reason to believe that an altcoin season will arrive soon.
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Altcoins do extremely well during their season.
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Bad risks will look very tempting to take, and smart moves will feel too boring to make.
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When altcoins start outrunning Bitcoin (CRYPTO: BTC) for weeks on end, excitement rises, stories of winning riches overnight multiply, and the fear of missing out (FOMO) quietly reaches for your wallet. These “altcoin seasons,” or “alt seasons,” are among the most thrilling times to be a cryptocurrency investor, yet they’re also among the riskiest.
Alt seasons tend to arrive after Bitcoin finishes making one of its bigger moves, which only happen once every few years. When they occur, they only last a few months at the most.
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That means if alt season is arriving soon, and it probably will, you will need to be prepared in advance if you want to profit. Here are three moves to make right now to ensure you capture upside without losing the plot.
Image source: Getty Images.
1. Keep perspective, even when it gets hard
Altcoin season is typically defined by altcoins like Ethereum (CRYPTO: ETH) and Solana (CRYPTO: SOL) outpacing Bitcoin during a period of roughly 90 days. This trend almost always occurs a year or so after Bitcoin’s halving (when rewards for mining coins are cut in half). One popular yardstick defines an alt season as occurring when 75% of the top 50 coins by market cap beat Bitcoin during that window. Despite this relatively clear definition, many crypto investors wishfully anticipate an impending alt season. The first step is to step back and pay attention to the data, not the chatter.
But why are investors so eager to believe in an imminent alt season?
In short, it’s because this is the period when altcoins see their prices rise sharply, sometimes even astronomically. For anyone holding altcoins that have been performing poorly— which is the case for most investors for quite some time— the hope of an alt season presents a glimmer of hope for a positive return. However, it’s crucial not to let that delusion cloud your judgment.
No matter how aggressively your coins pump during an alt season, their gains are almost guaranteed to vanish once the special period ends. Quality investments will follow a similar pattern as the lesser-performing coins, although they may ultimately be worth more in the long run. It’s essential not to confuse a coin’s price action with its likelihood of generating long-term value or its investment thesis; the powerful upward momentum during alt seasons can easily distort these concepts, leading to severe consequences.
2. Tighten your risk tolerance substantially
During alt season, your investing discipline is put to the test.
Liquidity can evaporate quickly, and declines typically hit altcoins much harder than Bitcoin, especially when market conditions shift. While Bitcoin’s liquidity tends to be more robust, altcoins have historically experienced significant liquidity stress during sell-offs.
Thus, it’s imperative to set your rules now. Commit to minimizing your investment in riskier crypto assets during alt season, as prices will likely be less favorable, and it’s possible that your coins may never regain their previous (high) prices. Establish strict position limits for the riskiest assets, or consider avoiding them altogether.
Be especially cautious with meme coins; ideally, abstain altogether. While Dogecoin may surge during euphoric market phases, there’s no underlying long-term value, making it unwise to attempt to time the market.
Conversely, even promising emerging cryptocurrencies with strong fundamentals should be approached with caution. Alt seasons often test the viability of different coins, distinguishing valuable assets from those that will not survive in the long term. However, this separation is only clear in hindsight, once the dust has settled and the losers have faded away. It’s advisable to focus your purchases on established winners like Solana and Ethereum or their similarly reputable peers.
The key takeaway is that your risk budget should temporarily shrink during alt season rather than expand.
3. Offload your losers and fragile winners promptly
If you’re holding onto underperforming altcoins from prior market cycles, alt season presents a rare opportunity. You’ll likely see a more favorable price for selling, possibly your only chance at those prices for years. It’s essential to evaluate your holdings diligently and determine which ones you still have faith in and which you would prefer to drop when the opportunity arises.
Here’s a practical strategy: First, map your cost basis and plan staged sales (for example, at +25%, +50%, and +100% from your entry point). Second, reinvest the proceeds into higher-conviction assets like Bitcoin, Ethereum, or Solana. Finally, keep a small position if your investment thesis remains intact, but recognize that many altcoins never return to prior cyclical highs; view price spikes as exit ramps rather than fresh opportunities.
In essence, use the alt season to mend your portfolio instead of abandoning your strategy. The objective is to exit with a higher concentration of long-term growth-oriented assets and reduce reliance on timing the market, which is notoriously unreliable.
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Alex Carchidi has positions in Bitcoin, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
