How to Prepare for Alt Season

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Many people hear cryptocurrency and immediately think “bitcoin.” However, that is not the only currency type available. There are other altcoins available, and they have their seasons. Bitcoin has been around for just over 20 years, and it has grown. As with any growth, it has expanded and branched off to other coins due to being based on an open-source code blockchain. Each of these new coins that have been created is now known as altcoins or Alternative Coins.

What are Seasons?

Over 4000 types of cryptocurrencies are currently on the market, with only a couple dozen worth of any value. Altcoin refers to any coin that is not a Bitcoin, and they are grouped into different categories based on functionality.

  • Stablecoin – Comparison to Bitcoin in stability
  • DeFi Tokens – Decentralized Finance applications that work like traditional banking.
  • Security Tokens – Comparison to stocks and real estate.
  • Utility Tokens – Gives users service or product.

A season is simply when more money is flowing to the alternative coins instead of Bitcoin. People purchase various coins for different reasons. Therefore, an alt season is when people prefer altcoins. It is essential to understand the digital world and how cryptocurrency works. Every few years, Bitcoin performs a “halving event” that prevents the overinflation of the coin. During this event, miners only receive half credit for mining coins. People will begin to cash in their currencies and invest in other cryptocurrency options.

The main reason for seasons is due to exchange fees. There are withdrawal fees, a percentage of the coin value, that come with selling Bitcoins. Therefore, it is a cheaper option to transfer the coins to an alternative coin. This is what leads to alt seasons in cryptocurrency.

How to Prepare for Alt Season

Once you understand what alt seasons are, you can prepare for them. Thankfully, there are signs that an alt coin season is about to happen. It is essential to follow the Altcoin Season Index that tracks the various coins available on the market for 90 days. You can compare Bitcoin against other coins. Once you see roughly ¾ of the top 50 altcoins fairing better than Bitcoin, you enter alt season. In addition, if Bitcoin begins to hit 50-percent dominant, alt season is coming. Finally, look for surges, which occur when new coins are created, and investors take stock.

Trading Alt Coins

Trading altcoins requires the same cryptocurrency exchange program that you need for Bitcoin. You will want to set up an account, have it verified, and then store everything in a digital wallet. With this wallet, you will have the ability to buy and trade other coin types. Some traders prefer to hold the coins until they grow in value, while others buy and sell to maintain the desired balance. Talking to financial advisors will help you with the best options for you. They will also help guide you through the seasons and which coins to purchase.

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