- Alt season can bring huge gains, but many aren’t sure how to pick the winners
- Looking at charts can tell us when an asset could be about to break out
- Entry points can vary depending on your risk level and your patience!
Alt season is something of mystical time in the cryptocurrency world and one that comes around about as often as Halley’s comet, but those who play it right can make a fortune. Alt season, or alt coin season, describes a time when alt coins pop off like fireworks, running into double and sometimes triple figures. But how can you spot the potential winners rather than sitting on the sidelines watching others making all the money? Our guide to finding the alt season winners will give you the inside track.
Bottoms and Tops
Buying the bottom and selling at the top of a coin’s cycle is of course the ideal that every trader strives to achieve, even more so in a crypto alt season, but getting both ends of the trade bang on is almost impossible. Instead you should be looking to buy somewhere near the bottom and selling somewhere near the top, depending on your own risk level. When looking for tokens to buy then, you shouldn’t be obsessed with catching the very bottom but looking instead for an asset that has bottomed out, gone through accumulation, and is showing signs of life.
We will use QuarkChain (QKC) as an example to show you what this process looks like. From the example below we can see that the coin had been in a downtrend since 2019, finally reversing its trend in February this year where the mean price line (red line) flattened out:
Source: Crypto Day Traders
The flattening of the mean line means that the coin is flipping from bearish to bullish. This doesn’t mean it’s time to load up on longs yet as there may be further dips ahead, but we can see from the next three months’ performance that the token remained roughly at the same price range, indicating that all the big selling was over and the coin was going through accumulation.
Some choose to buy here at the flattening of the mean price on the thinking that they have the best chance of buying the bottom, and they probably do. However, at the same time they are risking further downside before the coin starts its new cycle and they will also need to exercise more patience while the coin goes through its months-long accumulation period before an alt season can propel up upwards.
Buy the Breakout
On the QKC cryptocurrency chart we can also see a big spike in buying volume at the end of May, which precipitated the first concentrated upward movement in almost a year as alt season started. As time has passed since this first move we can see a very clear period of upward momentum:
Source: Crypto Day Traders
This area presents the second place to buy – the breakout and confirmation. This is where the price breaches a significant resistance point and then uses it as support, setting it up for further upside:
Source: Crypto Day Traders
Buying a breakout confirmation means that you will miss out on buying the bottom, but the risk of further downside is much smaller and your waiting time for potential further positive action is also reduced. Buying at a breakout confirmation might leave you a few percentage points short in terms of gains, but it’s the strongest sign you can have that a cryptocurrency is ready to move upwards, and if it really is a true alt season then the chances are that you will more than make up for any losses soon anyway.
Don’t Forget the Fundamentals
The other thing to bear in mind when trying to buy coins ahead of a crypto alt season cycle is how the fundamentals shape up. It can be tempting to look at a coin that has endured a 99% correction since its last high and pick up a bag, but you need to be sure that it is just sleeping and not dead. This is another reason why buying up at the flattening of the mean line is more risky because you are yet to see any accumulation and potential breakouts, which are the signs of life for a project.
Alt Season Shouldn’t Alter Your Principles
Trading during alt season isn’t any different in principle than trading at any other time, in that you should follow your existing risk management style. If you have the patience and the stomach for it then buying at the first signs of a flattening downward curve can reward you magnitudes more than if you buy at a breakout, but in a market where risk abounds already why add more to it and buy before you know the project is still alive?
Buying confirmed breakouts may not be as sexy and clout-worthy as buying the bottom, but at least you’re less likely to lose your stake and more likely to make a profit at all, which is the aim of the game in the first place right? A cryptocurrency alt season can multiply your portfolio in the space of just a few days, but only if you play it right.
