While Bitcoin is always in the spotlight during a bull market, altcoins tend to outperform BTC in almost every bullish season. We’ve already seen two major bullish cycles in 2024, during which Bitcoin subsequently hit a new all-time high and gained over 100% in a year. However, the year-to-year growth of altcoins such as Solana, BNB, TON, TRON, and Dogecoin has been significantly higher.
Bitcoin remains considerably the most stable cryptocurrency across the wider market, even during bearish trends – yet altcoins record the best gains when a new bullish cycle arrives.
So, how can one spot these potential altcoins ahead of a bull market?
Key takeaways
- Look for altcoins with positive momentum indicators like relative strength index (RSI) and moving average convergence/divergence (MACD), along with price-action patterns (e.g., ascending triangles, bullish flags) which signal potential breakouts ahead of a bull market.
- Prioritize coins with real use cases, high developer activity, active user bases, and well-defined roadmaps. Coins like Ethereum (ETH) and Solana (SOL) are often strong choices due to their robust ecosystems and adoption.
- Monitor Bitcoin’s dominance, upcoming halving cycles, and regulatory developments as they impact capital flow into altcoins. Key economic shifts, such as lower interest rates or new crypto regulations, can also shift sentiment positively toward altcoins.
Looking back at the 2024 altcoin season
Several altcoins have shown impressive gains throughout this year. Tokens like SUI have gained over 260% this year, while Toncoin recorded 140% growth due to the popularity of Telegram’s tap-to-earn games. Leading blockchain networks like Solana and Binance Chain (BNB) have also benefited from increased decentralized finance (DeFi) activity due to meme coin trading.
Despite Bitcoin’s current hold over market attention, the cyclical nature of crypto markets has historically allowed altcoins to capture capital inflows in the later phases of bull runs, particularly when Bitcoin stabilizes.
Whenever Bitcoin’s dominance plateaus due to liquidation, altcoin assets usually benefit from the next shift in investor sentiment. This potential for sector-specific gains suggests that if an altcoin season does emerge, it may be shorter but highly concentrated within selected tokens.
Why do altcoins outperform Bitcoin in a bull market?
- Higher volatility and market cap differences: Altcoins generally have smaller market capitalizations compared to Bitcoin. This makes them more susceptible to sharp price increases, as less capital is required to generate significant price movements. In bull markets, where investor confidence grows, these lower-cap assets can see larger percentage gains compared to Bitcoin. Essentially, altcoins offer higher returns at a higher risk, which becomes attractive in bullish conditions when investors are more willing to tolerate that risk.
- Increased speculative interest and diversification: As Bitcoin typically initiates the bull market, early gains in Bitcoin prompt investors to look for additional assets that may offer similar or better returns. Altcoins represent a wide variety of projects and sectors, from DeFi to NFTs (non-fungible tokens), each catering to specific market niches. During a bull market, capital often flows from Bitcoin into these alternative assets as investors seek diversification within crypto and aim to capitalize on specialized use cases and projects with high growth potential.
- Technological and network developments: Altcoins, particularly those supporting smart contracts, DeFi, and other blockchain ecosystems, frequently undergo rapid development and upgrades. During a bull market, network updates and new technological integrations can drive demand as users, developers, and investors explore these functionalities. For example, tokens like Ethereum and Solana have seen increased adoption due to their support for dApps and smart contracts, making them attractive in a high-growth market cycle.
How to find the best altcoins in the next bull market?
1. Technical indicators to track momentum and strength
Several key indicators help pinpoint when an altcoin may be positioned for growth:
- Relative Strength Index (RSI): The RSI measures the speed and change of price movements, with values between 0 and 100. An RSI above 70 suggests overbought conditions, indicating a potential reversal, while an RSI below 30 may suggest an oversold condition, often a buying signal. For trending altcoins, RSI values between 40-60 can signal stable, upward momentum without being overly bullish.
- Moving Averages (MA): Using moving averages like the 50-day and 200-day can identify underlying trends. When a short-term MA (e.g., 50-day) crosses above a long-term MA (e.g., 200-day), it forms a ‘Golden Cross’, indicating a potential bullish trend. Conversely, a ‘Death Cross’, where the short-term MA falls below the long-term MA, may signal bearish conditions.
- Moving Average Convergence Divergence (MACD): The MACD shows the relationship between two moving averages (usually the 12-day and 26-day) and helps identify momentum shifts. A MACD line crossing above the signal line is bullish, while crossing below is bearish. Monitoring MACD histograms can also reveal divergences from price movement, often signaling trend reversals.
2. Trading patterns indicating bullish setups
Certain patterns are strong indicators of upcoming upward movements in price:
- Ascending triangles: In an ascending triangle pattern, the price consolidates between an upward-sloping trendline and a horizontal resistance level. A breakout above the resistance often signals a strong upward trend, especially in high-volume environments. This pattern is frequently observed before a significant rally in bull markets.
- Bullish pennants and flags: These patterns show brief consolidation after a price surge and indicate the continuation of an uptrend. Pennants form as small triangles, while flags form as rectangular patterns. Both signal a strong bullish continuation when prices break upward following a consolidation period.
- Cup and handle: This pattern involves a ‘cup’ shape where prices dip, stabilize, and recover to previous levels, followed by a small, shallow pullback forming the ‘handle’. A breakout above the handle typically confirms a bullish move.
3. Identifying trends and market sentiment
To identify promising altcoins in a bull market, evaluate broader trends and project developments:
- Volume analysis: A rise in trading volume without a corresponding increase in price may indicate accumulation, suggesting institutional or large-scale investor interest. Sustained volume increases often confirm trend strength, especially during a breakout from consolidation patterns.
- On-chain data: Monitoring metrics like wallet activity, transaction counts, and active addresses can reveal user engagement and network growth. Rising unique addresses or higher transaction volume for an altcoin, for instance, can signal increasing adoption and demand.
- Bitcoin dominance index: Bitcoin dominance (the ratio of Bitcoin’s market cap to the total crypto market cap) can indicate when altcoins may start outperforming. A decrease in Bitcoin dominance is often a signal that investors are shifting capital into altcoins, paving the way for altcoin gains.
4. Assessing project fundamentals and use cases
Lastly, fundamentals determine whether an altcoin has potential long-term value:
- Technical and development roadmap: Projects with an active development team and a clear, achievable roadmap are more likely to succeed. Look for regular software updates, active GitHub repositories, and progress on stated milestones.
- Unique use cases and market Demand: Projects that fulfill unmet needs in areas like DeFi, NFTs, layer-2 scaling, or cross-chain interoperability may see higher adoption in the next bull cycle. Review partnerships, developer interest, and recent integrations to assess project relevance and innovation potential.
- Tokenomics: Strong tokenomics can support price appreciation. Look for limited maximum supply, deflationary mechanisms, staking rewards, and incentives for holding the asset. Projects with good tokenomics balance demand and supply to help support long-term value.
Promising altcoins to watch in the next bull run
1. Solana (SOL)
Known for high-speed transactions and low fees, Solana continues to attract developers and projects. Its high throughput, aided by the Proof of History mechanism, makes it an appealing alternative to Ethereum, particularly in DeFi and NFT markets. Its ecosystem development and partnerships signal strong network effects and adoption potential.
Solana’s volume surges and recent price rally place it on watchlists. Ascending triangles and bullish flag patterns could signal continuation in a bull market, while monitoring the 50- and 200-day moving averages can confirm trend direction.
2. Kaspa (KAS)
Kaspa’s adoption of the GHOSTDAG protocol differentiates it by using a BlockDAG for faster confirmation times, which tackles the blockchain trilemma of scalability, speed, and security. As a newer asset with rapid technical developments, including ASIC miner adoption and mobile wallet releases, Kaspa appeals to those looking for high-performance blockchain infrastructure.
Given its recent listing and trading activity, volume analysis and early-stage RSI monitoring are essential. As a low-cap asset, high volatility may allow significant price movements, making it a speculative yet potentially rewarding option for those monitoring breakout patterns and consolidation phases.
3. Stellar (XLM)
Stellar often moves with major financial and regulatory developments. Monitoring MACD and RSI levels around critical support points can help identify periods of accumulation, and breakout patterns on its price chart often precede bull run rallies, especially when liquidity increases.
4. Cosmos (ATOM)
Cosmos is unique with its Inter-Blockchain Communication (IBC) protocol, allowing seamless interoperability among different blockchains. Cosmos Hub and its ecosystem are growing steadily, driven by ATOM’s role in providing security and governance. The rise of interoperability-focused projects makes Cosmos particularly valuable, as interconnected ecosystems gain popularity.
Cosmos exhibits high support around its long-term trendlines, and using MACD crossovers can help signal upward momentum. Watch for breakouts in ascending channel patterns, as Cosmos often responds to ecosystem developments and IBC usage growth.
5. Polygon (MATIC)
Polygon’s volume and liquidity make it ideal for monitoring accumulation zones through moving average convergence. Look for cup-and-handle formations, which have historically preceded MATIC’s rallies during market upturns.
Final thoughts
For effective entry timing in these assets, keep an eye on technical indicators like RSI for identifying overbought/oversold conditions, volume to confirm trend strength, and MACD for momentum shifts.
Additionally, tracking Bitcoin’s dominance and shifts in macroeconomic sentiment will give you clues on when capital may start flowing into altcoins.
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01.
Why do altcoins outperform Bitcoin in a bull market?
Altcoins tend to outperform Bitcoin due to their smaller market caps, which makes them more volatile and capable of larger percentage gains with less capital inflow. Additionally, as investors diversify from Bitcoin, they often seek higher-yield, innovative projects in altcoins, especially in high-growth sectors like DeFi and NFTs.
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02.
Which altcoins might surge in the next bull market?
Promising altcoins include Solana (SOL), Polygon (MATIC), and Stellar (XLM) among others. Newer tokens like TON can also benefit from ongoing airdrop and tap-to-earn trends.
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03.
Are altcoins better than Bitcoin for trading?
Altcoins can offer higher returns due to their volatility, which appeals to traders seeking short-term gains. However, they also come with higher risk compared to Bitcoin’s relative stability and liquidity, making Bitcoin often preferable for long-term holding or lower-risk strategies.
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