We’re off to another interesting week in the crypto market, but that’s par for the course. Almost immediately after Bitcoin (BTC) broke to a fresh new all-time high, the entire crypto market took a bath and prices fell by about 10% – 20% across the board.

Many investors had been waiting for a dip, but Tuesday’s price movement was surprising to almost everybody. Not many people expected the price correction to take place immediately after a new all-time high.

As it turns out, the recent price correction was the doing of a Bitcoin whale who had held onto his coins since 2010. He must have had his targets set on $69,000 because the market dumped 1,000 BTC at that level. This of course sent the price of Bitcoin lower, which triggered a long liquidation across the market that flushed out a lot of the existing leverage.

These leverage flushes are great for market health because leverage is what causes these sharp and swift price movements. Longer and slower price movements are more sustainable in the long run.

Tuesday’s price crash happened swiftly, but the recovery was equally as rapid. In just 24 hours, Bitcoin had recouped most of its losses, but this time with much less leverage involved. As mentioned earlier, many investors were on the lookout for a favorable entry point into the market, and the dip presented precisely that opportunity.

A surge in spot purchases drove Bitcoin’s price back above $67,000 in under 48 hours. In the chart below, you can see that Tuesday’s huge red candle was covered up quickly by Wednesday’s recovery:

What’s even more amazing is that altcoins recovered even faster, and many are now trading for significantly higher prices than before the dip. Many altcoins just displayed some serious strength, and when they recover quickly after a dip like the one we saw, you need to pay attention.

When coins display strength during times of uncertainty, they also tend to have the strength to push to much higher levels in the weeks to come. Just take a look at the recovery of Render (RNDR) in the chart below:

After a huge drop from about $7.40 before the crash to a low of $5.70, RNDR looked weak. But in the following 48 hours, RNDR was able to pump all the way to a new all-time high of over $10.

Given the recent strength of altcoins, I believe we may be at the beginning stages of altcoin season, also known as one of the best times to make money in the crypto market, and that is today’s main focal point.

What is Altcoin Season?

Altcoin season, also known as altseason, is a key characteristic of a crypto bull market and it’s a concept that you must know to be a successful crypto trader.

You see, money in crypto flows in a cyclical fashion and repeats similar patterns in almost every bull market. Of course there is the meta cycle, i.e. the four-year cycle, that takes us from bull market to bear market back to a new bull market, but there are also internal market cycles.

Let me break down the internal money flow cycle of the crypto market, because this helps identify when we may be entering an altcoin season.

In the first stage of the crypto money flows, investors send money into Bitcoin and then Ethereum (ETH). These are our market leaders and they lead the way in every cycle. After the market leaders rise in price, investors tend to shift out and transfer some money into other large market cap altcoins. Think bigger blue chip cryptocurrencies not named Bitcoin and Ethereum, mainly top 25 cryptocurrencies by market capitalization.

In the next stage, investors shuffle their profits into mid- and small-cap altcoins to try and make even higher price multiples. These may be new crypto projects or smaller, lesser known cryptocurrencies outside of the top 25. This is the point of the cycle where speculation drives price action and investors tend to get greedy.

Somewhere during the shift of money from large-cap altcoins to smaller projects is the beginning of altcoin season, and I believe that is the stage we are currently in. That is when altcoins can seemingly explode out of nowhere and we can see the astronomical gains that the crypto market has become known for.

During an altseason. investors start throwing money into seemingly any altcoin that has potential, and many coins can sprout up out of nowhere and make massive gains. That is why the key to winning in an altcoin season is to already have small allocations of a few different carefully selected altcoins.

You don’t want to invest in any random project. You need to do your due diligence on what projects have good fundamentals and also have the potential to build momentum. However, sometimes during an altseason, the winners can be a bit random, that is why you need to diversify through multiple different altcoin selections.

You’re more likely to hit on a 5X+ gain if you have investments in many different coins. Approach altcoin season like a venture capitalist.

How To Take Advantage Now

I expect to see some big movements in smaller projects over the course of the next few weeks. That means smaller cryptocurrencies outside of just artificial intelligence (AI) projects should make huge gains in this next stage of the market cycle.

It’s important to keep in mind that at the end of the profit rotation, investors tend to shuffle their money back into Bitcoin and Ethereum and start the process anew. That is another reason why those are the safest investments in crypto and the cornerstones of any good crypto portfolio.

This shuffle of money, known as altcoin season, can happen multiple times in each bull market, but I believe we are at the start of the first altcoin season of the 2024 bull market right now.

That means if one wanted to trade the altcoin season, they should be prepping accordingly and adding exposure to altcoins with a medium-term outlook of a few weeks to a couple months. Altcoins could outpace the market leaders for as long as 2 to 3 months, and they can fly up in price at a moment’s notice. I’m excited to see this play out.