Another altcoin season is coming, with some assets already showing overheated performance

Altcoin seasons are unpredictable and often short-lived, but can bring unexpected returns. Broad crypto indexes may be one of the best tools to tap that market. 

Altcoin seasons are one of the biggest sources of fast returns on the crypto market. Multiple assets outperform BTC, with outsized daily pumps. However, altcoin indexes are usually based on the top 100 coins and tokens by market capitalization. 

This list is not constant, as narratives and assets shift. Coins and tokens from previous cycles often disappear, displacing up to 77% of top crypto assets. 

Experts from Market Vector warn that tapping altcoin market opportunities may be best done through indexes. Selecting individual coins and tokens may be a risky game, and even the best-performing assets often erase a big part of their value just hours or even minutes after a pump. 

As Cryptopolitan reported earlier, the altcoin season index was recently pushed to its highest value since December 2024, driven by a mix of solid blue-chip performance and unpredictable pumps. 

Altcoin seasons switch direction without warning

The raw index based on the current top 100 assets is extremely unpredictable. After hovering sideways for months, the index took just days to enter overheated territory. The index touched the overheated territory at 80 points, then returned to 78 points. 

Historically, altcoin seasons have often arrived with a steep climb and a brief peak, which lasts for 1-3 weeks before deep drawdowns and corrections. This has left many investors either with losses or a habit of avoiding altcoins altogether. 

Altcoins also have varying price pressures, different for VC-backed projects, memes, utility tokens, and coins. For that reason, Market Vector recommended using indexes for exposure to altcoins. 

Indexes smooth out the fluctuations in crypto

Market Vector has produced multiple indexes, which combine exposure to BTC and relevant altcoins. The recommendation for exposure to altcoins is to choose an index with selected altcoins. 

Market Vector recalculates its indexes quarterly, removing irrelevant or underperforming assets. This means even if an altcoin or token rallies during one period, it would be removed if it wipes out all gains. 

Indexes also mean an investor is not stuck holding underperforming assets, while missing out on other opportunities. Some altcoins and tokens offer only short-term rallies, later drifting sideways for relatively long periods. 

Market Vector recommends choosing Coinbase 50 (Coin50) or a similar index. The market product tracks the performance of BTC, but offers outsized gains during altcoin rallies. However, the index has a lower risk on the downside, due to the effect of BTC. 

The index takes into account the fact that even if an altcoin season ends, BTC can still outperform and compensate for losses. However, a broader selection of tokens can tap the “long tail of growth.” 

Adding BTC and the leading blue-chip tokens into an index leads to better performance during altcoin seasons. According to Market Vector, even five of the leading coins capture most of the upside of the altcoin season. Adding the top 50 assets offers even bigger outside gains, with similar risk-adjusted returns. The key to index returns is also the removal of irrelevant, unsustainable assets, which can sway investors and lead to unrecoverable losses. 

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