Is the altcoin season here? How to trade small-cap coins amid high volatility

Bitcoin might have pulled the crypto market from its multi-month sluggishness, but the big winners right now are altcoins, as many cryptocurrencies have outperformed BTC during the last few weeks. Does the crypto market ignite the engine for another altcoin season? How to benefit from this rally? We’re about to figure it out in this post.

Altcoins perform great in Q4

Altcoins – digital assets other than Bitcoin – have demonstrated great returns in the last quarter of the year, and some of them took off earlier than that.

While Bitcoin has gained over 40% since mid-September to consolidate above $35,000, Solana’s (SOL) value has tripled, while Injective (INJ) and Chainlink (LINK) have surged by 150%. Avalanche (AVAX), Aave (AAVE), Polygon (MATIC), and Cardano (ADA) have also outperformed Bitcoin during the last 60 days.

Bitcoin and Altcoin’s recent performance. Source: TradingView

More importantly, while Bitcoin has found support at $34,000 and has been moving sideways in November, many altcoins continue to extend their gains or start to compete with BTC fiercely. Filecoin (FILE), Uniswap (UNI), and Cosmos (ATOM) have been active particularly in the recent days.

Major price increases for Filecoin, Uniswap and Cosmos. Source: TradingView

What’s driving the altcoin rally?

Altcoins are now having a great time, but the truth is that Bitcoin is still the main driving force, and it holds the key to the current rally. The largest cryptocurrency by market cap accelerated its bullish mood in mid-October on investor excitement about a potential approval of one or more BTC exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC). Besides that, the digital asset has become a refuge amid escalating geopolitical tensions.

Since the crypto market tends to follow Bitcoin fundamentals, the oldest coin acted as a trigger, but altcoins continue to move by inertia now that the risk appetite has increased.

With its huge market cap, Bitcoin has less room for ongoing rallies, and investors focus their attention on medium-cap and small-cap crypto coins to target double-digit gains, including by using leverage.

Is the altcoin season here?

Many altcoins are leaving Bitcoin behind in terms of percentage gains, but can we really speak about the start of another altcoin season? The signs are there, but it’s still too early to confirm. The crypto community recognizes an altcoin season when the majority (at least 75%) of the top 50 coins by market cap outperform Bitcoin for 90 days. We have witnessed this for only a few weeks, and it remains to be seen if altcoins succeed further.

So far, 50% of the top altcoins have outperformed during a three-month period. It’s still not enough, but it’s a strong start: at the end of October, only 13% of top altcoins ruled over BTC.

Altcoin season index. Source: Blockchain Center

How to trade altcoins?

Whether it’s the official altcoin season or not, now might be the right time to seek profits outside Bitcoin. However, altcoins are currently highly volatile, and this involves greater risks.

During wild price fluctuations like this, traders seek quick profits, but the constant risk of sizeable corrections makes trading a more difficult job, especially for beginners.

Traders must back their open positions with strong technical analysis and monitor the market sentiment every minute. More importantly, this is the worst time to deviate from trading strategies and make hasty decisions. Our psychology might not handle the pressure of high volatility, which can lead to wrong moves.

Automated trading tools can help

Perhaps the best way to reap the benefits out of this altcoin explosion is to rely on tested automated trading tools. For example, TradeSanta helps traders customize their own trading bots based on preferred strategies. This helps them automate the trading process and eliminate the negative effects of emotions. Such instruments are a treasure, especially during high volatility and unpredictable moves that are hardly anticipated by the naked eye.

TradeSanta is a cryptocurrency trading automation platform that enables users to easily create and manage trading bots. It offers a beginner-friendly interface and various trading strategies to help traders automate their crypto trading and boost their trading efficiency.

Thanks to TradeSanta’s tools, traders don’t have to constantly watch the market and execute manual trades. The bots can be conditioned to analyze the crypto market to open and close positions without the user’s immediate involvement. The tool follows preselected strategies and relies on technical analysis and market sentiment to back its moves.

As an illustration, in the context of the increasing value of the Solana token, a trader can employ a long strategy using a Solana bot and set up take-profit targets and implement essential risk management tools, such as stop loss or trailing stop loss, while also leveraging trading signals to initiate or conclude trades in alignment with their individual strategy and risk tolerance.

Source: TradeSanta

Beginners have the opportunity to program it to copy the trading bots of more experienced traders, gaining access to seasoned pros with a few clicks.

Source: TradeSanta

TradeSanta’s automated trading tools can be easily integrated with many crypto platforms, including Binance, Coinbase Pro, Bybit, OKX, HitBTC, and Kraken, helping traders implement strategies on their existing accounts. It also offers its proprietary trading terminal, which has an intuitive interface and many features.

Source: TradeSanta

By leveraging TradeSanta, traders can take the best out of this altcoin revival and turn volatility from an enemy into a friend.