A new research from eToro stated that investors who knew when to swap Bitcoin (BTC) and altcoins could have boosted their gains significantly in 2020.
It has been reported that the challenge is pinpointing when the coveted alt season begins.
However, in its latest quarterly report, eToro breaks down various cryptocurrency investment themes related to the 2020 bull market, as it also devotes an entire section to alt season, the part of the cryptocurrency market cycle where altcoins rally against the dollar and, possibly, outperform Bitcoin.
The report said that the research found that the top 100 altcoins, when held equally, were “a more lucrative investment” than BTC for most of 2020 until December 18. Investors who knew when to cycle from BTC to altcoins and vice versa could have nearly doubled their gains for the year.
Hindsight is always 20/20, especially when it comes to alt season. Still, eToro may have uncovered some important insights about how to spot this coveted market cycle. https://t.co/JMx5rAdB0K — Cointelegraph (@Cointelegraph) January 31, 2021
“If you started with bitcoin, with only two swaps the entire year – bitcoin to altcoin in May, and back into bitcoin in September – the 3x or 4x gains seen by either investment grows to over 7x.”
The research looks at various metrics that may help investors pin-point market cycles although eToro admits that predicting alt season and BTC season is notoriously difficult. Relative trade volume, social media activity, new coin listings, and the number of news articles published from crypto projects appear to have an impact on whether altcoins are about to have their time in the sun.
As per the sources, eToro uses data from The TIE, a crypto analytics company, to compare altcoin tweet volume versus Bitcoin. The data suggests that “alt season may be defined by the relative number of tweets about altcoins.”
Thus, it concluded:
“This metric seems to not only capture the May and October swaps, but also potentially the short alt season in late February.”