If the top 100 altcoins had been held in equal parts, that would have been mostly more lucrative than Bitcoin in 2020, according to eToro.
Investors who swapped their bitcoins ( BTC ) for altcoins and vice versa at the right time could have made significantly higher profits in 2020, according to a new study by eToro , the popular social trading platform. The challenge, of course, is to determine exactly when the coveted old season begins.
In its latest quarterly report, the eToro platform explains various cryptocurrency investment topics in relation to the 2020 bull market. An entire section is also devoted to the old season . This is a phase in the cryptocurrency market cycle where altcoins rally, often outperforming Bitcoin.
The investigation showed that if the top 100 altcoins had been held in equal parts, in 2020 they would have been mostly a „more lucrative investment“ than BTC. Until December 18th to be precise. However, investors who knew when to switch from BTC to Cryptosoft and vice versa could have nearly doubled their profits that year.
eToro explained :
„If you had started with Bitcoin and had only made two changes in the whole year (Bitcoin to Altcoin in May and back to Bitcoin in September), instead of three or four times the profit you could have made over seven times the profit.“
While eToro admits that predicting the old season and BTC season is notoriously difficult, the research looks at various indicators that can help investors determine market cycles.
The relative trading volume, activity on social networks, the listing of new coins and the number of news articles published about crypto projects seem to have an impact on whether altcoins experience a boom.
Of course, trading volume is a classic chicken-or-egg situation. Because it is not always clear whether trading activity is increasing organically or simply because the price is rising.
To measure activity on social networks, eToro uses data from The TIE, a crypto analysis company. The tweet volume of Altcoins is compared with that of Bitcoin.
The data suggests that „the old season can be defined by the relative number of tweets about altcoins,“ the report said.
It also said:
„This indicator seems to capture not only the May and October deceptions, but possibly also the short old season in late February.“
Dogecoin ( DOGE ), the meme cryptocurrency , is currently the center of attention on social networks. Last week, DOGE became the first altcoin to outperform Bitcoin in terms of daily trading volume, according to data from The TIE.
Using data from The TIE, eToro also looked at listings on exchanges and thus showed that there was a „significant increase in the number of exchange listings in late summer“ in 2020. That was the same period in which altcoins performed the most significantly better than BTC.
More mentions in news articles published directly by cryptocurrency companies also appear to be correlated with the old season. „That makes intuitive sense,“ says eToro. Because these articles usually relate to current developments in projects and other big announcements.