🚨 Is the Altcoin Season Really Here? Glassnode Unveils the Harsh Truth: Over 75% of Altcoin Holders are Still at a Loss!

Altcoins have clearly started to "move" recently.

For some time now, the market focus has been more on BTC, but as we entered September, funds began to spread towards a broader range of crypto assets. Glassnode's latest data indicates that its Altcoin Cycle Signal has switched from the "Bitcoin Cycle" to the "Altcoin Cycle," suggesting that this round of increases is spreading from BTC to more altcoins.

But the truly interesting part is right here:

While the altcoin market seems to be heating up, most holders are still not making a profit.

As of September 23, Glassnode's data shows that the proportion of mid-tier altcoins in circulation that are profitable is still less than 25%. In other words, over three-quarters of the chips remain below their on-chain cost basis.

This suggests that the current altcoin season may still be far from its craziest phase.

Altcoins are Taking Over, but It's Not a Full-blown Celebration Yet

First, let's look at market breadth.

CoinMarketCap's altcoin season index has recently rebounded significantly, reaching 49 on September 22, which is a notable improvement from 32 a week ago and 40 a month ago.

Glassnode's signals show a similar change.

In the August rally, BTC absorbed most of the market's upward momentum, with many altcoins not rising in tandem. However, this latest round of rebound is noticeably different—gains are starting to spread to more crypto assets.

According to Glassnode, in the past week, 72.5% of tracked altcoins have outperformed BTC, while during the August rally, this ratio only peaked at 39%. More importantly, the open interest in altcoin perpetual contracts has not experienced extreme expansion, indicating that this round of increases is primarily driven by spot demand rather than purely relying on high leverage.

This is why the market is beginning to discuss "altcoin season" again.

However, an increase in the index and a "full-fledged bull market" are not the same thing.

The publicly available altcoin season indicators are still in a transitional zone, and there is a significant gap to the 75-point threshold, which is usually regarded as confirming an altcoin season.

The Key Signal is Not How Much Prices Have Risen, but How Many People Have Finally Broke Even

Many people see certain altcoins having tripled in the last 90 days and easily fall into the illusion:

"Has the altcoin season reached its peak?"

But Glassnode's data reminds the market not to focus solely on price.

The profit supply indicator measures the proportion of tokens whose current price is above the price of their last on-chain transfer.

In simple terms, if an investor bought in at a higher price, then even if the coin price has recently rebounded, their holding could still be at a loss.

Currently, the median altcoin still has less than 25% of its supply in a profitable state.

This leads to a very important market phenomenon:

As prices continue to rise, a large number of previously trapped holdings are gradually approaching their cost line.

For these holders, the real question is not "Should I chase the rise?" but rather:

"Finally back to break even, should I sell first?"

This is why there is often significant selling pressure near the breakeven point.

Investors who have been trapped for months or even longer may choose to exit when they see their accounts return to around their original cost.

Thus, as altcoins approach the dense zone of earlier trapped holdings, the market is more likely to experience fluctuations.

This Round of Increases has Already Started to Spread

While Most Holdings are Still Not Profitable, Market Breadth is Indeed Improving.

As of September 22, the total market capitalization of cryptocurrencies has rebounded to around $3 trillion, with BTC prices close to $86,000 and ETH reaching nearly $2,740 at one point. Meanwhile, several altcoins have shown very noticeable increases over the past 90 days.

Among them, PONS has risen about 636% in the last 90 days, USELESS is up about 351%, and ZEC has increased by about 265%; PUMP has risen around 225%, and UNI, RAY, and ARB have also risen approximately 199%, 197%, and 178% respectively.

Notably, larger assets like SOL, ADA, and ETH have also shown significant increases.

This indicates that funds are not just revolving around a single meme coin or a singular narrative but are beginning to spread to more assets.

And this is precisely the key to whether the altcoin season can continue.

But Don't Ignore the "Trapped Holdings" Time Bomb

The biggest contradiction in the market has now emerged.

On one hand, more and more altcoins are starting to rise, and market risk appetite is clearly improving;

On the other hand, a large number of holdings are still at a loss.

This means that if the market continues to push upward, it will face two opposing forces:

Some funds will continue to chase profits because of FOMO, while others that were previously trapped will wait to sell after breaking even.

Which force is stronger ultimately determines whether the altcoin market can further expand.

Glassnode previously pointed out that market cycles typically peak when a large portion of market supply is in deep profit. From the current data, it’s evident that the market has not yet reached that state.

Thus, from the on-chain profit structure perspective, we are still a distance away from the stage where "everyone is making money, and there's a widespread frenzy."

True Altcoin Season, Next Watch for Three Signals

First, watch the breadth of the altcoin market.

If more and more altcoins can consistently outperform BTC rather than just a few hot coins rising, then the foundation for an altcoin rally will be broader.

Second, observe whether the profit supply can continue to expand.

Currently, less than 25% of median altcoin supply is in a profitable state. If this ratio rises rapidly in the future, it suggests that more investors are starting to break even or even enter a profit zone.

Third, monitor if leverage becomes uncontrollable.

Current data from Glassnode indicates that this round of altcoin rises has not been accompanied by significant expansion in perpetual contract leverage, which is a crucial distinction.

If prices continue to rise but leverage remains relatively restrained, then the market structure will be different from just an instance of high leverage short squeezes.

Conversely, if open interest begins to surge rapidly while prices move into previously dense trapped areas, the market volatility may significantly increase.

The Altcoin Season May Just Have Entered the "Spreading Phase"

So now, asking "Is the altcoin season here?" does not have a simple answer.

From Glassnode's cycle signal perspective, funds and the upward range have indeed begun to spread from BTC to altcoins; but from the profit supply standpoint, most altcoin holders still have not truly broken even.

Putting these two signals together is quite intriguing.

The market is getting stronger, but it hasn’t yet reached the stage where everyone is profiting.

For BTC, we need to keep an eye on whether funds continue to spread to altcoins; for ETH, SOL, and other main altcoins, we should look at whether the increases can expand from a few strong assets to a broader market.

And for those popular altcoins that have already surged several times, the greatest caution should not be about a lack of buyers, but rather that more and more trapped coins are starting to break even.

The true test of the altcoin season may just be beginning.

After all, a truly sustained altcoin market doesn’t just mean a few coins rising several times; it requires the entire market's profit area to continuously expand.

Right now, this process is happening.

But we still have some distance to go before a genuine widespread celebration begins.
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