Altseason Top Identification: A Complete System from On-Chain Data to Market Sentiment

Altseason is a specific phase in the cryptocurrency market, typically occurring when Bitcoin reaches a high and moves sideways, with significant funds flowing from Bitcoin into altcoins. During the 2025-2026 cycle, many market analysts predict an “explosive altseason,” but it may be followed by a severe correction (expected drop of ~75%). This article systematically outlines seven major identification signals at the peak of altseason, helping investors stay rational amid market frenzy.

Retail Enthusiasm Indicator: Quantifying FOMO Sentiment

The FOMO (Fear of Missing Out) psychology of retail investors is a key driver of altseason. When small retail investors start to chase prices en masse, it often indicates that the market has entered a bubble zone.

Google Trends as a FOMO Barometer

When Bitcoin surged to $20,000 in 2017, the Google Trends index for the keyword “Bitcoin” skyrocketed to 100/100, while discussions about cryptocurrencies were rampant across social media and family gatherings—CoinCodex referred to it as a “pure FOMO phenomenon.” In contrast, even if Bitcoin breaks $100,000 in mid-2025, the corresponding Google Trends index remains at 37, indicating that retail enthusiasm has not yet fully ignited.

This comparison is crucial: when Google Trends spikes significantly, trading volume surges, community discussions explode, and major media outlets report intensively, it usually signals that the market is approaching a peak—at which point, a large number of small retail investors are “buying at the top.”

Conversely, if FOMO signals are not yet strong enough, it may indicate that the upward cycle has not ended and there is still room to grow. Investors need to continuously monitor these “thermometer” indicators, as they reflect the psychological state of market participants rather than purely technical aspects.

On-Chain Behavior Signals: Old Wallets and Short-Term Supply

Trends of Long-Term Holders (LTH)

“Old wallets” refer to addresses holding for over 155 days. In bear markets, this group is viewed as “smart money”—they accumulate gradually at low prices; during bullish peaks, they start to sell off in batches.

Research from Glassnode shows: “Long-term holders typically accumulate in bear markets and distribute when prices skyrocket… When market prices approach historical highs, they begin to spend (sell) again.” When LTH starts to sell off, old coins flow to short-term holders (STH), increasing the short-term supply ratio and consequently raising selling pressure.

Key Observation Indicator: Coin Days Destroyed (CDD)

Analysis from BitcoinMagazine found that when the growth rate of LTH holdings suddenly decreases, it indicates that this group is selling, and the market is entering a peak cycle. In other words, if the amount of coins in old wallets stops growing or even begins to decrease, while CDD data shows a significant amount of old coins being spent, that is a strong signal that long-term holders are starting to lock in profits and the market may be nearing its peak.

SOPR Indicator: Quantitative Measure of Profit-Taking Sales

SOPR (Spent Output Profit Ratio) measures “the level of profit when coins are sold.”

Calculation formula: SOPR = (USD value at the time of spending) ÷ (USD value at the time of UTXO creation)

According to Glassnode’s explanation:

• SOPR > 1: Most coins being moved are sold at a profit (sale price > purchase price)
• SOPR < 1: Sold at a loss

When SOPR remains above 1 for an extended period and repeatedly hits peaks, it reflects a continuous wave of concentrated selling—many holders are simultaneously locking in profits. Glassnode notes: “Continuous high SOPR peaks indicate a persistent distribution trend, typically occurring during price increases.”

Historical Validation

At the peaks of 2017 and 2021, SOPR repeatedly broke above 1 and reached peaks, subsequently falling as large-scale profit-taking initiated. Therefore, when SOPR continues to run high and frequently hits peaks, it serves as a warning signal to gradually reduce exposure to altcoins.

NUPL Indicator: Extreme Value Detector for Market Sentiment

NUPL (Net Unrealized Profit/Loss) is calculated using the formula: (Market Cap - Realized Value) / Market Cap

According to CryptoQuant’s Bitbo analysis:

• NUPL > 0: The market is in a profit state
• NUPL < 0: The market is in a loss state
• NUPL > 0.75: Extreme excitement, usually appears at market peaks

A high NUPL value indicates that a large number of holders possess substantial unrealized profits. Specifically:

• In 2017, the peak NUPL reached ~0.9
• In 2021, the peak NUPL similarly reached ~0.9

Practical Application

When NUPL enters the 0.75-0.8 range, the market has entered a “highly excited zone.” If NUPL continues to maintain high levels, it indicates that the risk of profit-taking is accumulating. During the 2025-2026 cycle, investors should closely monitor the NUPL value—once it remains persistently high, they should consider proactively reducing their holdings.

Profitability Indicator and Dominance: Dual Verification of Market Structure

Bitcoin Profitability Indicator

The Bitcoin profitability indicator (also known as average profitability) reflects the relationship between the current price and average holding cost, expressed as a percentage.

• Indicator > 100%: The Bitcoin trading price is above the average cost (market profit)
• Indicator < 100%: The market is at a loss
• Current level: ~202% (i.e., Bitcoin price is more than twice the average cost)

More importantly, CryptoQuant points out: when this indicator exceeds ~300% (as seen at the peaks in 2017 and 2021), investors typically begin to actively lock in profits. In other words, the larger the profitability multiple, the stronger the selling intention. The current 202% has not yet reached historical extreme values, but investors must closely monitor its subsequent trends.

Bitcoin Dominance (BTC.D)

Bitcoin dominance refers to the proportion of BTC’s market capitalization relative to the entire cryptocurrency market. When BTC.D declines, it means that funds are flowing into altcoins—this is the hallmark of altseason.

Historical data shows:

• 2017-2018 altseason: BTC.D dropped from ~86% to ~39%
• 2020-2021 altseason: BTC.D declined from ~70% to ~38%

When BTC.D falls to the 38-40% range, it usually marks the peak of altseason—at this point, most funds have shifted to altcoins, and Bitcoin may face a correction next. If BTC.D continues to decline to this critical level in 2025-2026, it will be a strong signal that altseason has peaked, and consideration should be given to reducing exposure to altcoins.

Media Effect and Crowd Psychology: The Final Signal for Mass Entry

When cryptocurrencies become a “hot topic” frequently appearing in news, television, YouTube, and social media, what does it usually indicate?

Widespread media coverage = Mass entry of retail investors

The situation with Bitcoin in 2017 is a typical case. Not just financial media, but mainstream media, family conversations, and internet memes were all discussing Bitcoin. Google Trends soared to 100/100. CoinCodex called it a “Bitcoin is not just a headline, but the headline of headlines” phenomenon.

This phenomenon is extremely rare, typically only appearing at the peak of market cycles. When everyone is talking about cryptocurrencies, even those who do not understand investing are eager to try, it is actually the moment of “highest popularity and greatest bubble.”

Conversely, when the media goes silent and news is scarce, it indicates that retail participation is not yet sufficient, and altseason may not have truly started.

Real Insights for the 2025-2026 Cycle

As of March 2026, we can partially review the altseason cycle of 2025:

1. Differences in FOMO Indicators: Even if Bitcoin breaks high prices, indicators of retail enthusiasm like Google Trends have not performed as strongly as in previous cycles, suggesting a potential divergence in public participation.

2. Multiple Indicators Must Confirm Together: One cannot rely on a single indicator to judge a peak. SOPR, NUPL, BTC.D, and profitability indicators must resonate together to confirm that the market has entered an extreme region.

3. Uncertainty of Correction Magnitude: Although historically, corrections after altseason have been in the 70-75% range, the characteristics of cycles are evolving, and solely referencing historical data poses risks.

Investment Decision Framework: From Cognition to Action

Early Cycle: Cautious Planning Phase

• Develop clear buying plans and target altcoin lists, do not chase high prices driven by FOMO
• Gradually build positions according to preset strategies, reasonably diversifying capital
• Pre-set target profit prices and stop-loss points

Altseason Activation Phase: Continuous Monitoring Stage

• Check changes in Google Trends, trading volume, and community enthusiasm weekly
• Track real-time trends of SOPR and NUPL, observe changes in LTH holdings
• When multiple indicators simultaneously trigger warnings (such as SOPR at high levels + NUPL > 0.75 + BTC.D drops to 40%), begin gradually reducing altcoin holdings
• Reserve some funds (stablecoins or Bitcoin) to respond to sharp declines

Peak Confirmation Phase: Proactive Profit-Taking Stage

• If multiple signals appear simultaneously (widespread FOMO, large-scale LTH sell-offs, SOPR/NUPL both high…), actively take profits in batches
• Overcome greed, avoiding trying to “catch the bottom”
• Set stop-loss points for holdings to prevent losses from expanding during sharp declines

Bear Market Correction Phase: Reaccumulation Stage

• When the market has entered a correction (with a drop of about 70-75%), high-quality altcoins often have long-term recovery potential
• Historical reference: Mid to late bear markets in 2018-2019 and 2022 often present high cost-performance buying points
• Continue to use macroeconomic and on-chain indicators to confirm market bottoms

Core Summary Points

To effectively avoid risks and seize opportunities during the altseason cycle of 2025-2026, investors need to:

1. Understand the essence of each indicator: FOMO reflects psychology, SOPR/NUPL reflect behavior, BTC.D reflects capital flow, profitability reflects extremes
2. Develop the habit of multi-indicator interlinked judgment: Do not trust a single signal, but wait for multiple indicators to trigger warnings simultaneously
3. Maintain composure, not being led by the media: When news is ubiquitous and family and friends are discussing cryptocurrency, it often indicates a dangerous zone
4. Reserve flexible capital: This enables quick entry when opportunities arise and swift loss-cutting when risks come
5. Cycle Thinking: The cryptocurrency market has clear cyclical rules, and investors who understand how to identify people and avoid risks will profit at every stage

Altseason is not an infinite game, but a cycle with clear starting and ending points. Mastering this identification system means gaining the initiative.