Altcoins in Deep Capitulation: Will This Cycle’s Pain Lead to a New Season?
Across the crypto market, altcoin holders are facing a level of stress that even veteran traders call extreme. Recent on-chain statistics from Glassnode, relayed by several analytics outlets, show that only around 5% of the overall altcoin supply is currently in profit, which implies that roughly 95% of coins are being held at a loss. That configuration is not just “a bad week” – it is what market structure analysts describe as a deep capitulation zone for altcoins.
The macro backdrop is equally uncomfortable. Bitcoin recently fell back below the psychologically important 100,000 USD level after having printed new all-time highs above 120,000 USD earlier in the year, with multiple news reports documenting a sharp slide into the mid-90,000s. While BTC has since stabilised around that area, the damage to sentiment has been done. Crypto fear-and-greed gauges that compress momentum, volatility and social activity into a single score have dropped into “extreme fear”, with one widely followed index briefly hitting a reading of 10 in mid-November 2025 – its lowest level in many months.
Against that backdrop, it is not surprising that social media is full of claims that “altcoins are dead” or, conversely, that this is exactly the type of capitulation that always appears right before an explosive altseason. A professional news and analysis desk has to do more than echo either extreme. We need to verify the key facts, understand how the market’s plumbing is behaving and ask what kinds of outcomes are genuinely plausible from here.
This article breaks down what the data actually shows, why altcoins have been underperforming Bitcoin so dramatically, how thin liquidity turns selling into cascades, and where the current cycle diverges from 2017 and 2021. The goal is not to promise a specific outcome, but to give readers a structured way to think about whether any new altcoin season is likely to appear – and if it does, what form it might realistically take.
1. What the Latest Data Really Shows
The headline statistic – only about 5% of the altcoin supply in profit – is grounded in recent Glassnode research rather than rumours. Summaries of their work, published by several data platforms and news desks, state that the realised profit ratio for a broad universe of altcoins has fallen into a deep capitulation regime, with roughly one-twentieth of circulating supply still above cost basis while the rest is underwater. In plain language, almost everyone who holds a diversified bag of altcoins is sitting on unrealised losses.
Other write-ups based on the same dataset emphasise that this is the lowest profitability reading for altcoins in the current cycle. More importantly, they highlight an unusual divergence: altcoins have been stuck in this surrender zone for some time, while Bitcoin’s realised profit metrics have only recently begun to decline sharply. Earlier cycles typically saw BTC and the rest of the market top and then bleed together. This time, non-Bitcoin assets have been in pain for much longer, even as BTC pushed to new highs on the back of ETF flows and institutional adoption.
Sentiment data confirms that investors feel this pain. Providers that track composite crypto fear-and-greed indices show scores dropping into the low 20s in November, firmly in “fear”, and at least one widely cited index recorded a reading of 10 – an “extreme fear” level that major media reports identify as the lowest in roughly nine months. That low coincided with Bitcoin’s slide back under 100,000 USD and a broad sell-off in large-cap altcoins.
These numbers paint a clear picture: the bulk of altcoin supply is in the red, investors are anxious, and Bitcoin itself is no longer cruising higher in a straight line. What they do not provide is a simple yes-or-no answer to whether the next phase must be an altseason. Deep capitulation can mark the end of a bear phase – but in previous cycles it has also given way to long periods of choppy sideways trading where many projects simply withered away.
2. Panic Selling or Rational De-Risking?
Headlines often describe the current environment as “panic selling”, and there is certainly an emotional component when portfolios are this far underwater. But beneath the emotion, there is also a rational de-risking process at work.
On the forced side, leveraged traders and structured products tied to altcoins have been hit by margin calls as prices slide and volatility spikes. When collateral is marked down, positions have to be cut, sometimes aggressively. That forced unwinding can show up on-chain and on exchanges as waves of selling that are mechanical rather than discretionary.
On the voluntary side, many longer-term investors are making a simple relative-value judgement. Given a choice between holding an altcoin that is 70–90% below its 2021 peak with uncertain regulatory and business prospects, or reallocating to Bitcoin, which has already made new highs in 2025 and enjoys clearer institutional support, some rotation back toward BTC and stablecoins is rational rather than panicked. Exchange and fund flow commentary throughout the year has repeatedly noted this bias toward Bitcoin whenever macro or regulatory risks rise.
From a professional perspective, it is important not to over-simplify. Yes, there is capitulation. But it is the result of both emotion and structure: fear among stretched retail holders, de-leveraging among traders and a systematic preference by larger allocators for the most “blue-chip” assets in the crypto universe.
3. Why Altcoins Fall Harder Than Bitcoin When Volatility Spikes
Another widely shared observation is that when Bitcoin falls, altcoins typically fall more – sometimes much more. This is not anecdotal; it is visible in cross-asset performance charts. Market analyses in 2025 repeatedly point out that while BTC has pulled back around 20–25% from its peak, many altcoins have suffered drawdowns of 50–80% from their local highs, and a large number remain far below their 2021 records.
There are several structural reasons for this behaviour. First, altcoins function as high-beta assets on top of the Bitcoin “index”. They are perceived as higher risk, higher potential reward. When macro conditions tighten or regulatory headlines create uncertainty, investors and trading firms often cut risk by selling these higher-beta holdings first, while preserving core BTC exposure as long as they can.
Second, the investor base is different. Bitcoin ownership now includes institutions, corporates and long-term individuals who have lived through multiple cycles. In contrast, ownership of many altcoins is concentrated among retail traders, specialised funds and short-horizon speculators. Those groups are more sensitive to sharp drawdowns and quicker to exit when momentum reverses, which amplifies downside moves.
Third, derivatives and leverage play a bigger role in altcoins than casual observers realise. Perpetual futures and options tied to smaller assets often trade with relatively shallow order books and higher leverage. When prices move against crowded positions, forced liquidations add extra sell pressure, pushing prices well beyond the levels implied purely by spot selling. Recent derivatives analytics from major venues highlight periods where funding rates for altcoin perpetuals turned sharply negative, an indication that short pressure and de-risking were dominating.
All of this means that a 10% move in Bitcoin can easily translate into 20–40% moves across parts of the altcoin complex without any new, asset-specific news. From the outside that may look like “irrational” behaviour. In reality, it is simply what happens when high-beta assets with leveraged positioning meet a sudden change in risk appetite.
4. Liquidity, Low Caps and the Domino Effect
Price declines in altcoins are not just about sentiment and leverage; they are also about liquidity, especially in lower-cap names.
Analyses of current order-book depth show that in many small and mid-cap tokens, the amount of resting buy liquidity close to the spot price is thin. A sell order of moderate size can move the market several percentage points. For genuinely low-cap assets, a single large holder deciding to exit can push the price down 20–30% or more before new bids appear.
During periods of stress, this structure creates a domino effect. A macro or regulatory shock hits, traders decide to trim risk, and they start with positions that are easiest to sacrifice: speculative altcoins. Initial selling knocks prices through nearby bids, triggering stop-loss orders and liquidations. As charts break important technical levels, algorithmic strategies and momentum traders may join the move, further draining liquidity. Fear then spreads sector by sector – DeFi, gaming, infrastructure – as investors extrapolate the damage from one token to its peers, even in the absence of project-specific news.
This is why describing altcoins as “illiquid” is not just jargon. Thin liquidity is the mechanism that transforms a single decision to sell into a visible cascade on the chart. It helps explain why so many altcoins have recently printed steep one-day or one-week drops, even when Bitcoin’s own decline, in percentage terms, looked more modest.
5. This Cycle Is Not 2017 or 2021
To judge whether an altcoin season can replay, it is essential to compare cycles. In 2017, after Bitcoin’s explosive rally, liquidity rotated into a wide universe of new tokens. In 2020–2021, DeFi, NFTs and layer-1 narratives triggered broad rallies across dozens of large caps, with many coins setting new all-time highs alongside or shortly after Bitcoin.
In 2024–2025, the pattern is different. Bitcoin has already broken to fresh records above 120,000 USD, helped by spot ETF inflows and a strengthening “digital reserve asset” narrative. In parallel, a large share of established altcoins remains far below their 2021 peaks. Research pieces from multiple firms note, for example, that some heavily used networks and infrastructure tokens still trade 70–80% under their old highs, and commentary on the top 50 altcoins as a group describes them as “far below” prior-cycle levels even after occasional rallies.
Another difference is the character of altcoin rotations. Instead of the broad, almost indiscriminate surges of prior cycles, 2025 has seen more selective waves: a memecoin and PolitiFi boom early in the year, a strong run for AI-related tokens, and episodic inflows into specific sectors like DePIN or restaking. Institutional and macro-focused research increasingly argues that this selectivity may be the new normal: Bitcoin as the core asset, with capital rotating into a handful of narratives rather than into every token that can list on an exchange.
That does not mean a large-scale altseason is impossible. It does mean that simply assuming “what happened in 2017 or 2021 will happen the same way again” is dangerous. The market’s structure, regulatory environment and investor base have all changed.
6. Sentiment: Extreme Fear and the Psychology of Being 95% Underwater
Sentiment indices like the crypto fear-and-greed gauge compress several inputs – volatility, price momentum, social chatter and dominance – into a single number between 0 and 100. Scores near 100 represent euphoric greed; scores near 0 signal extreme fear. In November 2025, multiple providers placed the market firmly in fear, and at least one tracked index dropped to about 10, an extreme reading that news outlets flagged as the lowest in many months.
In combination with the statistic that roughly 95% of altcoin supply sits at a loss, it is easy to see why market participants talk about despair and exhaustion. Historically, such combinations of extreme fear and broad unrealised losses have sometimes coincided with attractive long-term entry zones. However, they have also persisted for extended periods where prices simply chopped sideways and weaker projects quietly disappeared.
For a professional investor, the right way to use these indices is not as a one-line trading signal, but as context: they highlight when the crowd is either overconfident or deeply pessimistic. Today’s readings clearly show pessimism, but they do not tell us which individual assets, if any, deserve fresh capital.
7. Will Altcoin History Repeat? Three Plausible Paths
Given all this, will altcoin history repeat itself in this cycle? There is no deterministic answer, but it is useful to outline three broad scenarios.
Scenario 1: A selective altseason. In this path, Bitcoin stabilises in a broad range and volatility compresses after the recent drop. ETF flows and macro conditions become less noisy. Under those circumstances, capital could rotate into altcoins again, but in a targeted way: mainly toward large-cap names with clear narratives and a few mid-cap projects that can demonstrate real usage, revenues or unique positioning. Index-level measures of “altseason” might turn up, yet the experience for investors would be very different from 2017 – more about picking a few strong horses than buying any small-cap token and expecting it to fly.
Scenario 2: Extended Bitcoin dominance, no classic altseason. Here, institutions continue to treat Bitcoin as the only asset that reliably justifies a large allocation. Research already notes that many altcoins have vastly underperformed BTC throughout this bull phase. In this scenario, that underperformance continues: BTC remains the main beneficiary of any renewed risk appetite, while altcoin rallies appear as brief, narrative-driven spikes that fade quickly. The notion of a broad, multi-month altcoin season like 2021 might not materialise at all.
Scenario 3: A late-cycle altcoin mania. The third path assumes a friendlier macro backdrop – lower rates, easing policy and renewed speculative interest – combined with a period where Bitcoin trades sideways near the top of its range. If that happens, and if retail capital returns in size, a more traditional altseason cannot be ruled out. Bitcoin dominance could fall, dozens of tokens might set new highs and social media would once again be full of overnight success stories. Even in this optimistic case, though, history suggests that many of today’s weaker projects would still not participate meaningfully, and any mania would be followed by another painful comedown.
8. How a Professional Desk Reads This Environment
For a professional news and analysis platform, the value is not in guessing which scenario will play out, but in helping readers prepare for several possibilities at once.
First, it is crucial to stop treating “altcoins” as a single monolithic trade. Large-cap infrastructure tokens, mid-cap application projects and illiquid microcaps belong in different risk buckets. Each should be analysed with appropriate tools: on-chain activity, development progress, treasury runway and tokenomics for fundamentals; order-book depth and derivatives positioning for trading; and regulatory context for legal risk.
Second, liquidity has to be front and centre. When only 5% of supply is in profit and fear is high, the question is not just “Is this coin cheap?” but “Can I exit a position without moving the market against myself if conditions worsen?” Position sizing, use of leverage and stop-loss placement all need to reflect the reality that many altcoins trade in thin markets.
Third, investors should track structural indicators rather than just price. Bitcoin dominance, altseason indices, stablecoin supply trends, ETF flows and layer-2 activity all provide clues about where fresh capital is actually going. If an altcoin revival is genuinely underway, it should be visible not only in isolated price spikes, but also in healthier volumes, improving breadth and more constructive funding conditions across the non-BTC complex.
Conclusion: Pain, But Also Information
The current altcoin landscape is brutal by any objective measure. On-chain data confirms that roughly 95% of supply is at a loss, sentiment indices have sunk into extreme fear, and Bitcoin’s recent drop from record highs has done little to improve confidence. Thin liquidity means that even modest selling can trigger outsized price moves, and the memory of earlier cycles reminds investors that some projects will simply not come back.
Whether this environment marks the birth of a new, more selective altseason or the end of the old “everything pumps” playbook will only be obvious in hindsight. What can be said with confidence is that surviving – and potentially benefiting from – this phase requires more than hoping that history repeats. It demands careful attention to verified data, a clear understanding of how market structure amplifies moves and a willingness to be highly selective about which altcoins, if any, deserve a place in a portfolio when almost everyone else is afraid.
