KOLs Are Liquidating Their Holdings as the Altcoin Narrative Gains Traction—But Market Indicators Tell a Different Story

The cryptocurrency market is entering a heated phase. Prominent KOLs and influencers are aggressively closing out their long positions and broadcasting bullish calls on the altcoin season. While some analysts have been calling for the second wave of this cycle since late April, and further proclaimed the alt market’s awakening in mid-May, the reality painted by on-chain metrics suggests a more nuanced picture.

The narrative surrounding altcoins reaching extreme valuations—such as the altcoin index surpassing 75—has motivated some to believe the next leg of extraordinary gains is inevitable. Ethereum, which traded around $1,800 at that earlier signal, has since seen many smaller altcoins double from those levels. However, the current market composition differs significantly from previous cycles. The sheer number of projects competing for attention has diluted the odds of discovering the next 10x or 100x performer, making cherry-picking winners substantially more difficult.

Technical Indicators Suggest Caution, Not Euphoria

As of December 26, 2025, a comprehensive analysis of market breadth and momentum reveals mixed signals:

On-Chain Sentiment & Valuation:

• Bitcoin market cap dominance: 54.96% (notably down from historical peaks, indicating capital rotation toward alternatives)
• Fear and Greed Index: 71 (elevated, but not yet in extreme territory)
• Ahr999X Index: 2.51 (still within regular investment territory, well below the 9+ bubble threshold)
• MVRV-Z Score: 2.73 (approaching but not yet at peak levels above 4)

Long-Term Holder Positioning:

• Long-term holder percentage: 61.75% (elevated, yet maintaining a healthy buffer above the 55% danger zone)
• RHODL Ratio: 5179 (comfortably below the 10k+ peak warning level)

Altcoin Thermometer:

• Altcoin Season Index: 45 (midway between the 25 buy threshold and the 75 bubble extreme)
• This reading suggests genuine alternative upside potential, but nowhere near saturation

Recent Price Action & Capital Flows:

• Bitcoin ETF flows: -$85.8 million (slight outflows)
• Ethereum ETF flows: +$332.2 million (notable institutional buying)
• Ethereum current price: $2.93K
• 60-day Bitcoin returns: 10.25% (healthy but not parabolic)
• RSI Indicator: 74.38 (showing momentum, but the 85+ zone is where caution intensifies)

The Reality: Differentiation Over Broad Gains

The altcoin market is far from a lottery where every token multiplies. While the second half of the cycle may indeed see significant relative strength in alternatives, concentration risk has increased. Not every altcoin will participate equally. The probability of randomly selecting a 10x winner from today’s vastly expanded universe of tokens is materially lower than it was in 2017 or 2021.

This represents a structural shift: KOLs and retail participants chasing altcoins must accept that past cycle patterns may not repeat with the same symmetry. The market is maturing, and opportunities are increasingly clustered around quality projects with genuine utility propositions.

The Bottom Line

As indicators drift toward overbought territory—particularly with the RSI at 74.38 and positive ETF inflows supporting Ethereum—the prudent approach remains disciplined. The altcoin narrative is real, and capital flows suggest institutional validation. However, the path to extraordinary returns no longer lies in indiscriminate alt accumulation. Selective positioning in fundamentally sound projects, paired with disciplined risk management, remains the winning strategy as KOLs continue to reshape their portfolios in this evolving cycle.