On-chain data indicates that a significant portion of altcoins has now entered what's historically considered a "danger zone," suggesting a potentially bearish outlook.

Santiment, a data analytics firm, highlighted in a recent post on X how altcoins collectively have been experiencing notable profits based on the Market Value to Realized Value (MVRV) ratio.

The MVRV ratio compares a cryptocurrency's market cap to its realized cap, which is calculated based on the last transaction price on the blockchain, representing investors' cost basis.

Typically, a high MVRV ratio signals that investors are holding substantial profits, indicating an overheated market, while a low ratio suggests a market that's underbought. Santiment has established "opportunity" and "danger" zones based on historical patterns.

According to their analysis, when the MVRV ratio deviates toward -1, it enters the danger zone, indicating that traders hold significant profits. The majority of altcoins are currently in this region, implying an "overbought" status.

Conversely, the opportunity zone, where the ratio approaches 1, suggests few investors hold high profits, presenting a potential buying opportunity. However, currently, no assets fall within this zone.

Santiment emphasizes that this doesn't necessarily forecast a massive market correction but highlights a higher risk for buying or opening new positions during a prolonged surge lasting over four months.

Meanwhile, Ethereum has shown signs of decoupling from Bitcoin, with its price surging above $2,900 while Bitcoin remains relatively stagnant.