Diverging Sentiment in Altcoins: How Whales Operate Amid Market Panic

Editor’s Note: A notable feature of the recent cryptocurrency market is the divergence between price trends, social sentiment, and on-chain investor behavior.

On October 24, the on-chain data analysis platform Santiment released its latest market weekly report, focusing on the market panic triggered by recent security incidents and the responses of different types of investors.

Against the backdrop of most altcoins performing poorly, privacy coins Monero (XMR) and Zcash (ZEC) rose by 6.6% and 6.2%, respectively, becoming the two best-performing large crypto assets of the week. Meanwhile, the social discussion volume for Monero increased by nearly 50% compared to the previous week, reflecting a significant rise in market attention towards privacy-related narratives.

However, the change in sentiment did not lead to a uniform withdrawal of funds. Santiment data shows that large wallets holding between 10 and 10,000 BTC have cumulatively increased their holdings by about 110,000 BTC over the past four to five weeks, marking the fastest accumulation rate this year. Ethereum saw a net outflow of about 170,000 ETH from exchanges on October 22, the highest level in at least three months.

On the other hand, while Bitcoin’s social sentiment briefly turned pessimistic during the escalation of security incidents, the ratio of positive to negative discussions quickly recovered, and on-chain valuation indicators like MVRV did not show any significant extreme signals.

Santiment’s analysis indicates that market panic, social heat, and on-chain funding behavior do not always change in sync. A price drop does not mean all investors are fleeing, and an increase in discussion heat does not necessarily correspond to sustained fund inflows.

This divergence is particularly noteworthy for altcoin investors: during phases when market sentiment is easily driven by news, the relationship between price, social discussion volume, and on-chain activity may be more valuable than simply observing price fluctuations.

Privacy Coins Lead Against the Trend, Altcoin Market Sentiment Clearly Diverges

Santiment points out that this week’s cryptocurrency market sentiment was impacted by security incidents, but the performance of different assets showed clear divergence.

On October 21, PHP released an emergency security patch to fix two vulnerabilities, both rated at 9.2 severity. These vulnerabilities could allow attackers to execute code remotely, with some technical details leaked before the patch was released.

Although this incident did not directly affect the Bitcoin protocol, it raised concerns in the market regarding the security of cryptocurrency-related websites and infrastructure.

As the news developed, most crypto assets performed poorly. Bitcoin fell 0.3% this week, Ethereum dropped 1.1%; Quant (QNT) decreased by 10.3%, and Uniswap (UNI) fell by 3.8%.

In contrast, privacy coins became one of the few sectors to rise.

Monero (XMR) rose 6.6% this week, and Zcash (ZEC) increased by 6.2%, becoming the two most prominent large crypto assets. Meanwhile, Monero’s social discussion volume grew nearly 50% compared to the previous week.

Santiment believes this performance reflects an increased market focus on privacy-protecting assets as security risks rise. When investors shift their concerns from price volatility to data and information security, the narrative appeal of privacy coins increases.

However, a rise in social heat does not necessarily mean sustained buying demand. Santiment observed this divergence in another set of altcoin data.

From October 8 to 15, the price of Basic Attention Token (BAT) rose from $0.1026 to $0.2157, more than 100% in a week, but there was no significant news catalyst behind the rise.

On-chain data shows that in the early stages of the price surge, the growth rate of active addresses for BAT even outpaced the price increase, reflecting a rapid rise in market participation. However, on October 13, the number of active addresses peaked two days before the price high. By October 20, the number of active addresses had decreased by 46% from the peak, while the price only fell about 10% during the same period.

This indicates that although the price remains relatively high, on-chain participation heat has clearly declined.

Santiment views this change as a divergence worth noting: price trends may lag behind changes in on-chain participation. When active addresses begin to decline, the basis for short-term price increases may already be weakening.

For the sentiment-driven altcoin market, this case illustrates that rising social discussions, increasing prices, and on-chain user participation are not the same concept. When prices are still rising, but active addresses and actual participation have begun to decline, the apparent strength of the market may mask a weakening of internal momentum.

However, changes in the active addresses of a single token cannot be directly taken as a signal of price peaks; they need to be assessed in conjunction with trading volume, fund flows, and the token’s own use cases.

Whales Continue to Accumulate BTC, ETH Fund Flows Signal Different Trends

In contrast to the emotional fluctuations in the altcoin market, large Bitcoin holders continue to accumulate chips. According to Santiment data, wallets holding between 10 and 10,000 BTC currently hold approximately 13.71 million Bitcoins.

Compared to four to five weeks ago, this group’s total holdings have increased by about 110,000 BTC, marking the fastest sustained accumulation rate since 2026. Santiment notes that only the accumulation phase from February to April of this year approached this level.

It is noteworthy that small wallets also show no significant signs of withdrawal. The number of wallets holding less than 0.01 BTC continues to grow, indicating that large holders and small holders are accumulating in sync, rather than simply retail investors selling off to whales. This contrasts with the short-term market panic. While negative discussions arose from security incidents and Bitcoin prices were under pressure, some large wallets continued to expand their holdings.

However, an increase in wallet holdings does not necessarily equate to net buying by independent investors. One entity may control multiple addresses, and internal transfers by exchanges and custodians may also affect the relevant data.

Therefore, Santiment’s data is more suitable for observing changes in chip distribution and holding structure rather than directly judging that Bitcoin prices are about to rebound.

Ethereum, on the other hand, has shown another noteworthy signal in terms of exchange fund flows. On October 22, approximately 170,000 ETH net flowed out of centralized exchanges, setting a record for the largest single-day net outflow in at least three months. This timing coincided with the phase of most pronounced market panic.

For the week, the total net outflow from exchanges was about 75,600 ETH, indicating that fund inflows on some trading days offset the large outflows of that day. Santiment believes that such a large-scale single-day fund transfer likely involves large wallets, not just ordinary retail activity.

In contrast, Bitcoin experienced net inflows on six out of seven days of the week, with a total net inflow of about 10,600 BTC. Thus, the two assets exhibited different fund flows: ETH flowed out of exchanges, while BTC continued to flow into exchanges.

Generally speaking, assets flowing out of exchanges may indicate a transfer to self-custody or other holding channels, while inflows into exchanges may increase the supply of assets available for trading. However, these data do not directly correspond to buying or selling behavior. Institutional custody migrations, wallet management, and other asset transfers may also cause large-scale movements.

Santiment also reminds that relative to the total supply of the two assets, these changes remain relatively small. Changes in exchange balances over a single week have limited predictive value for future prices.

Market Panic Has Not Evolved into Full-Scale Withdrawal

Despite negative news triggering market fluctuations this week, social sentiment data shows that investors’ pessimism has not continued to expand. Santiment data indicates that the average ratio of positive to negative social posts for Bitcoin this week was 1.09, up from 0.97 the previous week.

This indicator peaked at 1.32 on October 20, then fell to 0.96 on October 22 as security incidents escalated. When the indicator drops below 1, it means that the number of negative discussions briefly exceeds positive discussions. However, this wave of pessimism did not last long. About 24 hours later, the ratio of positive to negative discussions rose back to 1.08.

Meanwhile, the overall social discussion volume for Bitcoin remained basically flat compared to the previous week. This indicates that although market sentiment briefly deteriorated, it did not accompany a significant expansion in discussion scale, and panic did not continue to spread on social platforms.

On-chain valuation indicators also show a relatively neutral state. According to Santiment data, Bitcoin’s 30-day MVRV is -2.5%, and the 365-day MVRV is +0.6%. MVRV primarily measures the change in an asset’s current market value relative to the on-chain holding cost, which can be used to observe the average profit and loss status of investors over different holding periods.

Currently, short-term holders are generally in a slight loss, while long-term holders’ profits and losses are basically close to break-even. This means the market has not entered a clearly extreme profit or loss zone. Santiment believes that the brief drop of the positive to negative discussion ratio to 0.96, and its recovery within about 24 hours, is more akin to a short-term emotional shock rather than a typical market capitulation event.

Combining this week’s data, the market is showing three different changes.

On one hand, negative news affects market risk appetite, putting pressure on most altcoins, but privacy coins like XMR and ZEC gain more market attention due to related narratives; on the other hand, large Bitcoin wallets continue to accumulate, and Ethereum also sees significant net outflows from exchanges, indicating that on-chain holding behavior has not completely synchronized with short-term pessimistic sentiment.

At the same time, the rapid recovery of social sentiment and the neutral MVRV indicator suggest that although the market has been impacted, it has not yet formed characteristics of a full-scale withdrawal.

For future market trends, it is important to pay attention not only to whether market sentiment can improve but also to whether this sentiment improvement can be supported by real funding demand and sustained on-chain activity.

The core issue revealed by Santiment’s data this week is that market panic does not necessarily mean a full withdrawal of funds, and rising social heat and prices do not necessarily mean that real participation is simultaneously increasing.

Especially in the altcoin market, the divergence between price, public opinion, and on-chain behavior may become an important clue for observing short-term market structural changes.

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