David Edwards
Felix Hartmann, a venture capitalist, believes that the altcoin market, which has seen significant increases since Donald Trump’s election, might have a dramatic correction. Hartmann said in a post on X (previously Twitter) on December 7 that institutional investors and venture capitalists are getting ready for more aggressive profit-taking, indicating that the present period of “irrational” trading is coming to an end.
VC Alert: A Sharp Drop Is Coming
“For the time being, the alt season is over,” stated Hartmann, managing partner at Hartmann Capital. He pointed out that the majority of altcoins’ financing rates have risen beyond 100% annually, suggesting a speculative bubble driven more by permanent traders than by spot market activity.
Hartmann warned that the market may experience “murder wicks” and a sharp leg down if momentum wanes. “Traders may stay irrational, but we are at the point where teams and VCs start clipping more aggressively,” he continued.
Current Information and Historical Patterns
The picture painted by historical data is gloomy. Following a spectacular altcoin run in late 2021, assets like as Solana (SOL) and XRP saw sharp drops. While XRP saw a 50% decline during the same time frame, SOL saw a 64% decline to $89 by January 2022 after peaking at $248.36 in November 2021.
Some altcoins are still making spectacular increases at the moment. According to CoinMarketCap data, starting November 1, Hedera (HBAR) has increased by 99.31%, IOTA has increased by 79.61%, and JasmyCoin (JASMY) has increased by 72.47%. However, if institutional profit-taking picks up speed, these gains might not last long.
Various Opinions on Altcoin Season
Hartmann’s pessimism is not shared by all market participants. The altcoin season may last until March 2024, according to pseudonymous trader MilkyBull Crypto. In a similar vein, well-known trader Sensei declared to his 72,900 X followers that “Altseason has just started.”
Bitcoin dominance, which fell to 55.11%—a dip of 7.88% over the previous 30 days—is one important indicator that traders are keeping an eye on, according to TradingView. Although there are differing views on whether the current surge is sustainable, diminished Bitcoin dominance frequently heralds the start of an altcoin season.
An indication of bullishness or a red flag?
Market players are discussing if the nine-month high funding rates for perpetual futures portend more gains or an impending correction. According to CoinGlass data, bulls pay between 4% and 6% a month to keep their leveraged holdings active. If market momentum slows, this expense becomes prohibitive.
Even while some traders are still hopeful, experienced venture capitalists like Hartmann have cautioned that caution is crucial. The cryptocurrency market is currently at a turning point, and significant volatility is expected in the near future.
