Altcoin Rally May Be Short-Lived, Says Venture Capitalist
The altcoin market has seen significant gains since November 1, driven by heightened enthusiasm following Donald Trump’s U.S. presidential election victory. Top-performing tokens include Hedera (+99.31%), IOTA (+79.61%), and JasmyCoin (+72.47%), as reported by CoinMarketCap.
Despite the optimism, venture capitalist Felix Hartmann, managing partner at Hartmann Capital, has warned that the rally may lose steam. In a December 7 post on X, Hartmann stated, “Considering alt season tapped out for now.” He attributes the deceleration to institutional investors and project teams taking profits amid high funding rates for perpetual futures, some exceeding 100% annualized returns.
Risks of Sharp Market Corrections
Hartmann cautioned that profit-taking could lead to sudden price declines, or “murder wicks,” as momentum shifts. He pointed out that recent price surges were primarily driven by perpetual traders rather than spot volume growth.
Bitcoin dominance—a key metric used to assess altcoin performance—has dropped by 7.88% over the past month, falling to 55.11%, according to TradingView. Meanwhile, data from CoinGlass reveals that funding rates for perpetual futures have risen, with bulls paying 4%-6% monthly to maintain leveraged positions.
Optimists Bet on Prolonged Altcoin Season
Not all market participants share Hartmann’s cautious outlook. Pseudonymous trader MilkyBull Crypto believes the altcoin season could last until March, describing the current rally as just the beginning. Similarly, trader Sensei, with 72,900 X followers, tweeted, “Altseason has just started.”
This divergence of opinions reflects broader uncertainty, as past altcoin cycles have shown rapid gains followed by steep corrections, such as those experienced by Solana and XRP in late 2021.
Bitcoin’s Next Moves
As Bitcoin recently surged past the $100,000 milestone, the broader cryptocurrency market remains captivated. However, Sergei Gorev, Head of Risk at YouHodler, predicts that Bitcoin’s upward momentum may slow before a significant correction.
In a statement to Cryptonews.com, Gorev pointed to the imminent expiration of monthly, quarterly, semi-annual, and annual futures contracts, expected within the next two weeks, as a potential driver of increased volatility. He also noted Bitcoin’s correlation with the S&P 500, which he described as approaching an “overheating phase,” further supporting the possibility of a downturn.
Despite this cautious outlook, Bitcoin’s dominance in the market may continue to influence altcoin performance in the near term.
Conclusion
The altcoin market’s recent rally showcases both opportunities and risks, with top performers delivering impressive returns but facing potential corrections as profit-taking escalates. While some traders remain bullish on an extended altcoin season, market dynamics such as rising funding rates and Bitcoin’s correlation with broader financial indices suggest heightened volatility ahead.
For both Bitcoin and altcoin investors, the coming weeks will be crucial as key contracts expire, and market momentum faces a pivotal test.
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals