Venture Capitalist States Altcoin Season is Currently Exhausted

The altcoin sector has seen notable increases following Donald Trump’s recent success in the U.S. presidential election.

Nonetheless, venture capitalist Felix Hartmann, managing partner at Hartmann Capital, has indicated that the ongoing rally might be temporary.

“Considering alt season tapped out for now,” he noted in a December 7 update on X.

Institutional Investors and Project Teams Continue to Take Profits

He pointed out the rising trend of profit-taking by institutional investors and project teams as a possible inflection point for the market.

Hartmann elaborated that funding rates for the majority of altcoins are currently surpassing 100% annualized, with recent price increases primarily driven by perpetual traders amid declining spot volumes.

“Traders may remain irrational, but we are at a stage where teams and VCs begin to take profits more aggressively.”

He cautioned that when momentum shifts, the market could experience significant sell-offs, or “murder wicks,” leading to sharp price drops.

Considering alt season tapped out for now.
Most alts now have funding rates north of 100% annualized. Last moves purely perp driven, spot volumes declining.
Leg down will be ugly.
Doing some light 2x long BTC, 1x short tapped out dino coins
Traders may stay irrational,… https://t.co/s066BWjtsr pic.twitter.com/BEEzhpLnBe

— Felix Hartmann (@FelixOHartmann) December 7, 2024

Data from CoinMarketCap indicates that altcoins have achieved remarkable returns since November 1.

Among the top 100 cryptocurrencies, Hedera (HBAR) surged 99.31%, IOTA increased by 79.61%, and JasmyCoin (JASMY) rose 72.47%.

However, Hartmann’s apprehensions reflect previous cycles where swift gains were succeeded by sharp corrections, as observed with Solana and XRP in late 2021.

Not all traders align with Hartmann’s pessimistic perspective.

Pseudonymous trader MilkyBull Crypto proposed that the altcoin season might extend until March, characterizing the recent rally as merely the beginning.

Another trader, Sensei, conveyed similar optimism to his 72,900 X followers, asserting, “Altseason has just started.”

Bitcoin dominance, an important indicator for assessing altcoin season, has decreased by 7.88% over the past month to 55.11%, according to TradingView.

Meanwhile, CoinGlass data reveals that funding rates for perpetual futures are increasing, with bulls paying 4%–6% monthly to sustain leveraged positions.

What is Next for Bitcoin?

Bitcoin’s historic rise past the $100,000 threshold has captured the attention of the cryptocurrency market, yet Sergei Gorev, Head of Risk at YouHodler, remains cautious.

In a recent statement shared with Cryptonews.com, Gorev forecasted that the price may experience only modest growth beyond this level before a substantial correction occurs.

“The cryptocurrency market is very fond of round numbers, and the price often unfolds in such cases.”

“Also note that monthly, quarterly, semi-annual, and annual futures and options contracts are expected to expire in two weeks,” he added.

Gorev stressed that Bitcoin’s price movements are affected by significant market cycles, including the expiration of futures and options contracts.

With monthly, quarterly, semi-annual, and annual contracts set to expire in two weeks, traders should prepare for increased volatility.

Adding to this cautious perspective, Gorev pointed out Bitcoin’s correlation with the S&P 500 index, which is nearing what he describes as the “overheating phase.”

As the broader financial market exhibits signs of stress, the probability of Bitcoin facing a notable price correction rises.

Divergences in price charts and a strengthening USD exchange rate further bolster this view, suggesting that the current rally may be losing momentum.

“The price increase may still continue, but not significantly,” he concluded.

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