The altcoin market has shown remarkable gains since Donald Trump’s recent U.S. presidential victory, but according to Felix Hartmann, managing partner at Hartmann Capital, the rally may have run its course.
In a December 7 post on X (formerly Twitter), Hartmann stated:
“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.”
Profit-Taking and Overheated Metrics Spark Concerns
Hartmann pointed to several red flags that suggest a potential downturn:
- Institutional Profit-Taking: Increasing sell-offs by institutional investors and project teams may dampen momentum.
- High Funding Rates: Most altcoins now have funding rates exceeding 100% annualized, with recent price surges fueled by perpetual traders rather than spot volume.
- Market Volatility: Hartmann warned of potential “murder wicks,” or sharp price drops, as momentum fades.
Hartmann’s strategy involves longing Bitcoin with 2x leverage while shorting what he calls “tapped-out dino coins.”
Mixed Sentiments on Altcoin Season
Despite Hartmann’s bearish outlook, some traders remain optimistic:
- MilkyBull Crypto predicted that the altcoin rally might extend until March 2025, calling the current surge just the beginning.
- Sensei, a pseudonymous trader with 72,900 followers, declared, “Altseason has just started.”
Altcoin Performance Highlights
Data from CoinMarketCap reveals strong performances among top altcoins since November 1:
- Hedera (HBAR): +99.31%
- IOTA: +79.61%
- JasmyCoin (JASMY): +72.47%
Bitcoin’s Milestone and Future Outlook
Bitcoin’s historic surge past $100,000 has captivated the crypto world, but caution persists.
- Market Cycles: Sergei Gorev, Head of Risk at YouHodler, warned of potential corrections as futures and options contracts approach expiration within two weeks.
- Correlation with S&P 500: Bitcoin’s price closely follows the S&P 500 index, which is nearing an “overheating phase,” suggesting increased risk of a downturn.
- Volatility Ahead: Divergences in price charts and a rising USD exchange rate could signal waning momentum.
Gorev concluded:
“The price increase may still continue, but not significantly.”
What’s Next for Crypto Investors?
As altcoin and Bitcoin rallies face uncertainty, investors are urged to:
- Monitor Funding Rates and Spot Volumes: Look for signs of declining momentum.
- Stay Alert for Futures Expiry: Expect heightened volatility in the coming weeks.
- Diversify Portfolios: Consider hedging strategies to navigate potential corrections.
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