Altcoin Season “Tapped Out for Now,” Venture Capitalist Says

The altcoin market has experienced significant gains following Donald Trump’s recent victory in the U.S. presidential election.

However, venture capitalist Felix Hartmann, managing partner at Hartmann Capital, has suggested that the current rally may be short-lived.

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

Institutional Investors and Project Teams Continue to Take Profits

He highlighted increasing profit-taking by institutional investors and project teams as a potential turning point for the market.

Hartmann explained that funding rates for most altcoins are now exceeding 100% annualized, with recent price surges driven largely by perpetual traders amid dwindling spot volumes.

“Traders may stay irrational, but we are at the point where teams and VCs start clipping more aggressively.”

He warned that when momentum shifts, the market could witness dramatic sell-offs, or “murder wicks,” causing sharp price declines.

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 shows that altcoins have posted impressive returns since November 1.

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

However, Hartmann’s concerns echo past cycles where rapid gains were followed by steep corrections, as seen with Solana and XRP in late 2021.

Not all traders share Hartmann’s bearish outlook.

Pseudonymous trader MilkyBull Crypto suggested that the altcoin season may last until March, describing the recent rally as only the beginning.

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

Bitcoin dominance, a key metric for gauging altcoin season, has dropped 7.88% over the past month to 55.11%, according to TradingView.

Meanwhile, CoinGlass data shows that funding rates for perpetual futures are rising, with bulls paying 4%–6% monthly to maintain leveraged positions.

What is Next for Bitcoin?

Bitcoin’s historic surge past the $100,000 milestone has captivated the cryptocurrency market, but Sergei Gorev, Head of Risk at YouHodler, remains cautious.

In a recent statement shared with Cryptonews.com, Gorev predicted that the price may see only moderate growth beyond this level before a significant correction takes hold.

“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 emphasized that Bitcoin’s price dynamics are influenced by key 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 brace for heightened volatility.

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

As the broader financial market shows signs of strain, the likelihood of Bitcoin experiencing a significant price correction increases.

Divergences in price charts and a rising USD exchange rate further support this view, indicating that the current rally may be running out of momentum.

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