Venture capitalist: New season of Bitcoin decline will be ugly

A cryptocurrency venture capitalist warns that market participants could be caught off guard by “some killer wicks” on the charts “once momentum gets going.” Alternative coin markets have seen a major rally since Donald Trump won the U.S. presidential election, but a venture capitalist warns that near-term volatility could be in the cards as profit-taking activity among institutional investors increases.

However, not all traders agree with this.

“Consider the altar season is over for now,” Felix Hartman, managing partner at Hartman Capital, said in a Dec. 7 X post.

VCs will “start to tailor more aggressively”

“Traders may continue to be irrational, but we are at a stage where teams and VCs are starting to trim more aggressively,” Hartman said.

“As soon as momentum turns, we have to take the leverage out and see some killer wicks,” Hartman said. He explained that most altcoins’ annualized funding rates are now “north of” 100% and that recent “moves are purely” driven by perpetual traders amid declining spot volumes.

"It's going to be ugly," Hartman said.

CoinMarketCap data shows that among the top 100 cryptocurrencies, the three alternative coins with the largest increases since November 1 are Hedera (HBAR), up 99.31%; IOTA (IOTA), up 79.61%; and JasmyCoin (JASMY), up 72.47%.

After a major surge in the altcoin market in 2021, some altcoins fell sharply within a few months.

In November 2021, Solana (SOL) reached $248.36, and plummeted 64% to $89 in January 2022. XRP (XRP) also faced a plunge, losing about 51% during the same period.

Comparative opinions from other traders

However, other cryptocurrency traders believe this is just the beginning of the altcoin season.

“From this month to March seems logical,” pseudo-anonymous crypto trader MilkyBull Crypto said in a Dec. 6 post on X.

He added: "It lasts about 90 days.

Alj is just getting started," the teacher told his 72.9k followers.

Traders often monitor Bitcoin’s dominance as a key indicator of the start of the altcoin season. According to TradingView data, Bitcoin’s dominance is 55.11% at press time, down 7.88% over the past 30 days.

On December 4, Cointelegraph reported that according to data from CoinGlass, the 30-day funding rate for perpetual futures has risen sharply, with longs paying 4% to 6% per month to maintain leveraged positions.

While these costs may seem manageable during a strong uptrend, they can quickly eat into traders' profits if prices stagnate or fall.