Author: Ciaran Lyons; Source: Cointelegraph
A cryptocurrency venture capitalist has warned that market participants may be caught off guard by some "killer wicks" on the charts once the momentum shows signs of slowing down. Since Donald Trump's victory in the US presidential election, the alternative currency market has seen a significant rise, but a venture capitalist has warned that volatility may occur in the near future as institutional investors increase their profit-taking activities.
However, not all traders agree with this view.
"Considering the altar season is temporarily over," said Felix Hartmann, a partner at Hartmann Capital, in a X post on December 7.
Venture capital firms will "start to be more aggressive in pruning"
"Traders may continue to be irrational, but we are in a phase where teams and venture capital are starting to be more aggressive in pruning," Hartmann said.
"Once the momentum starts to turn, we'll have to pull the leverage and see some killer wicks," he explained, noting that the annualized financing rates for most altcoins are now "north of 100%" and the recent "moves are purely driven by perpetual traders in the face of declining spot volumes."
"The downside will be ugly," Hartmann said.
Source: Felix Hartmann
According to CoinMarketCap data, the three highest-gaining altcoins among the top 100 cryptocurrencies since November 1 are Hedera (HBAR), up 99.31%; IOTA (IOTA), up 79.61%; and JasmyCoin (JASMY), up 72.47%.
In 2021, after a significant surge in the altcoin market, some altcoins experienced a sharp decline within a few months.
In November 2021, Solana (SOL) reached $248.36, only to plummet 64% to $89 by January 2022. XRP (XRP) also faced a steep decline, losing around 51% during the same period.
Contrasting views from other traders
However, other cryptocurrency traders believe that this is just the beginning of the altcoin season.
"From this month to March seems logical," said the pseudonymous crypto trader MilkyBull Crypto in a X post on December 6.
He added, "It should last around 90 days."
"The alt season has just begun," the teacher told his 72,900 X followers.
Traders often monitor Bitcoin's dominance as a key indicator for the start of the altcoin season. According to TradingView data, as of the time of writing, Bitcoin's dominance is 55.11%, down 7.88% in the past 30 days.
On December 4, Cointelegraph reported that, according to CoinGlass data, the 30-day funding rates for perpetual futures have risen significantly, with longs paying 4% to 6% monthly fees to maintain their leveraged positions.
While these costs may be manageable in a strong uptrend, they can quickly erode traders' profits if prices stagnate or decline.
