With Donald Trump's victory in the US presidential election, the Altcoin market has seen a significant increase recently. However, a venture capitalist has warned that as institutional investors increase their profit-taking behavior, the market may experience a correction in the short term.
Table of Contents
ToggleVC Warning: Institutional Investors May Trigger "Collapse"
Felix Hartmann, managing partner of Hartmann Capital, stated in a X post on December 7 that the rally in the Altcoin market may have reached its peak. Felix Hartmann said:
"Traders may remain irrational, but we are now in a phase where teams and venture capitalists are more actively taking profits. Once the momentum changes, we may see violent fluctuations in the market."
He explained that the annualized funding rates of most Altcoins have exceeded 100%, and the recent rally has been mainly driven by perpetual contract traders, while spot trading volume has been declining, and the subsequent decline may be very severe.
The correction of Altcoins is not to be underestimated for investors. The Altcoin market experienced a significant rise in 2021, but then plummeted sharply within a few months. For example, Solana (SOL) reached a high of $248.36 in November 2021, but then fell 64% to $89 by January 2022. XRP also fell about 51% during the same period.
Altcoin Season Has Just Begun!
Despite the warning voices, many cryptocurrency traders still believe that the Altcoin season has just begun. Anonymous trader Mikybull Crypto stated in a X post on December 6 that the Altcoin season usually lasts about 90 days, so the reasonable Altcoin season period is from this month to March next year.
At the same time, according to the forecast results of the prediction market Polymarket, the probability of Ethereum reaching a new all-time high this year has rebounded from 8% in November to 32%. At the time of writing, $9.37 million has participated in this prediction.
The performance of Ethereum is closely related to the performance of most Altcoins, so this seems to reflect that traders are still optimistic about the performance of the Altcoin market before the end of the year.
Overall, the future trend of the Altcoin market is currently divided. While many traders are optimistic about the continuation of the subsequent rally, the risks brought by institutional profit-taking and market volatility cannot be ignored. Traders need to be cautious and pay attention to changes in market momentum.
