Felix Hartmann, a crypto venture capitalist, is of the opinion that the altcoin market’s reversion to “long-term trendlines,” along with consistently negative financing rates, may indicate a market bottom.
Summary
Crypto VC Felix Hartmann suggests the altcoin market is approaching a local bottom due to pervasive adverse sentiment and persistently negative financing rates. The market’s reversion to long-term trendlines and persistently negative funding rates suggest a near-term rebound and market bottom. The sentiment towards cryptocurrency is destabilized, with retail sentiment at its lowest point in years. The majority of unsealed venture capital token allocations have been “dumped,” potentially indicating a tail end in the market.
A crypto venture capitalist has suggested that the market may be approaching a local bottom, citing pervasive adverse sentiment and protracted negative funding rates. He believes that this is “often the most obvious signal.”
Felix Hartmann, the proprietor of Hartmann Capital, stated in a post on February 8 that “I may be too early, but it appears that we are approaching the bottom.”
Crypto funding rates and attitudes are key factors
According to Hartmann, the crypto funding rates, which are payments that serve to maintain equitable trading by coordinating futures and current market prices, have been “negative for an extended period,” indicating that there are more sellers than purchasers.
Sustained negative funding rates can indicate that traders are negative, suggesting that there is a possibility of a near-term rebound and a market bottom.
Hartmann also stated that “quality alts” have retraced to long-term trendlines, thereby “wiping out” the majority of the gains achieved in Q4 2024.
Ether traded above $4,000 in December 2024, prompting speculation that it may be on the brink of recovering its all-time high of $4,878 from November 2021. Nevertheless, the asset has since retreated to $2,639 at the time of publication.
Solana surged to an all-time high of $295 on January 19, but it has since declined to $201.15 at the time of publication.
In the interim, the memecoin aggregate market valuation experienced a 32.38% decline by the conclusion of December 2024.
Matthew Hyland, a crypto analyst, recently stated that it is probable that the market will not experience the December highs on the majority of altcoins for a minimum of two months, if not longer.
The VC has indicated that the market may be experiencing market choppiness at the “tail end.”
Hartmann claimed that the general sentiment toward cryptocurrency is “completely destabilized,” which he characterized as “frequently the most reliable indicator.” According to the Crypto Fear & Greed Index, which reflects the general sentiment of the crypto market, the “Fear” score is 46, which is a 14-point decrease from the “Greed” score of 60 last week.
The “terrible” sentiment in the crypto market is “essentially the setup of prior significant sector-wide rallies,” crypto analyst Mike Alfred stated in a Jan. 21 X post, echoing a similar perspective.
Matt Hougan, the chief investment officer of Bitwise, recently stated that “retail sentiment is at its lowest point in years.”
Nevertheless, Hougan stated that professional investors are “extraordinarily bullish,” resulting in “massive differences” between the two categories of investors.
Hartmann stated that in the past two quarters, the majority of opened venture capital xtoken allocations have already been “dumped,” and while the crypto market may continue to “chop,” this could also be the “tail end.”
Token unlocks distributed $35 billion worth of assets between March and October 2024, thereby substantially expanding the market supply.
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