Venture capitalist warns altcoin market could face major drop

A venture capitalist has issued a warning about potential turbulence in the altcoin market, suggesting that “once momentum tips,” traders might be surprised by significant price drops, referred to as "murder wicks" on the charts.

The altcoin market has experienced considerable gains since Donald Trump’s presidential victory, but concerns are rising as institutional investors begin to take profits.

Felix Hartmann, managing partner at Hartmann Capital, stated in a December 7 post on X that traders may remain irrational for a while, but it is now time for teams and venture capitalists to start “clipping more aggressively.”

He elaborated that most altcoins have funding rates above 100% annualized, with recent price movements primarily driven by perpetual traders amid decreasing spot volumes.

Hartmann cautioned that the “leg down will be ugly” if the market shifts.

According to CoinMarketCap data, among the top 100 cryptocurrencies, Hedera (CRYPTO:HBAR) saw a remarkable 99.31% increase since November 1, followed by IOTA (CRYPTO:IOTA) with a 79.61% gain and JasmyCoin (CRYPTO:JASMY) with a 72.47% rise.

Historically, after significant surges in the altcoin market, many cryptocurrencies have faced sharp declines within months.

For instance, Solana (CRYPTO:SOL) reached a high of $248.36 in November 2021 before plummeting 64% to $89 by January 2022.

Despite these warnings, some traders believe that the altcoin season is just beginning.

Pseudonymous trader Mikybull Crypto suggested that the period from December to March could be favorable for altcoins, while another trader named Sensei declared that “altseason has just started.”

Traders often look at Bitcoin's (CRYPTO:BTC) dominance as an indicator of altcoin trends.