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Post-election altcoin gains have traders bracing for volatility as institutional sell-offs intensify. While Hedera, IOTA, and JasmyCoin top recent gains, experts caution that soaring funding rates and reduced spot volume could tip the market into chaos.
Institutional Profit-Taking Raises Concerns Over Altcoin Stability
Although the altcoin market has experienced significant gains following Donald Trump's US presidential victory, a venture capitalist has expressed concern about a possible shakeout in the near future due to increased profit-taking by institutional investors.
But not every trader feels the same way.
"Considering alt season tapped out for now," wrote Felix Hartmann, managing partner of Hartmann Capital, in a post on December 7th, X.
"Traders may stay irrational, but we are at the point where teams and VCs start clipping more aggressively," says Hartmann.
Hartmann Highlights Rising Funding Rates as Warning Signal
"Once momentum tips, we'll have to get that lever out, and see some murder wicks," Hartmann stated. According to him, the funding rates of most altcoins are currently "north" of 100% annually, and the recent "moves purely" are caused by permanent traders in response to falling spot volumes.
"Leg down will be ugly," Hartmann said.
Top Altcoin Gainers: Hedera, IOTA, and JasmyCoin Shine
Based on data from CoinMarketCap, the top three altcoins among the top 100 cryptocurrencies since November 1st are Hedera (HEDERA), IOTA (IOTA) (79.61%), and JasmyCoin (JASMY) (72.47%).
A few cryptocurrencies saw precipitous price drops in the months after the 2021 altcoin market rise.
Solana peaked at $248.36 in November 2021 and then plummeted 64% to $89 in January 2022. In the same time frame, XRP also had a precipitous fall, falling by almost 51%.
Bitcoin Dominance Declines as Traders Watch for Altseason Signs
On the other hand, other cryptocurrency traders think this is only the beginning of altcoin season.
"From this month till March seems logical," posted the anonymous cryptocurrency dealer MilkyBull Crypto on December 6th, X.
"Lasts about 90 days," he chimed in.
"Altseason has just started,” Sensei informed his 72,900 X followers.
When looking for signs that altcoin season is about to begin, traders frequently keep an eye on Bitcoin's dominance. As of this writing, Bitcoin's market share stands at 55.11%, down 7.88% from 30 days ago, according to data from TradingView.
Soaring Funding Rates Create Risks for Overleveraged Traders
Perpetual futures 30-day financing rates have increased, with bulls paying 4% to 6% monthly to hold leveraged positions, according to data from CoinGlass, as reported by Cointelegraph.
Traders' profit margins can be swiftly eroded if prices remain stagnant or fall, even if these costs may appear reasonable during strong uptrends.
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