Yigit Taha OZTURK 
Crypto venture capitalist Felix Hartmann has suggested that the market may have reached a local bottom. Among the reasons for this are the long-lasting negative funding rates and the overall bearish sentiment in the market.
“I might be early, but it feels like we’re near the bottom,” said Hartmann Capital founder in a statement on February 8, emphasizing the importance of closely monitoring market signals.
Funding Rates and Market Sentiment Are Key Indicators
Hartmann highlighted that crypto funding rates have been negative for a while. Funding rates are a mechanism used to maintain balance between futures and spot market prices. A prolonged period of negative rates indicates that there are more sellers than buyers, signaling a continued downtrend in the market.
Additionally, Hartmann noted that quality altcoins have retraced to long-term trendlines, wiping out most of the gains made in Q4 2024.
ETHEREUM (ETH) surged above $4,000 in December 2024, leading to speculation that it might retest its all-time high of $4,878 from November 2021. However, at the time of writing, it has pulled back to $2,639.
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Similarly, SOLANA (SOL) hit a new all-time high of $295 on January 19, but it has since dropped to $201.
Additionally, the memecoin market’s overall capitalization declined by 32.38% by the end of December 2024.
Crypto analyst Matthew Hyland recently suggested that most altcoins may not see their December highs for at least two months, if not longer.
Is the Market Volatility Coming to an End?
Hartmann stated that the overall sentiment in the crypto market has been “completely wrecked”, which he believes is “often the best signal”.
The Crypto Fear and Greed Index, which measures investor sentiment in the market, has dropped from 60 (Greed) last week to 46 (Fear).
Echoing a similar view, crypto analyst Mike Alfred stated on January 21 that the “terrible” sentiment in the crypto market is “exactly the setup for prior major sector-wide rallies.”
Meanwhile, Bitwise Chief Investment Officer Matt Hougan recently noted that retail investor sentiment is at its worst in years, while institutional investors remain extremely bullish, leading to a “massive disconnect” between the two groups.
Hartmann suggested that while the crypto market may continue to experience choppy movements, this phase could also be nearing its end, as most venture capital token allocations have already been dumped over the past two quarters.
Between March and October 2024, $35 billion worth of tokens were unlocked and released into the market, significantly increasing supply.
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