A crypto venture capitalist said the market may be nearing a local bottom, citing extended negative funding rates and widespread bearish sentiment — which he says is “often the best signal.”
“I might be early, but it feels like we’re near the bottom,” Hartmann Capital founder Felix Hartmann said in a Feb. 8 X post.
Funding rates and sentiment are two big indicators
Hartmann said that crypto funding rates — payments that help keep trading fair by aligning futures and spot market prices — have been “negative for a while,” meaning there are more sellers than buyers.
Sustained negative funding rates can signal bearish sentiment among traders, hinting at a market bottom and the potential for a near-term rebound.
Hartmann also said “quality alts” have retraced to long-term trendlines, “wiping out” most of the gains made in Q4 2024.
In December 2024, Ether (ETH) traded above $4,000, with speculation it could be on its way to retesting its November 2021 all-time high of $4,878. However, the asset has since pulled back to $2,639 at the time of publication.
Solana (SOL) reached new all-time high of $295 on Jan. 19 but has since pulled back to $201.15 at the time of publication.
Meanwhile, the memecoin overall market cap declined 32.38% by the end of December 2024.
Crypto analyst Matthew Hyland recently said it is likely the market “won’t see those December highs on most Alts for a minimum of 2 months, if not longer.”
VC says market choppiness may be at ‘tail end’
Hartmann said that the overall crypto sentiment is “absolutely wrecked,” which he said is “often the best signal.” The Crypto Fear and Greed Index, which measures overall crypto market sentiment, is reading a “Fear” score of 46, down 14 points from last week’s “Greed” score of 60.
Echoing a similar view, crypto analyst Mike Alfred said in a Jan. 21 X post that the “terrible” sentiment in the crypto market is “exactly the setup of prior major sector-wide rallies.”
Bitwise chief investment officer Matt Hougan recently said that “retail sentiment is the worst it’s been in years.”
Related: Crypto market has become ‘very confusing,’ losing all logic — Traders
However, Hougan said that professional investors are “extraordinarily bullish,” leaving a “massive disconnect” between the two groups of investors.
Hartmann said that while the crypto market may continue to “chop,” this could also be the “tail end” as most unlocked venture capital token allocations have already “been dumped in the past two quarters.”
Between March and October 2024, token unlocks released $35 billion worth of assets, significantly increasing market supply.
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