How far can Shanzhai Season go? VC Warning: Institutions are taking profits and may trigger a '

With the victory of Donald Trump in the US presidential election, the Altcoin market has seen significant growth recently. However, a venture capitalist warns that as institutional investors increase their profit taking behavior, there may be a short-term market correction.

VC Warning: Institutional Investors May Trigger 'Crash'

Hartmann Capital Managing partner Felix Hartmann stated in an X post on December 7th that the rise of the altcoin market may have reached a high point. Felix Hartmann stated:

Traders may remain irrational, but they are currently in a stage where teams and venture capitalists are more actively taking profits. Once the momentum changes, we may see severe market volatility

He explained that the annualized funding rates of most altcoins have exceeded 100%, and the recent rise is mainly driven by perpetual contract traders, while spot trading volume is declining, and the subsequent decline may be very severe.

For investors, the pullback of altcoins should not be underestimated. The altcoin market experienced a significant rise in 2021, but fell sharply in just a few months. For example, Solana (SOL) reached a high of 248.36 in November 2021 and fell 64% to $89 in January 2022. XRP also fell by about 51% during the same period.

The shanzhai season has just begun!

Despite warning voices, many cryptocurrency traders still believe that the alternative currency season has just begun. Anonymous trader Mikybull Crypto stated in an X post on December 6th that the knockoff season usually lasts about 90 days, so the period from this month to March next year is a reasonable knockoff season.

Meanwhile, according to Polymarket's forecast results, the probability of Ethereum hitting a historic high this year has rebounded from 8% in November to 32%. At the time of writing this article, a total of 9.37 million US dollars were involved in this prediction.

And the performance of Ethereum has a strong correlation with most altcoins, so this seems to reflect that traders are still optimistic about the performance of the altcoin market until the end of the year.

Overall, there are currently divergent views on the future trend of the altcoin market. Although many traders are optimistic about the continuation of the subsequent upward trend, the risks brought by institutional profit taking and market volatility cannot be ignored. Traders need to remain cautious and pay attention to changes in market momentum.

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