By Nermeen Nabil Khear 
Felix Hartmann, the founder of Hartmann Capital, believes that the crypto market is approaching the local bottom after the extended period of negative funding rates and the overall bearish sentiment.
In an X post, Hartmann mentioned that the rebound normally follows these indicators. The crypto VC first mentioned that prolonged negative funding rates—the fees paid by futures traders to bring futures prices into line with the spot market—are among the factors that informed his analysis.
These rates have been negative for quite some time now, which means that there are more sellers than buyers. Historically, such conditions have preceded bullish reversals.
Besides, Hartmann stated that “quality alts” (alternative cryptocurrencies) have pulled back to long-term trendlines and have wiped out most of their Q4 2024 gains. The correction seen in the macro environment also points to a shift in the market sentiment from optimistic to fearful in the course of a few weeks.
Crypto market sentiment hits multi-month lows as institutions stay bullish
The Crypto Fear & Greed Index, a popular market sentiment metric, has tumbled to 46 (“Fear”) this week from 60 for last week’s “Greed” rating. Hartmann said the overall market sentiment is “absolutely wrecked,” which he considers to be a strong contrarian indicator.
Veteran crypto analyst Mike Alfred also shared this view, indicating that major upticks have historically occurred at the tails of despair.
Likewise, Matt Hougan, the chief investment officer of Bitwise, noted that retail investors’ sentiment is the worst it has been in years. In contrast, institutional investors are still bullish; thus, there is a huge divergence in market views.
This trend is evident in price movements across the market. Ethereum (ETH) rose to $4,000 in December 2024 amid speculation about a new all-time high before dropping to $2,639 as of the time of writing. Solana (SOL) hit a new high of $295 on January 19, 2025, before dropping to $201.15. The meme coin sector has witnessed a total capitalization decline of 32.38% since the end of December 2024.
In a recent development, Crypto analyst Matthew Hyland predicted that most altcoins are unlikely to break through the December highs in two months or even more. This forecast concurs with the current retail trader’s cautionary sentiment.
Is the crypto market preparing for a major rebound?
According to Hartmann, the market may still be volatile, but it could be at the end of the current range-bound activity. He noted that the past two quarters have seen enormous token unlocks, with $35 billion in assets unlocked between March and October 2024, which cannot be the cause of anything but negative pressure on prices. With the possibility of a good deal of the selling pressure being removed, the market is preparing itself for a recovery.
However, since we have yet to rule out other factors, most investors are waiting to stabilize funding rates and other sentiment indicators that suggest that we are at or near the bottom. If there is one thing that has happened at the end of the previous bull run, then the current bear run may well be preparing the market for the next big crypto bull run.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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