The crypto market may be nearing a local bottom, according to Felix Hartmann, founder of Hartmann Capital. In a Feb. 8 post on X, Hartmann pointed to sustained negative funding rates and widespread bearish sentiment as signals that the worst may be over.

Funding rates, which help balance futures and spot prices, have remained negative for an extended period—an indication that sellers outnumber buyers. Historically, prolonged negative funding rates have preceded market recoveries. Hartmann also noted that many "quality alts" have retraced to long-term trendlines, erasing most of their Q4 2024 gains.

Ethereum, which traded above $4,000 in December 2024, has since dropped to $2,639, while Solana has fallen from its January peak of $295 to $201. Meanwhile, the total market cap of memecoins plunged by over 32% in December. Analyst Matthew Hyland suggested that altcoins may not revisit their December highs for at least two months, if not longer.

Despite the gloomy sentiment, some analysts see this as a bullish setup. The Crypto Fear & Greed Index has dropped to a "Fear" score of 46, down from last week's "Greed" score of 60. Crypto analyst Mike Alfred said that such extreme fear has historically preceded market-wide rallies. Bitwise CIO Matt Hougan echoed this sentiment, pointing out a stark divide between retail investors, who remain bearish, and institutional investors, who are increasingly bullish.

Hartmann believes the market may still experience short-term volatility but suggests that the worst could be behind us. With $35 billion in token unlocks already absorbed between March and October 2024, the market could be stabilizing for the next major move.