In line with knowledge from ETC Group, cryptocurrency hedge funds considerably decreased their dangers within the Bitcoin market to ranges not seen since October 2020.
“Crypto hedge funds have actually thrown within the towel on Bitcoin these days. During the last 20 buying and selling days, they’ve decreased their holdings within the BTC market to solely 0.37, which is the bottom degree since October 2020,” mentioned André Dragosch, Head of Analysis at ETC Group. mentioned.
The crypto hedge fund trade is various, with a wide range of methods that may be each directional and market impartial. Subsequently, it’s troublesome to find out the primary elements behind this lower in publicity. “However what we will say is that the entire web lengthy publicity of those crypto hedge funds relative to BTC as a benchmark has decreased considerably,” Dragosch added.
This discount in hedge funds’ Bitcoin publicity coincided with their continued web outflows from crypto ETFs. Dragosch additionally defined that hedge fund positions are usually extremely pro-cyclical, implying that they typically have poor market timing total.
“As soon as we begin rallying once more, they could have to return again into the market, which might be essential uncooked materials for the upcoming upside leg,” he mentioned. This implies that the present low publicity might result in a big market transfer when funds re-enter the market.
*This isn’t funding recommendation.