- According to an analysis research from ETC Group, the exposure of crypto hedge funds to the bitcoin market has decreased to levels not seen since October 2020.
According to data from ETC Group, the exposure of crypto hedge funds to the bitcoin market has decreased to levels not seen since October 2020.
Hedge funds specialising in cryptocurrency have recently abandoned bitcoin. Over the last 20 trading days, they have lowered their exposure to the bitcoin market to only 0.37, the lowest since October 2020, according to André Dragosch, head of research at ETC Group.
Dragosch stated that because the cryptocurrency hedge fund business is made up of numerous strategies that can be both directional and market-neutral, it is challenging to determine the primary causes of this decline in exposure.
However, he said, “we can say that there has been a significant decline in these crypto hedge funds’ aggregate net long exposure relative to bitcoin as a benchmark.”
Decreased exposure of hedge funds aligns with ETP withdrawals
Dragosch continued, “A reduction in hedge funds’ exposure to bitcoin has coincided with a continuation of net outflows from crypto exchange-traded products.”
The posture of hedge funds is generally quite pro-cyclical, which indicates that overall, their market timing is bad. They could be pushed back into the market when we start to rally again, which is crucial dry powder for the next upward leg, he said.
According to Coingecko data, the value of the whole cryptocurrency market capitalization has increased by 0.5% during the last day to reach $2.5 trillion.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
