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Hedge Funds’ Move During Bitcoin’s Staggering Fall Revealed

Hedge Funds Adjust Bitcoin Holdings Amid Market Volatility

According to recent data provided by ETC Group, hedge funds in the cryptocurrency industry have significantly reduced their exposure to the Bitcoin market, reaching levels not witnessed since October 2020.

André Dragosch, Head of Research at ETC Group, noted, “Crypto hedge funds have recently been cutting back on their Bitcoin holdings. Over the past 20 trading days, their holdings in the BTC market have dropped to just 0.37, the lowest level since October 2020.” The cryptocurrency hedge fund sector encompasses a diverse range of strategies, making it challenging to pinpoint specific factors behind this decrease in exposure. However, Dragosch highlighted that the total net long exposure of these hedge funds compared to BTC as a benchmark has considerably decreased.

This reduction in Bitcoin exposure by hedge funds coincided with continued net outflows from crypto ETFs. Dragosch explained that hedge fund positions are typically pro-cyclical, indicating suboptimal market timing overall. He added, “Once we begin to rally again, they may have to re-enter the market, which will serve as significant fuel for the upcoming upward trend.” This suggests that the current low exposure could potentially trigger a substantial market movement when these funds re-enter the Bitcoin market.

It’s important to note that this information is not intended as investment advice.