U.Today – The drop below $65,000 was clearly unexpected and its causes were quite unclear, and figuring out what exactly caused it is complicated. Perhaps we will find the answer after all.
Recently, cryptocurrency hedge funds have completely abandoned Bitcoin. Over the last 20 trading days, they have reduced their exposure to the BTC market to just 0.37. This is the lowest level since October 2020. The charts show Bitcoin’s price trend from 2019 to 2024, highlighting noticeable ups and downs.
Hedge funds’ reduced exposure to Bitcoin is a huge reason for the cryptocurrency’s recent acute decline in value. The bottom chart illustrates the rolling one-month beta of global cryptocurrency hedge funds against Bitcoin, showing the extent to which hedge funds’ performance is influenced by changes in the Bitcoin price.
A hedge fund’s performance follows Bitcoin if its beta value is one, while a beta value of less than one indicates reduced exposure. The drop to a beta of 0.37 indicates that hedge funds are much less susceptible to Bitcoin price changes than they were a few years ago.
Hedge fund exposure was last at this low point in October 2020, just before Bitcoin experienced a noticeable bull run. Hedge funds are well known for their calculated actions and often have access to cutting-edge data and industry knowledge. Perhaps they expected greater declines or volatility due to the withdrawal from Bitcoin.
There are many reasons for this cautious approach, such as changing internal investment strategies, macroeconomic conditions or regulatory uncertainty. Since there was less exposure, there was likely to be more selling pressure on Bitcoin, which caused the price to fall below the key $65,000 mark.
Hedge funds often have significant influence on the market because they often have significant capital under their control. Market sentiment and price action greatly influence fund flow.
