Bitcoin’s unexpected drop below $65,000 has raised questions, with one key factor being the significant reduction in exposure by cryptocurrency hedge funds. Over the past 20 trading days, hedge funds have lowered their exposure to just 0.37, the lowest since October 2020. This reduction indicates that hedge funds are less influenced by Bitcoin price changes.
Historically, a beta value of one means hedge fund performance closely follows Bitcoin, while a beta below one shows reduced exposure. The current beta of 0.37 suggests hedge funds are cautious about potential drops or volatility in Bitcoin.
This strategic withdrawal by hedge funds, known for their market insights, suggests anticipation of further price declines or regulatory uncertainties. Their reduced exposure has likely increased selling pressure on Bitcoin, contributing to its recent decline.
With substantial capital, hedge funds significantly impact market sentiment and price action. Their cautious stance reflects broader market concerns, influencing Bitcoin’s current performance.
