Hedge funds reduce exposure to Bitcoin, causing recent price drop below $65,000

From Investing.com: 2024-06-19 11:30:27

Bitcoin’s unexpected drop below $65,000 has left many puzzled about the cause. Cryptocurrency hedge funds have drastically reduced their exposure to Bitcoin over the last 20 trading days to just 0.37, the lowest level since October 2020. This reduced exposure is seen as a key reason for the recent decline in the cryptocurrency.

The charts depicting Bitcoin’s price trend from 2019 to 2024 highlight significant highs and lows. The rolling one-month beta of global crypto hedge funds to Bitcoin showcases the impact of price changes on hedge fund performance, with a beta value of 0.37 indicating decreased vulnerability to Bitcoin price fluctuations.

Hedge funds’ diminished exposure suggests a cautious strategy, possibly due to factors like changing investment tactics, macroeconomic conditions, or regulatory uncertainties. Their withdrawal from Bitcoin prior to the drop below $65,000 could have contributed to increased selling pressure and market volatility.

The influence of hedge funds, with their significant capital and market impact, cannot be underestimated. Their calculated actions can sway market sentiment and price movements, highlighting the importance of monitoring their activities in the cryptocurrency space.

Overall, the reduced exposure of hedge funds to Bitcoin and their cautious approach suggest a complex interplay of factors influencing the recent price decline. Observing hedge fund behavior can provide insights into market trends and potential future movements in the cryptocurrency space.

Read more at Investing.com: Exact Reason Behind Bitcoin (BTC) Drop Finally Revealed By U.Today