After reaching its highest point on Jan. 20th, Bitcoin’s value has been suppressed since then by hedge funds who have taken advantage of a yield-based trade using spot ETFs and CME futures. The move is a sign that the institutional acceptance of crypto assets doesn’t happen in a single direction.
This is the general takeaway of analyst Kyle Chassé, who dissected the latest Bitcoin (BTC) price crash in a thread on the X social media platform.
“For months, hedge funds were exploiting a low-risk yield trade using BTC spot ETFs & CME futures,” said Chassé. This cash-and-carry trade is now becoming mainstream. “imploding,” “He said”
Source: Kyle Chassé
The cash and carry trade involved buying spot Bitcoin ETFs and shorting Bitcoin futures on CME, which allowed traders to earn up to 5.68% in annualized returns by Chassé’s calculation.
Success of the trade was largely dependent on Bitcoin Futures trading at an elevated premium over Bitcoin’s current spot price. However, “with recent market weakness, that premium has collapsed,” said Chassé.
Hedge funds have left the market because the trading is no longer profitable. record outflows from US spot Bitcoin ETFs This week.
“The same trade that kept Bitcoin stable on the way up is accelerating the crash now,” He replied. It is because “hedge funds don’t care about Bitcoin. They weren’t betting on BTC mooning. They were farming low-risk yield.”
Related: Bitcoin futures and spot ETF traders capitulate as BTC looks for a bottom
Bitcoin users are the main victims of losses
Bitcoin’s price decline accelerated in the week of February 27 as it retraced to its previous levels. sub-$79,000 region First time in over three months.
A closer look at the onchain data shows that losses tend to be concentrated among Bitcoin tourist or recent traders.
Glassnode’s data indicates that 74% (or the losses) came from buyers who made purchases in the previous month.
Source: Carl B Menger
FTX, a crypto-exchange, has capitulated, but the losses that have not yet been realized from this recent drop in value are still greater. according Milkybull Crypto is an analyst. This is an indication that Bitcoin has reached a new low.
Magazine: 3AC-related OX.FUN denies insolvency rumors, Bybit goes to war: Asia Express
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Source: cointelegraph.com
