Bitcoin’s drop below $65,000 came as a surprise to many, with the exact reasons behind it being unclear. However, recent data suggests that cryptocurrency hedge funds have significantly reduced their exposure to Bitcoin, which may have played a role in the price decline.
Over the past 20 trading days, hedge funds have lowered their exposure to the BTC market to just 0.37, the lowest level since October 2020. This reduced exposure indicates that hedge funds are now less vulnerable to changes in the price of Bitcoin compared to previous years.
The decreased exposure of hedge funds to Bitcoin could be a key factor in the recent steep decline in the cryptocurrency’s price. Hedge funds are known for their calculated actions and access to cutting-edge data, so their withdrawal from Bitcoin may have been a signal of more drops or volatility to come.
Various reasons could be behind this cautious approach, including shifting investment strategies, macroeconomic conditions, or regulatory uncertainties. With less exposure from hedge funds, there may have been increased selling pressure on Bitcoin, pushing its price below the $65,000 mark.
Hedge funds, with their significant capital, have a notable influence on the market. Their actions can greatly impact market sentiment and price movements. As such, their reduced exposure to Bitcoin has likely contributed to the recent drop in its price.