Ah, Bitcoin. The digital gold that everyone loves to talk about—until it crashes, of course. Since soaring to stratospheric highs on January 20, Bitcoin’s price has been dragged down by a group of very serious hedge funds doing what they do best: exploiting low-risk yield trades. The weapon of choice? Spot exchange-traded funds (ETFs) and CME futures. Because if there’s one thing hedge funds love more than money, it’s a low-risk yield trade. 🍿
According to analyst Kyle Chassé, this is the reason behind the recent Bitcoin crash. In a glorious thread on the social media platform formerly known as Twitter (now X, because why not?), Chassé broke it all down for us. He said hedge funds had been “having a blast” with a cash-and-carry trade that involved buying Bitcoin ETFs and shorting Bitcoin futures. All while raking in a “measly” 5.68% annualized return. You know, just pocket change for the big players.
But wait—plot twist! As Bitcoin’s market started to wobble, this once-beautiful trade began to “implode” (Chassé’s word, not mine). The premium Bitcoin futures once had over spot prices collapsed, and suddenly, that low-risk yield turned into a low-risk headache. Hedge funds, being the savvy folks they are, realized the free ride was over and started pulling out. Which, as you can imagine, led to record outflows from US spot Bitcoin ETFs this week. Sounds like a fun time, huh?
“The same trade that kept Bitcoin stable on the way up is now accelerating the crash,” said Chassé. So, to sum it up: hedge funds didn’t care about Bitcoin’s moonshot. They were in it for the yield. Just a bunch of financial tourists passing through, using Bitcoin as a pit stop for some quick profits. 🚀➡️💸
Losses concentrated among Bitcoin tourists
Bitcoin’s rollercoaster ride took a sharp dip on February 27, falling all the way back down to below $79,000 for the first time in over three months. Ouch. But here’s the kicker: the people who are really feeling the burn aren’t the seasoned crypto pros—they’re the Bitcoin tourists. These are the folks who jumped on the crypto bandwagon recently, thinking they could ride the wave of instant riches. Spoiler alert: it’s not that easy. 😬
According to Glassnode, 74% of the realized losses came from traders who entered the market in the last month. It’s like they showed up to the party just in time for the fire alarm to go off. But don’t worry, there’s hope for these new traders—if you count unrealized losses from the recent sell-off, they surpassed even the FTX debacle. But hey, if you’ve lost big, maybe it’s a sign that Bitcoin is finally bottoming out. Or maybe it’s just a sign to grab a drink and wait for the next rally. 🍸
Either way, Bitcoin’s wild ride continues, and we’re all just along for the chaotic, sometimes hilarious, sometimes tragic journey. Stay tuned for the next chapter in this crypto soap opera. 🎬
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2025-02-28 19:40