According to Augustine Fan, the head of SignalPlus, the recent sell-off of Bitcoin has been mainly triggered by multi strategy hedge fund trading that dominates the macro market. These multi strategy trades include arbitrage, long short positions, and leverage operations, aimed at maximizing returns across asset classes.
The common multi strategy trading method in the Bitcoin market is basis trading, which involves buying spot Bitcoin (usually through ETFs) and shorting Bitcoin futures to profit from the price difference. However, when the price difference narrows or the market changes, the profit of basis trading decreases, leading to funds exiting positions and concentrated selling of Bitcoin and ETF shares. Fan pointed out that this liquidation pressure has amplified the sell-off in the past week, especially against the backdrop of increased tariff related volatility.
However, the 'buying on dips' sentiment still exists in the market. Fan stated that the valuations of stocks other than major cap stocks remain relatively stable compared to historical averages, and economic hard data may outperform the rapid deterioration of soft data. Therefore, the market generally believes that it is still a "buy on dips" market and is expected to gradually absorb the impact of tariff fluctuations.
