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SignalPlus Head: The intensification of multi-strategy hedge fund trading has triggered recent BTC sell-offs, but the market still holds a buy-the-dip sentiment

ChainCatcher news, according to an analysis by SignalPlus head Augustine Fan, the recent sell-off of Bitcoin has been primarily triggered by multi-strategy hedge fund trading that dominates the macro market. These multi-strategy trades include arbitrage, long-short positions, and leveraged operations, aiming to maximize returns across asset classes.In the Bitcoin market, a common multi-strategy trading method 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 profits from basis trading decline, leading to capital exiting positions and concentrated sell-offs of Bitcoin and ETF shares. Fan pointed out that this liquidation pressure has amplified the sell-off over the past week, especially against the backdrop of increased volatility related to tariffs.Nevertheless, the "buying the dip" sentiment still exists in the market. Fan stated that the valuations of stocks outside the major indices remain relatively stable compared to historical averages, and hard economic data may outperform the rapid deterioration of soft data. Therefore, the market generally believes that it is still a "buying the dip" market, expecting to gradually digest the impacts of tariff volatility.

Santiment: Cautious market sentiment may continue to dominate before a significant increase in trading activity

ChainCatcher news, according to Santiment analysis, since peaking on February 27, the trading volume across the cryptocurrency market has been steadily declining. After further declines in market capitalization over the past two weeks, trader behavior shows a mix of fatigue, despair, and capitulation.The report analyzes that when the trading volume of major cryptocurrencies continues to decline, even during slight price recoveries (as seen on Wednesday), it usually indicates that trader enthusiasm is waning. In this scenario, traders become cautious, suggesting they may not believe the current price increase will be sustained. Essentially, the decrease in trading activity reflects uncertainty, as fewer traders are confident that buying at current price levels will yield profits.The weakening trading volume during a mild price rebound could be an early warning sign of diminishing market momentum. Without strong buying participation, price gains may quickly lose momentum due to a lack of sufficient support to maintain an upward trend, which could lead to any rebound being temporary, with prices susceptible to decline again.To show a healthier and more sustainable recovery, bulls typically hope to see both price increases and trading volume rising simultaneously. Cautious market sentiment may continue to dominate until there is a significant increase in trading activity.
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