Crypto funds began 2026 with losses. A study done in mid-February by Presto Research and Otos Data shows investors moved toward safer and more careful trading ideas. The main reason is bigger price swings and unclear policy around the economy. This makes traders reluctant to bet on big moves up or down in the market.
Many investors chose what is called relative-value and market-neutral trades. These strategies try to make money even if the overall market goes up or down. They focus on price differences and not on whether prices will rise or fall in general. In simple words, they look for small gaps in price and try to profit from those gaps, rather than trying to guess the direction of the whole market.
Market-neutral funds do better than directional bets
The Presto survey found that all liquid crypto hedge funds fell by about 1.49% in January. This continues a tough stretch for active managers. It was the fourth straight month of negative results for both fundamental and quantitative fund categories. This kind of pattern hasn’t happened since late 2018 and early 2019.
Inside the numbers, fundamental funds lost about 3.01% in January while quantitative funds fell a bit more, at 3.51%. In contrast, market-neutral funds rose by roughly 1.6%. Market-neutral funds try to profit from price differences, not from the overall direction of the market, so they are less affected when prices swing a lot in general.
Over the last six months, market-neutral strategies are up nearly 5%. Fundamental funds, on the other hand, are down more than 24% in that period. This shows how different approaches can perform very differently in the same month or year.
During the same period, big cryptocurrencies fell sharply. Bitcoin (BTC) dropped about 31%. Ethereum (ETH) fell about 23%. Solana (SOL) fell about 47%. These declines show that even though some funds did not lose as much, the overall market was weak.
What analysts see when they study market data
Other market watchers also described a fragile situation. A firm called Alphractal noted that Bitcoin was in what they call a stress zone. In this zone, weaker investors tend to sell, while long-term holders buy and hold. The founder of Alphractal, Joao Wedson, said that profit levels for long-term holders are still positive. This suggests the market may not have hit a final turning point yet, even if prices are lower now.
How investors positioned themselves in January
The Presto survey looked at where money was flowing inside the market. At the start of January, traders were optimistic. They bought calls, which are options that let you bet on higher prices. But when prices did not rise as expected, they shifted to strategies that could profit from a decline or from slower gains. This is called a tactical fade, a plan to reduce bets when rallies fail to keep going.
In the third week, traders began to protect themselves against downside moves. They used hedges and a variety of exchange-traded funds (ETFs) that track crypto markets. Flows in ETFs moved up and down, with some buyers and some sellers. Miner distribution and large traders sometimes sold, which added to selling pressure at times. Corporate accumulation—when companies buy or hold crypto—still happened but wasn’t strong enough to offset the general move to lower risk.
Importantly, the report noted that the end of January did not look like a panic. The level of protection was present, but the leverage (how much debt or borrowed money was used to amplify bets) looked more orderly than in a chaotic event in October 2025. This matters because it shows the market did not reach a broad, all-at-once collapse. It suggests stress is appearing in smaller pockets rather than across the whole market at once.
The researchers said that until policy clarity improves or a clear crypto-specific catalyst appears, rallies are likely to fade. They also said volatility will stay reactive to headlines. In other words, prices will bounce only when new news makes people more willing to take risks again. The key to surviving the first quarter of 2026 will be adaptability—changing plans as new information comes in—more than sticking to a single, strong bet.
So, did January end the bear market or show that selling pressure was fading? The data suggest that it is too early to tell. What is clear is that strategies focusing on relative value, or on profiting from price differences rather than from overall market direction, did better than those trying to guess which way prices would go next. In a market with big swings and mixed news, flexible and careful approaches help investors stay in the game longer.
The full discussion and conclusions come from the researchers at Presto and Otos Data. You can read more about their findings in their report, and it has been summarized by CryptoPotato. CryptoPotato published the story with the headline: Relative-Value Strategies Beat Directional Bets as Crypto Volatility Bites.
Why this matters for investors
Investors often look for ways to make money in different kinds of markets. Some bets depend on the market moving up or down. Those are directional bets. If you count on prices going up and they go down, you can lose a lot. Market-neutral and relative-value strategies try to reduce that risk by balancing long positions (betting prices will rise) and short positions (betting prices will fall). This balance can help protect against large losses when markets move a lot in unpredictable ways.
In this report, market-neutral funds managed to produce a small gain in January, while other funds struggled. Over six months, the neutral strategies have done better than many other approaches. This is why some investors now prefer these safer, more careful methods when policy and market news are uncertain.
Still, the study says nothing is guaranteed. The market could find a catalyst and rally, or it could stay choppy for a while. The important idea is to stay flexible and adjust strategies as conditions change. Investors should watch policy news, technical developments, and how major funds are adjusting their holdings.
Glossary and quick definitions
This section explains a few technical terms used in the report and in crypto markets. Each term has a quick definition with a link to a longer explanation on Wikipedia, so readers can learn more if they want to.
- Market-neutral — An investment strategy (often used in hedge funds) designed to minimize market risk by balancing long and short positions to focus on returns from relative value rather than directional market moves. Wikipedia
- Relative value — In finance, the relative value approach evaluates the attractiveness of one asset relative to another by comparing risk, liquidity, and expected return; hedge funds use it to exploit price differences. Wikipedia
- Bitcoin — Bitcoin is the first decentralized cryptocurrency, created in 2009, that uses a blockchain and peer-to-peer network to enable digital transactions without a central authority. Wikipedia
- Ethereum — Ethereum is a decentralized blockchain platform that enables smart contracts and decentralized applications; its native cryptocurrency is Ether (ETH). Wikipedia
- Solana — Solana is a public blockchain platform that uses a proof-of-stake consensus and provides smart contract functionality; its native token is SOL. Wikipedia
Source of the original report and summary: CryptoPotato.
Leave a Reply