Hedging strategy shows its power as ETH rises 26%, outperforming alts. KOL analysis of Holdings experience.

On August 13, a certain crypto KOL stated that the price of Ethereum on August 1 was about 3700 USD, and it has now risen to 4660 USD, an increase of 26%. The rise of the shorted alts is concentrated between 5% and 15%, with an overall profit margin of about 16%. Compared to holding Ethereum outright, the hedging strategy faces less psychological pressure during a downturn, especially since Ethereum once fell to 3360 USD, where a naked long position might trigger a stop loss, while during hedging, the decline of alts is usually greater than that of Ethereum, which still enhances overall profit and improves the holdings experience.

According to previous reports, on August 1, the KOL stated that there is currently a severe divergence in the market between bulls and bears. Personally, they have opened a hedging trade (going long on ETH and shorting a basket of alts), with a position size approximately 1:1, believing that the funds from institutions buying ETH will not spill over into other alts.

If the market continues to rise in the second half of the year, I believe it is highly likely that it will still be driven by ETH. If the market enters a bear phase, I don’t think alts can stand alone, while ETH at least has institutional buying power to support it. The scenarios that would lead to this hedging strategy failing are either that the altcoin season really arrives, and most alts continue to outperform ETH, or that ETH experiences fluctuations or leads the decline, while other alts fall less. Based on the experiences of the past few months, I personally think the likelihood is low.