Bitcoin has settled into a tight trading range as investors search for direction following a market collapse that erased gains made since the US election. The recent downturn has prompted cryptocurrency hedge funds to increase their cash holdings, highlighting the impact of the $US2 trillion market rout and the lack of clear conviction heading into 2026.
According to Bohan Jiang, a senior derivatives trader at FalconX, Bitcoin has found a new range in the mid-60s, trading without strong directional momentum. The notoriously volatile cryptocurrency traded in a narrow range on Thursday, remaining near $US67,000 during New York trading hours. Bitcoin experienced a significant drop on February 6, falling as much as 13 per cent, its largest decline in approximately four years. The token is currently down about 50 per cent from its peak of nearly $US127,000 in early October.
Paul Howard, senior director at market maker Wincent, noted that the volatility spike seen on February 6 has since subsided. Howard added that declining implied volatility and selective spot ETF demand on-chain suggest that leverage has been reduced. Industry surveys by Crypto Insights Group indicate that a growing number of managers reduced risk in the fourth quarter as risk-reward profiles worsened.
Some funds increased cash allocations, while others, bound by investment mandates, shifted into more defensive positions. Sigil Fund stated in a note that they had de-risked 40 per cent of their portfolio as the risk-reward profile became unfavourable in Q4, marking the first time the fund had zero exposure to both Bitcoin and Ethereum.
