According to BlockBeats, Smart Money and crypto influencer 0xsun.sol (@0xSunNFT) recently shared insights on social media regarding the current market conditions, highlighting significant divergence between bullish and bearish sentiments. In response, 0xsun.sol has initiated a hedge trade, going long on Ethereum (ETH) while shorting a basket of altcoins, maintaining a balanced position ratio of 1:1.
The rationale behind going long on ETH is based on its role as a key driver in the market's recent uptrend since late June. Institutions are reportedly emulating MicroStrategy by using crypto-equity financing to purchase ETH. Additionally, ETH serves as a fundamental infrastructure and settlement layer in the stablecoin narrative. Drawing parallels with MicroStrategy's previous Bitcoin purchases, which significantly boosted BTC prices, it is anticipated that the funds allocated by institutions for ETH acquisition are unlikely to spill over into other altcoins.
Data from CoinMarketCap (CMC) reveals that over the past 30 days, only 20 tokens among the top 200 have outperformed ETH, including BONK, ZORA, CFX, and ENA, which were notably driven by favorable events.
The strategy for shorting altcoins follows a previous logic, prioritizing those with relatively high market capitalization, non-leading status, weak performance, and low visibility. The approach involves diversified short positions with set stop-loss orders to mitigate risks of sudden price surges in individual assets.
0xsun.sol further commented that if the market continues to be bullish in the latter half of the year, ETH is likely to remain a driving force. Conversely, in a bearish scenario, altcoins are not expected to outperform, while ETH benefits from institutional buying power as a safety net. The hedge strategy could fail if a significant altcoin season emerges, with most altcoins consistently outperforming ETH, or if ETH experiences volatility or leads a downturn, while other altcoins remain relatively stable. Based on recent months' experiences, 0xsun.sol considers these possibilities to be unlikely.
