BlockBeats news, on August 13, Smart Money and crypto KOL 0xSun (@0xSunNFT) stated that on August 1, the price of Ethereum was about $3700, and it has now risen to $4660, an increase of 26%. The altcoins that were shorted have increased between 5% to 15%, with an overall profit margin of about 16%. Compared to going long on Ethereum without hedging, the hedging strategy faces less psychological pressure during declines, especially since Ethereum previously dropped to $3360, where a naked long position may trigger a stop-loss, whereas in hedging, the declines of altcoins are usually greater than that of Ethereum, and the overall profit can still be improved, resulting in a better holding experience.
According to previous reports, on August 1, 0xSun stated that there is currently a serious divergence in the market, and the individual has opened a hedging trade (going long on ETH and shorting a basket of altcoins), with a position approximately 1:1, believing that institutional buying of ETH will not spill over into other altcoins.
If the market continues to rise in the second half of the year, it is believed that it is highly likely to be driven by ETH. If the market enters a bear phase, it is also believed that altcoins cannot thrive independently, while ETH at least has institutional buying power to support it. The scenarios that would render this hedging strategy ineffective are either that the altcoin season really comes, and most altcoins continue to outperform ETH, or that ETH fluctuates or leads the decline, while other altcoins do not fall much. Based on the experience of the past few months, personally, I believe the likelihood is low.
