$BTC What is Bitcoin ‘pairs trading’?

Cryptos | 12/06/2024 10:12:23 GMT

This is for anybody who wants to sell some Bitcoin but is still bullish crypto.

It’s also if you’re neutral on crypto but think Bitcoin is overvalued vs other tokens.

It’s also just if you’re just interested to see a way to apply a pairs trading strategy.

In case you’ve been hiding under a rock, Bitcoin just broke over $100k - No more waiting for the HODLRS!!

Naturally after hitting this massive milestone, some traders are going to be thinking about taking profits. And if they’re thinking it, some of them are going to be doing it.

But let’s forget about selling for a moment, are you really buying more BTC when it just hit $100k and it's up ~150% this year?

So even if there is not more active selling interest, there’s probably less buying interest.

What is pairs trading?

Pairs trading in crypto is a market-neutral trading strategy that involves taking a long position in one cryptocurrency and a short position in another, based on the assumption that their historical price relationship will revert to the mean.

The point is to profit from the relative price movement between the two assets, i.e. not the absolute ups or downs of one asset like Bitcoin.