Kyle Chasse: Bitcoin Will Remain Volatile Without Real Investors
Kyle Chasse, founder of Master Ventures, argues that Bitcoin volatility will persist until the crypto market sees more long-term investors, not just hedge funds using Bitcoin for short-term speculation.
He explains that certain institutional investors are heavily involved in arbitrage trading, which guarantees returns regardless of price direction. Marcus Thielen, the head of research at 10x Research, shares a similar view, having previously stated that only 44% of spot Bitcoin ETFs are held as long-term investments.
Chasse describes the current scenario as a textbook liquidity play: hedge funds buy spot Bitcoin ETFs while simultaneously shorting Bitcoin futures on the Chicago Mercantile Exchange (CME). This approach allowed them to earn an annualized spread of about 5%, with higher returns when leveraging borrowed capital. However, as the spread narrowed, the profitability of this strategy has declined.
As funds began unwinding their positions, selling pressure intensified. Over the past week, major investors have withdrawn more than $1.9 billion from U.S. spot Bitcoin ETFs. Meanwhile, open interest on the CME plummeted 10% in just one day. This has led to Bitcoin’s price dropping nearly 20%.
What happens next? Cash & carry will keep unwinding. BTC needs to find real organic buyers (not just hedge funds extracting yield). Volatility will remain high as leveraged positions continue to get liquidated,
Chasse added.
At the time of writing, Bitcoin is trading at approximately $80,000, the lowest level since November 2024, following Donald Trump’s election victory. The crypto market’s downturn began amid macroeconomic uncertainty caused by the new U.S. tariffs imposed on other nations. Additionally, market participants are concerned about the potential introduction of further trade barriers from the U.S. administration.
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