Crypto hedge funds began 2026 with losses and a more defensive stance, according to a February 18 survey by Presto Research and Otos Data. Investors increasingly rotated into relative value and market neutral strategies as macro uncertainty and sharp price swings undermined directional positioning.
All liquid crypto hedge funds declined by an average of 1.49 percent in January, marking a fourth straight month of negative performance across both fundamental and quantitative strategies, the longest such stretch since 2018 to 2019. Fundamental funds fell 3.01 percent, while quantitative funds dropped 3.51 percent. In contrast, market neutral funds gained about 1.6 percent for the month and are up nearly 5 percent over six months, while fundamental funds have lost more than 24 percent in the same period.
Over the past six months, Bitcoin has fallen roughly 31 percent, Ethereum 23 percent, and Solana 47 percent. Data from Alphractal indicates Bitcoin is trading in a stress zone where weaker holders are selling while long term investors continue to accumulate. Its founder, Joao Wedson, noted that long term holder profits remain positive, suggesting the market may not yet have reached a final bottom.
Flow data shows that traders started January with constructive positioning but shifted toward downside protection as rallies failed and exchange traded fund flows fluctuated. Although hedging increased, analysts observed no signs of widespread panic similar to the sharp reset seen in October 2025.
Researchers concluded that until there is clearer policy direction or a strong crypto specific catalyst, rallies may struggle to sustain momentum and volatility is likely to remain headline driven. For now, strategies focused on relative value rather than outright market direction appear better suited to navigating current conditions.
