Relative-Value Strategies Beat Directional Bets as Crypto Volatility Bites

Cryptocurrencies shifted to market-neutral trading as volatility punished directional bets and resulted in a fourth consecutive month of losses.

Crypto currencies opened 2026 with losses and a defensive stance, according to a February 18 study by Presto Research and Otos Data.

The report shows investors turning to relative value trading and market neutrality as high uncertainty and price volatility weigh on directional bets.

Market-Neutral Funds Work Best as Directional Strategies Sink

According to Presto research, all crypto hedge funds have sunk by an average of 1.49% in the past month. The losses extended a difficult period for active managers, marking the fourth consecutive month of equally weighted negative performance across all basic and multiple categories, a streak not seen since late 2018 and early 2019.

The spread of the numbers tells a clearer story, as the core funds fell by 3.01% in January, while the quantitative funds fell by 3.51%. On the other hand, Presto reported that market-neutral funds, which aim to profit from price differences rather than market direction, gained about 1.6%. In six months, those same neutral strategies are up about 5% while core funds are down more than 24%.

Meanwhile, Bitcoin (BTC) is down about 31%, Ethereum (ETH) 23%, and Solana (SOL) 47%.

Analysis by some market watchers supports the bearish tone, with data from Alphractal showing that Bitcoin has been trading in a depression zone where weak holders tend to sell while long-term investors accumulate. The company’s founder, Joao Wedson, said the long-term profitability levels of its owners are still good, which is a sign that the market may not have bottomed out yet.

Putting Data Points on Defense, Not Panic

Analysis of the flow of the Presto survey shows a clear arc of behavior until January. The month opened with positive putting and buying calls, but as rallies failed, traders traded in bleak structures. In the third week, hedging became stronger, as ETF flows fluctuated, with periods entering the balance sheet with miners’ distributions and whale sales. Meanwhile, corporate consolidation still exists but is not enough to reduce the broader risk.

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Importantly, the report noted that the suspension at the end of the month was not straightforward. Analysts have pointed out that while the safeguards are still in place, the power seems more orderly compared to the chaotic reset event in October 2025.

The absence of widespread panic suggests that pressure is building up in pockets rather than being expressed as a system breakdown. This difference is important as the market evaluates whether January represents continuation or exhaustion.

Researchers have advised that until policy clarity improves or a crypto-specific structural catalyst appears, the rallies may end, volatility will remain active at the risk of the topic, and adaptation instead of belief will determine survival in the first quarter of 2026.

Whether January marks the continuation of the bear trend or the exhaustion phase of selling pressure remains an open question. However, for now, the data shows that strategies that prioritize relative value over guiding beliefs are successfully navigating current challenges.