Hedging strategies show advantages as ETH rises by 26%, outperforming alts. KOL analyzes the returns and psychological experience.

[Coin World] On August 13, a certain crypto KOL stated that on August 1, the price of Ethereum was about $3700, and now it has risen to $4660, an increase of 26%. The rise in shorted alts is concentrated between 5% to 15%, with an overall profit margin of about 16%. Compared to a naked long position in Ethereum, hedging strategies face less psychological pressure during declines, especially since Ethereum once fell to $3360, where a naked long position might trigger a stop loss, while during hedging, the decline in altcoins is usually greater than that of Ethereum, still enhancing total profits and providing a better holding experience.

According to previous reports, on August 1, the KOL stated that there is currently a serious divergence between bulls and bears in the market. Personally, they have opened a hedge trade (going long on ETH and shorting a basket of alts), with a position approximately at 1:1. They believe that the funds from institutions buying ETH will not spill over to other alts. If the market continues to rise in the second half of the year, they are confident that it will still be driven by ETH. If the market enters a bear phase, they do not think alts can thrive independently, while ETH at least has institutional buying power to back it up. The situations that would lead to this hedging strategy failing would be either the arrival of the alt season, where most alts continue to outperform ETH, or ETH fluctuating or leading the fall, while other alts decline less. Based on the experience of the past few months, they believe the likelihood of this is low.