Relative-value strategies beat directional bets amid crypto volatility
Crypto’s latest bout of turbulence has tilted professional positioning toward market-neutral and relative-value structures rather than outright long-or-short wagers. According to Deribit Insights, price action has been increasingly shaped by global macro stress, which has encouraged deleveraging and greater use of downside protection rather than pure directional exposure (https://insights.deribit.com/industry/crypto-options-at-a-crossroads-macro-stress-heavy-tape-and-relative-vol-opportunities/).
Options flow has echoed this shift. As reported by CoinDesk, non-directional formats such as straddles and strangles made up over 20% of BTC block options activity in late 2025, signaling demand for volatility-driven trades that do not rely on getting price direction right (https://www.coindesk.com/markets/2025/11/13/how-are-bitcoin-and-xrp-traders-positioning-themselves-in-a-choppy-market-environment/).
Institutional adoption is also evolving toward hedged exposure rather than binary bets. CoinLaw reported that Intesa Sanpaolo disclosed nearly $100 million in Bitcoin ETF holdings alongside a strategy hedge, a combination that points to appetite for crypto access paired with explicit risk controls (https://coinlaw.io/intesa-sanpaolo-100m-bitcoin-etf-holdings/).
What market-neutral strategies are and why they matter now
Market-neutral strategies in digital assets aim to strip out broad market beta and extract returns from spreads, carry, or volatility dynamics. Instead of profiting when prices rise or fall, they target mispricings between related instruments, such as spot, futures, or options, or between closely correlated tokens.
This approach has become more relevant as macro uncertainty and cyclical swings make directional exposure harder to size and hedge. Historical cycle analysis of crypto markets shows recurring boom-and-bust phases, and in that context managers have emphasized reducing drawdowns and improving risk-adjusted returns through neutral positioning.
Industry practitioners have emphasized the breadth of tools now available beyond simply holding Bitcoin or Ethereum. “Not all of them will last, but they are providing lots of options that go beyond buy-and-HODL …” said Scott Army, CIO of Galaxy Vision Hill at Galaxy Fund Management, highlighting the role of arbitrage, basis, and options structures in managing volatility (https://sponsored.bloomberg.com/article/galaxy-fund-management/How-Institutional-Investors-Can-Take-Advantage-of-Crypto-Volatility).
Core relative-value tactics: basis, arbitrage, and funding spreads
Basis trades monetize the price gap between spot and futures. In a positive basis, a desk may buy spot and sell futures to lock in the spread; in a negative basis, it can invert the structure. The aim is to capture convergence at expiry while controlling market direction risk through offsetting legs.
Arbitrage and funding spreads extend this logic across venues and instruments. For example, managers may seek to harvest recurring funding payments on perpetual swaps versus positions in spot or dated futures, or pair options with futures to isolate implied volatility mispricings. These tactics rely on disciplined collateral management, consistent execution, and an understanding of how liquidity, fees, and borrow costs affect net returns.
At the time of this writing, market conditions reflect elevated but manageable turbulence, with Bitcoin near $66,461 and 14-day RSI around 35.8 alongside roughly 12% monthly volatility. In such environments, neutral structures that emphasize spreads, carry, and optionality can help reduce downside participation while leaving scope to monetize dislocations if they persist.
| Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial, investment, legal, or trading advice. Cryptocurrency markets are highly volatile and involve risk. Readers should conduct their own research and consult with a qualified professional before making any investment decisions. The publisher is not responsible for any losses incurred as a result of reliance on the information contained herein. |
