The month of February has been one of the most statistically challenging the crypto market has faced in a long while. Trapped in a cycle of sharp 24-48 hour geopolitical spikes followed by multi-day “leverage flushes” that erased all gains as quickly as they appeared. In short, very difficult trading conditions.
The sector faced multiple 4-6% spikes and Implied Volitility (IV) for BTC options hitting 3 year highs in Early February with PUT IV reaching 95% in the most acute sell offs.
It was clear that BTC was used in many cases to cover traditional finance margin calls as Whales (10-10k BTC owners) sold off roughly 66% of their positions into any rally. Interestingly and encouragingly, retail continued to build positions buying into most drawdowns. Retail, once again, believes this is a very strong re-entry point.
From a trading perspective it is well known that these strong spikes and then sustained sell offs are the worst trading conditions for systematic traders, highlighted by the Barclays Hedge Crypto Index which shows that cumulatively this index of over 100 traders, is down over 30% in the last 5 months. While things have been tough for us as well, our Market Neutral is down less than a half a percent in the same period and our AiQP Multi strategy is down just over 3%. Of course we are not happy with drawdown periods and we understand people don’t get involved in crypto just to break even but our statistics say we will always have drawdown months and February was one of those.
The final figures net of fees were
QPMN – 3.1% for February and down -2.6% YTD
AiQP – 4.4% for February and -2.8% YTD (fact sheets available on request)
On the basis of February’s figures and the overhang of the War, into March, some have asked if Algorithmic trading is now fundamentally struggling to perform as it once did. The answer to that is a categoric no. We have been systematically trading since 2019 and are now on Version 4 of both of our key strategies and have seen almost all trading conditions. We believe that the upgrades we put in place both in October of 24 and in January of 25 will continue to provide sustained returns over a 12 month period and beyond. We had drawdown months in January and March in 2025 as we all tried to understand the next move of the US President but yet again we finished up for the year.
This is just another challenge and an important reset for the sector. It was very obvious in Miami at the i-connections event last week, that traditional finance is now very keen to get involved. Many now see BTC at $70,000 as a great entry point. By way of example I had 33 meetings booked with new allocators to the space in just over 2 days. It was incredibly uplifting and confirmed to me that everything we are doing in managing risk is hitting all the right notes.
If you would like to understand trading conditions better or also believe that now is a good time to enter or increase exposure and would like to talk further then please do make contact. Evidence of 7 years trading would suggest the ideal time to invest or increase exposure is after a drawdown month and the timing may just prove spot on.
