Crypto trend-following trade finds relief after sharp selloff

Digital-asset investment firm XBTO’s trend fund rose 13.3% last month, its second-best since launching in February 2024, as Bitcoin fell more than 10% and Ether dropped 18%. The gain was driven by a timely flip to short positions as crypto markets broke lower in the final week of January, with more than seven percentage points of the return coming in those last few days, according to Karl Naim, the firm’s chief commercial officer.

One month doesn’t change a challenging trading landscape. But for a strategy that struggled last year, recent gains offer a well needed boost — and a reminder that trend-following can still pay when markets finally pick a direction.

Bloomberg

Bitcoin peaked near $126,000 in early October and has since fallen sharply, with the broader crypto market losing $2 trillion in crypto market value along the way, according to CoinGecko. Trend models that rode momentum higher got whipsawed by the fast reversal. The fund lost money in five of the previous six months and finished 2025 down 7.8%. Industry-wide, quant trend funds returned 0.44% last year, down from 65% in 2024, according to Crypto Insights Group. Market-neutral strategies, which don’t rely on directional bets, gained 14.7%.

Live Events

Those that caught the downturn, though, are now benefiting.

“We have been net short in February, have taken some risk off the table, and continue to see potential downside pressure on Bitcoin,” Naim said.

XBTO’s trend fund trades crypto perpetual futures and focuses on the most liquid tokens, typically the top-50 by market value. Perpetual futures are derivatives that track an asset’s price without an expiry date. Positions are driven by a systematic momentum model that scans market and blockchain data.

XBTO was founded in 2015 by Philippe Bekhazi, a former SAC Capital trader, and is regulated in Bermuda and Abu Dhabi.

Trend-following is a well-established strategy in traditional markets, where large quant firms manage billions of dollars. In crypto, the approach can win big in one-way markets like in 2021, 2023 and 2024. But it remains largely unproven at scale — funds are far smaller, track records are short, and the market’s tendency toward sudden, violent reversals makes sustained momentum difficult to capture.

XBTO manages about $100 million across its funds and is targeting to raise another $100 million this year.