Author: Ciaran Lyons, CoinTelegraph; Compiled by: Wuzhu, Golden Finance

A cryptocurrency venture capitalist said that the price of Bitcoin will continue to fluctuate until real buyers start entering the market, rather than traders seeking arbitrage opportunities.

"This is a typical liquidity game case. The ETF brings not only long-term holders, but hedge funds that conduct short-term arbitrage," said Kyle Chasse, founder of Master Ventures, in a February 27 X post.

“For months, hedge funds have been using BTC spot ETFs and CME futures for low risk returns trading,” Chasse added.

He said that as leveraged positions are liquidated, spot and arbitrage trading will continue to close positions, and Bitcoin's volatility will continue to exist.

“BTC needs to find real organic buyers (not just hedge funds that withdraw income),” he said.

Chasse explained that hedge funds make profits by trading the spread between the Bitcoin futures price and the Bitcoin spot price because the futures price is higher.

As the market plummeted, the price difference “collapsed”, leaving the transaction unprofitable. This is what is commonly known as spot and arbitrage trading.

Chasse said:

“Hedge funds don’t care about Bitcoin.” Markus Thielen, head of research at 10x Research, expressed a similar view in a Feb. 27 report, saying that financing rates plummeted as sentiment in cryptocurrency markets declined, which could force these trades to close positions.

Chasse explained that hedge funds never “bet” that Bitcoin prices surged; instead, they pursued low-risk returns.

Bitcoin price fell below $80,000 for the first time since November 10, breaking this level after Donald Trump re-election in the U.S. presidential election.

According to data from TradingView, Bitcoin was trading at $79,532 as of this article.

As of publication, Bitcoin trading price was $79,532. Source: TradingView

Swyftx chief analyst Pav Hundal said that while Bitcoin may fall further, most of the fluctuations have ended.

"IIt is entirely possible that we see Bitcoin falling at this time, but most of the losses may have already been done,” Hundal said. He added that market conditions could be improved if the upcoming U.S. inflation data on February 28 are below expectations.

"Now that trading is over, they are withdrawing liquidity—let the market fall freely," Chasse said.

Since Bitcoin fell below $90,000 on February 25, many analysts blamed the decline in Bitcoin and the wider cryptocurrency market on macroeconomic uncertainty and concerns about Trump's proposed tariffs.