Crypto trend-following trading finds relief after a sharp sell-off

Choppy crypto markets punished trend-following funds in 2025, with violent swings that erased months of positioning. This year’s decisive sell-off has offered a reprieve.Digital asset investment firm The gains were driven by a timely move to short positions as crypto markets moved lower in the last week of January, with more than seven percentage points of returns coming in the past few days, said Karl Naim, the company’s chief commercial officer.

One month doesn’t change a challenging trading landscape. But for a strategy that struggled last year, recent gains provide a much-needed boost — and a reminder that following trends can still pay off when markets finally choose a direction.

Bitcoin peaked at nearly $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 pushed momentum higher were caught off guard by the quick reversal. The fund lost money in five of the previous six months and ended 2025 down 7.8%. According to Crypto Insights Group, industry-wide quantitative trend funds returned 0.44% last year, up from 65% in 2024. Market-neutral strategies, which don’t rely on directional bets, rose 14.7%.

Those who suffered the recession are now benefiting from it.

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

XBTO’s trend fund trades perpetual crypto futures and focuses on the most liquid tokens, typically the top 50 by market value. Perpetual futures are derivatives that track the price of an asset without an expiration date. Positions are determined 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 quantitative firms manage billions of dollars. In cryptocurrencies, the approach can yield big profits in one-way markets like 2021, 2023, and 2024. But at scale, this approach is largely unproven: the funds are much smaller, the track records are short, and the market’s propensity for sudden, violent reversals makes it difficult to capture sustainable momentum.

XBTO manages approximately $100 million in its funds and aims to raise another $100 million this year.