Bitcoin Holds Up Better Than Nasdaq as Hedge Funds Slash Tech Positions

Bitcoin loses less than tech stocks in market pullback

Bitcoin fell 1.27% from October 9 to October 16, while the Nasdaq-100 dropped 5.49% over the same period, according to UTC daily closes and the index's 4 p.m. ET closing prices. The difference of about 4.22 percentage points suggests Bitcoin held its value better than big-tech stocks during a sharp selloff.

The comparison is preliminary, because a UTC daily close sits four hours apart from the Nasdaq's regular close.

Key numbers from the week

• Nasdaq-100 fell from 30,883.15 to 29,187.55, a drop of 5.49%


• Bitcoin fell from $82,546.32 to $81,500.80, a drop of about 1.27%


• US spot Bitcoin ETFs pulled in $526.7 million on October 19, led by $665.2 million into the iShares Bitcoin Trust (IBIT)


• Hedge funds cut technology positions at the fastest pace since at least 2016, per Goldman Sachs prime brokerage data


• Leveraged funds reduced net short exposure in Bitcoin futures by 1,008 contracts, or 14.71%, through October 13


• Bitcoin's net leverage in Goldman's global prime brokerage book fell to a one-year low of 48.6%

What the ETF flows show

The $526.7 million inflow on October 19 marked a turnaround after two weeks of net outflows. The week ending October 9 saw $678.9 million leave US spot Bitcoin ETFs, and the following week through October 16 saw another $228.4 million in outflows. Those combined withdrawals equalled about 35% of the $2.63 billion that had flowed in between September 21 and October 2.

Bitcoin's relative strength came during a single week of redemptions inside a broader four-week stretch of net inflows.

What CFTC data reveals about trader positioning

CFTC positioning data for the week to October 13 shows leveraged funds cutting their net short bets on Bitcoin futures. Gross shorts fell by 1,219 contracts while gross longs dropped by just 211, indicating traders were mostly closing out short positions rather than buying. Net shorts still stood at 5,844 contracts, representing roughly 29,220 BTC. Open interest at CME fell 3.17%.

The data snapshot predates the late-week equity selloff, so whether short covering drove Bitcoin's relative strength remains a hypothesis.

How a tech unwind could reach Bitcoin

An October 6 IMF research note placed hedge funds at about $13 trillion in gross assets and $40 trillion in gross notional exposure. The IMF found that the most crowded hedge-fund stocks were about 10 percentage points more volatile and suffered peak-to-trough losses about 4 percentage points deeper than the least crowded holdings.

The IMF's October Global Financial Stability Report identifies leverage, concentrated exposures, prime-broker stress, and correlated redemptions as channels that can spread localized disruptions. In that sequence, weakening AI valuations hit crowded positions, margin requirements rose, and funds trimmed liquid holdings across asset classes, which could reach Bitcoin through shared liquidity needs.

Goldman's reading of one-year-low net leverage suggests the unwind may be contained. AI and semiconductor stocks rebounded on October 19.

What happens next

The next CFTC positioning report, covering data through October 20, is due October 23. The Federal Reserve's next policy decision is scheduled for October 28.

Market observers will watch rolling beta between Bitcoin and equities, ETF inflow and outflow trends, CME net exposure, and perpetual funding rates to see whether Bitcoin's resilience during an AI-focused selloff holds up under broader liquidity stress.

Why this matters for crypto investors

Bitcoin's ability to lose less than the Nasdaq-100 during a sharp tech sell-off raises the question of whether it is decoupling from risk assets or simply riding on ETF demand. The return of inflows into US spot Bitcoin ETFs after two weeks of outflows adds weight to the idea that institutional demand may be providing a cushion.

At the same time, the IMF analysis underscores a real transmission channel: if hedge funds face margin calls and liquidity crunches, they may sell across asset classes, including Bitcoin. The scenario analysis in the source material suggests that a further 5% Nasdaq decline could keep Bitcoin in the $80,278 to $81,908 range under benign conditions, while a 10% decline could push it toward $66,831 to $70,091 if liquidity conditions deteriorate.

Sources

• CryptoSlate