5 Liquid Altcoins for Crypto Hedge Fund Long-short Strategy with Hedging Potential

Jakarta, Pintu News – In the crypto world, many hedge funds are currently running long-short strategies by choosing liquid altcoins as hedging or alpha instruments-here are five examples.

1. Ethereum (ETH) – key infrastructure and high liquidity

Ethereum is cited by the report as one of the most frequently traded altcoins by crypto hedge funds, with liquidity levels capable of supporting long-short strategies.

The large liquidity allows hedge funds to enter and exit positions with lower slippage risk, essential for hedge strategies. According to institutional guidance, ETH alongside Bitcoin dominates volume and provides a deep enough field for large executions.

Also Read: 5 Reasons Why Analysts Think November Could Be the Most Bullish Month for XRP (XRP)

2. Binance Coin (BNB) – a large ecosystem altcoin with liquidity support

Binance Coin is an altcoin that is often recommended as a large ecosystem project with sufficient liquidity. Hedge funds that run long-short strategies choose BNB because of its connection to a large ecosystem (Binance) and relatively high liquidity compared to smaller altcoins.

With sufficient liquidity, BNB allows hedging of positions as well as taking positions relative to other smaller altcoins. If BNB is traded at, for example, USD $300, then in rupiah terms it is ± IDR 5,015,100 (300 × 16,717). This shows that altcoins like BNB can bridge hedge fund strategies between large assets and medium assets.

3. Solana (SOL) – layer-1 altcoin with attractive volume

Solana stands out as an alternative layer-1 with a large community, significant transaction volume and liquidity that is increasingly being considered in institutional digital-asset strategies.

For hedge funds that go long-short, SOL can be used as a “benchmark altcoin” versus less liquid altcoins, or as a long-bias by hedging shorts against other more speculative altcoins. With greater liquidity than micro tokens, execution risk decreases.

4. Polkadot (POL) – interoperability and diversified hedging

Polkadot is an altcoin that gets attention in hedge fund reports as one of the altcoins that is often part of trading portfolios besides ETH. Long-short hedge fund strategies can use DOT as diversification relative to other layer-1s.

Since DOT has a multi-chain interoperability ecosystem, hedge funds can go long on DOT if they see strong fundamentals, and short smaller or riskier altcoins. Adequate liquidity makes DOT worth including in a hedge portfolio.

5. Chainlink (LINK) – main oracles and medium-large liquidity

Chainlink is noted as an altcoin that is quite often used by hedge funds (the 2021 version of the survey named LINK in the top 3 most traded altcoins by crypto hedge funds).

Because of oracles’ specific functions and wide adoption, hedge funds can use LINK as part of a long-short strategy-for example, long LINK if adoption increases, or short less mature oracle altcoins. Its relatively good liquidity keeps it on the radar compared to very small tokens with thin liquidity.

Conclusion

The five altcoins above – Ethereum (ETH), Binance Coin (BNB), Solana (SOL), Polkadot (POL), and Chainlink (LINK) – exhibit characteristics suitable for hedge funds executing a long-short strategy: sufficient liquidity, relatively wide adoption, and sufficient scale to allow efficient entry/exit of positions.

A long-short strategy demands not only an asset that can go up (long) but is also risk-manageable and allows for short or arbitrage positions, so liquidity is a key factor.
However, it is important to emphasize: this article is educational/informative in nature, not investment advice.

Also Read: Can You Live Only on Crypto? Here are 3 Sources of Income & Challenges You Need to Know About

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This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Crypto trading activities are subject to high risk and volatility, always do your own research and use cold hard cash before investing. All activities of buying andselling Bitcoin and other crypto asset investments are the responsibility of the reader.

Reference:

• pwc. 3rd Annual Global Crypto Hedge Fund Report 2021. Accessed on November 5, 2025