1inch Investment Fund Rotates WBTC Profits into Native Token as Strategic Rebalancing Continues

The 1inch Investment Fund has initiated a capital reallocation—this time relocating from Bitcoin-backed assets into 1INCH tokens.

When it comes to what this might mean, there seem to be two potentially significant takeaways:

1. The fund might believe 1INCH is undervalued.

2. If the fund otherwise believes in the value of WBTC, this capital reallocation could be interpreted as a transition to a careful profit-taking phase.

Data from the blockchain shows that the 1inch Investment Fund recently sold off 70.76 WBTC, which is worth about $6.68 million. And they sold it at an average price of around $94,346. And they made a profit of around $421,000. That is a 2.92% return on the Bitcoin position that they had. After the sale, they still have 55.39 WBTC on the books, which is worth about $5.15 million, again based on recent market prices.

The profit rotation continued after the liquidation of WBTC. Not long afterward, the fund moved $1.05 million of the freshly minted USDC into purchasing around 5.23 million 1INCH tokens. The average price for this buy-in, this accumulation phase, works out to around $0.199 per token. This speaks to a perceived value in the 1INCH token range at these levels.

The 1inch Investment Fund has previously made well-timed entries into its ecosystem token, such as a recent trade that brought it into the 1INCH market at $0.245 and saw it exit at $0.534. That trade alone realized an eye-popping 118% gain, numbers that are rarely seen in traditional equity markets. The value of the 1INCH token is determined primarily by how many users are routing their trades through the 1inch decentralized exchange or through its aggregating smart contract. When the 1inch protocol is used, it goes without saying that it tends not to be seen as a healthy sign for the value of its token. User numbers generally skyrocketed in the first quarter of 2022, leading to particularly strong performance from the 1INCH token.

These sorts of strategic rebalancing decisions are often taken as signals to the wider market. And because the fund is managed by a team that knows the 1inch protocol and its long-term roadmap inside out, when they make moves—like re-entering at $0.199 for 1INCH—they can also create ripples in investor sentiment and the token’s price. This recent re-entry might reflect an internal belief that the token is currently undervalued or on the verge of some significant upcoming change, whether of a technical or fundamental nature.

The fund has a history of ducking emotional or reactive trades, opting instead for data-driven “behavioral finance” decisions that plumb the depths of the fund’s analytics systems. They look at profitability thresholds, liquidity analysis, and other deeper, darker trends. The 2.92% gain we took from the WBTC sale looks modest on the surface; however, in this market, that’s probably a reflection of us being risk-aware and more disciplined than a lot of other folks in this game.

Rotating assets from blue-chip investments like WBTC into altcoins is risky, but it lets institutional investors try for huge gains. In this light, we can see the 1 inch Investment Fund’s recent move as a thumbs-up for 1INCH and its future. That said, if you watch the token closely, its next price action may be significant. Why? Because the fund’s pattern is to come in as our price is hitting a technical low and leave while we’re trading at or near a technical high.

Moreover, the fund is left with WBTC worth $5.15 million. It could choose to sell that off in small tranches and use the proceeds to purchase 1INCH tokens. The good news here is that, unlike with the WBTC, those sales wouldn’t create any significant price impact or liquidity problems. The fund could thus serve as a reliable straight-up buyer of 1INCH tokens, while at the same time reducing its risk profile because, hey, 1INCH is not Bitcoin.

These days, when so much is happening with blockchain technology, it seems the only thing we can count on is change. Those in the crypto space are well aware of the value of protocols and the on-chain “dynamics” they create. Meanwhile, blockchain projects keep appearing, tend to do most of their business in and around the digital world, and usually have means in the form of cryptocurrencies (or tokens) that allow them to operate and interact with the virtual space. In this situation, there are few simply reported economic metrics that can be seen as reliable indicators. However, if any can possibly be, the 1inch dashboard appears well-suited for the task.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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