Market Neutrality

Definition ∞ Market neutrality describes an investment strategy designed to yield returns regardless of overall market direction. This approach typically involves taking offsetting long and short positions in related assets, aiming to profit from price discrepancies while minimizing exposure to broader market movements. In cryptocurrency, this might involve strategies like arbitrage or basis trading. The goal is to isolate specific risk factors and generate alpha independently of general market trends.
Context ∞ Discussions around market neutrality often appear in professional trading circles and institutional investment reports concerning digital assets. News sometimes covers these strategies when explaining how sophisticated investors seek to generate consistent returns in volatile crypto markets. Understanding market neutrality helps appreciate advanced trading approaches that aim to mitigate systemic market risk.