Galaxy hedge fund targets $100 million long short crypto strategy amid market reset

In a sign of sustained institutional interest in digital assets, Galaxy hedge fund plans are moving ahead even as markets digest a sharp crypto market pullback.

Galaxy launches new $100 million crypto-focused vehicle

Galaxy, the digital asset group founded by billionaire investor Mike Novogratz, is rolling out a new $100 million hedge fund that will trade both cryptocurrencies and related equities. The strategy, reported by the Financial Times, is scheduled to launch in the first quarter of this year as crypto markets adjust after a recent sell-off.

The fund is designed to bet on both rising and falling prices across a range of instruments. This long/short structure offers more flexibility than traditional long-only crypto products, which can struggle during sharp downturns. Moreover, it aligns with growing demand from sophisticated investors for hedge-style approaches in digital assets investing.

According to the report, the hedge fund will be managed within Galaxy‘s broader asset management platform, which today oversees about $17 billion in digital assets. That said, the new strategy marks a more targeted push into public markets trading tied to blockchain-related themes.

Portfolio mix: digital tokens and financial stocks

The new vehicle will follow a hybrid allocation model. Up to 30% of the portfolio will be invested directly in crypto tokens, while the remaining capital will be deployed into financial services stocks that Galaxy sees as exposed to crypto technology, regulation and structural market shifts.

This blended approach aims to capture both pure-play token upside and equity market opportunities created by blockchain adoption. Moreover, it gives portfolio managers a broader toolkit to express views on how regulation, market structure and macro events may impact listed firms, from exchanges to payment processors.

The fund has already raised the full $100 million target from family offices, wealthy individuals and several larger institutions, according to people familiar with the matter. However, additional commitments could still be accepted before the official launch date, depending on investor demand and capacity considerations.

Galaxy will also contribute its own capital as a seed investment, although the firm has not disclosed the exact amount. That said, a meaningful internal allocation would help align incentives between the manager and outside investors seeking diversified financial stocks exposure.

Launching into a volatile crypto backdrop

The hedge fund is arriving during a softer phase for digital asset prices. Bitcoin (BTC) has dropped about 28% from its peak in October and is currently trading near $90,000. Bitcoin is also down around 5% this week, reflecting renewed volatility across crypto markets.

The latest move followed an uptick in global trade concerns after former US president Donald Trump threatened tariffs linked to disputes involving Greenland. Moreover, broader risk sentiment has wobbled, adding pressure to speculative assets even as traditional markets remain relatively stable.

Despite the turbulence, Galaxy executives say the environment still supports active strategies. A structure that can go long and short may be particularly attractive to investors wary of directional exposure yet still interested in investing in cryptocurrencies and digital assets with tighter risk controls.

Leadership and market outlook

Joe Armao, who will lead the fund, argued that the market may be leaving its easy growth phase after several strong years for crypto. However, he remains constructive on major tokens including Bitcoin, Ether and Solana, which he sees as core holdings for institutional portfolios over the medium term.

Armao said Bitcoin remains important in a world where interest rates could decline while traditional markets stay broadly stable. Moreover, he suggested that a disciplined long/short framework can better navigate shifts in liquidity, regulation and macro policy than passive exposure alone.

In the middle of this evolving landscape, the new galaxy hedge fund will seek to exploit both winners and losers across the digital asset ecosystem. The mandate includes crypto firms, banks, payment companies and software groups that are either benefiting from, or being disrupted by, blockchain and artificial intelligence trends.

Galaxy’s broader expansion and tokenized credit push

Novogratz founded Galaxy nine years ago, initially envisioning it as a pure hedge fund. He later shifted the strategy in response to market conditions, building a diversified platform spanning crypto investment banking and asset management. The firm reported $505 million in profit in the third quarter of 2025, underscoring the scale of its operations.

Alongside the new hedge vehicle, Galaxy is also pushing deeper into onchain capital markets. Institutional credit is moving onchain, and the firm recently closed the initial issuance of its debut tokenized CLO at $75M, creating what it describes as a new model for institutional participation in private credit.

The transaction was anchored by an approximately $50M allocation from Grove Finance, highlighting growing interest from professional allocators in structured credit delivered via blockchain rails. Moreover, this effort complements Galaxy’s push into tokenized clo issuance, positioning the firm at the intersection of traditional finance and decentralized infrastructure.

Why the new hedge fund matters for institutional crypto adoption

Galaxy’s latest move reinforces the view that large investors still see opportunity in crypto, even during material drawdowns. A hedge strategy that can trade in both directions may appeal to allocators seeking family office allocations and other institutional mandates that demand more sophisticated risk management.

For the wider market, the launch signals that professional money continues to develop more nuanced approaches to investing in digital assets. Moreover, if the fund performs well through volatile conditions, it could strengthen the case for broader institutional crypto adoption and support the maturation of the asset class.

In summary, Galaxy is using the current market reset to introduce a more flexible, equity-linked crypto hedge fund while advancing its onchain credit initiatives, underlining how major players are positioning for the next phase of digital finance.