Galaxy Launches $100M Crypto Hedge Fund Amid Market Volatility

Key Insights

• Galaxy launched a $100 million hedge fund using long and short positions as crypto volatility increased.
• The strategy capped direct crypto exposure at 30% and favored regulation-linked financial stocks.
• Galaxy expanded tokenization efforts after issuing a $75 million collateralized loan obligation on Avalanche.

Galaxy Digital is prepared to launch a 100-million-dollar hedge fund built for two-way crypto markets. The strategy targeted profits from both rising and falling prices. This happened as volatility returned across major digital assets.

The fund was scheduled to open in the first quarter, according to the Financial Times. The launch mattered because it reflected a broader institutional shift in crypto strategy.

Galaxy framed the move as a response to fading momentum after last year’s rally. The Galaxy crypto hedge fund aimed to combine directional trades with equity exposure tied to digital finance infrastructure.

Galaxy secured commitments totaling $100 million from family offices, high-net-worth investors, and select institutions, the Financial Times said. The firm confirmed it would seed the fund but declined to disclose the amount. Galaxy also left room to scale the strategy with additional capital later.

The fund planned to allocate up to 30% of capital directly to crypto tokens. The remaining allocation targeted traditional equities linked to financial infrastructure and regulatory trends. Galaxy positioned the mix as a hedge against crypto-specific drawdowns.

The equity sleeve focused on financial services firms affected by digital asset regulation, blockchain adoption, and technology shifts.

Galaxy viewed these stocks as indirect beneficiaries of crypto’s integration into mainstream finance. The structure reduced reliance on pure token price appreciation.

This approach followed a sharp market pullback. Bitcoin traded near 90,000 dollars after falling roughly 30% from its October peak, according to CoinMarketCap data. Volatility increased across major tokens during the same period.

Joe Armao, who led the new fund, described the market as entering a different phase. He told the Financial Times the “up-only” portion of the cycle appeared to be ending. The comment underscored Galaxy’s pivot toward long-short strategies.

Armao maintained a constructive view on Ethereum and Solana despite recent weakness. He said selective positioning still offered opportunities within large-cap tokens. The fund planned to express those views tactically rather than directionally.

He also highlighted Bitcoin as relevant under certain macro conditions. Armao said potential U.S. Federal Reserve rate cuts could support Bitcoin if equities and gold remained resilient. The view tied crypto performance closely to broader risk markets.

Beyond crypto-native assets, Galaxy tracked valuation shifts in legacy financial firms. Armao pointed to sell-offs in payments and data companies such as Fiserv. He argued that regulatory pressure and technology shifts reshaped earnings expectations.

Galaxy viewed blockchain adoption and artificial intelligence as factors altering competitive dynamics. The fund aimed to capture mispricings created by these structural shifts. That thesis extended the strategy beyond crypto-only exposure.

The approach mirrored broader institutional behavior. Asset managers increasingly treated crypto as part of a wider financial technology stack. Galaxy positioned its fund to reflect that convergence.

Galaxy’s hedge fund launch followed aggressive positioning in Solana. In September, the firm bought about $306 million worth of SOL tokens. The purchases extended a buying streak exceeding $1.5 billion.

The accumulation suggested long-term conviction despite near-term volatility. Galaxy did not publicly disclose hedging activity around those purchases. The new fund provided a framework to express such views with downside protection.

Solana traded near $128 at the time of reporting, reflecting continued pressure following the broader market pullback. Galaxy’s exposure placed it among the largest institutional holders of the asset. The fund could adjust that exposure dynamically.

Galaxy also advanced its on-chain credit strategy during the same period. The firm completed its first tokenized collateralized loan obligation, Galaxy CLO 2025-1. The deal issued on Avalanche financed about 75 million dollars in loans.

The structure received a 50 million dollar anchor allocation from Grove, part of the Sky ecosystem. Galaxy framed the transaction as a step toward moving private credit on-chain. The CLO supported its crypto lending arm.

The vehicle purchased overcollateralized Bitcoin- and Ether-backed consumer loans originated by Arch Lending. Capacity allowed expansion to $200 million. The bonds were issued and tokenized through INX, while Anchorage Digital Bank handled custody and collateral tracking.

Galaxy’s hedge fund launch and tokenization activity pointed to a more cautious institutional stance. The firm emphasized relative value, hedging, and infrastructure plays over outright directional bets. That shift aligned with weakening momentum across crypto markets.

Investors tracked Bitcoin’s ability to hold above the $90,000 zone. Sustained equity strength and clarity on U.S. rate policy remained key variables. Regulatory developments also shaped positioning in crypto-linked financial stocks.

The Galaxy crypto hedge fund reflected an adjustment rather than a retreat. Galaxy framed the strategy as preparation for a choppier market structure. The next phase depended on whether macro support returned or volatility deepened across digital assets.

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