Hedge Fund Investment in Crypto Surges as Industry Embraces Digital Assets
Global hedge funds are ramping up their exposure to cryptocurrency markets, with more than half now invested in the sector. Interest in digital assets has grown significantly following the U.S. government’s more favorable stance on crypto under President Donald Trump’s administration, according to a report released on Thursday.
The survey, conducted by the Alternative Investment Management Association (AIMA) and PwC during the first half of 2025, found that 55% of hedge funds now hold crypto-related assets, up from 47% a year earlier. On average, funds are allocating around 7% of their total holdings to cryptocurrencies.
Hedge Funds Increase Exposure but Keep Positions Modest
Despite the growing participation, most hedge funds are still keeping their crypto exposure small. Over half of those invested have allocated less than 2% of their assets to digital assets, the report noted.
Bitcoin has led the charge in 2025, hitting a series of record highs amid regulatory clarity and renewed optimism for U.S. crypto policy reform. The Trump administration’s support has boosted both institutional and retail confidence, driving demand for crypto-linked investments.
Regulatory Shift Supports Market Growth
The report described 2025 as a turning point for U.S. crypto regulation, noting that the government may finally be laying the foundation for long-term regulatory stability. However, global regulators continue to warn that the integration of crypto into mainstream finance could pose financial stability risks if oversight fails to keep pace.
Hedge Funds Favor Derivatives for Crypto Exposure
Among hedge funds already invested, 67% are using crypto derivatives to gain exposure. These financial instruments let managers speculate on cryptocurrency price movements without directly holding the underlying assets.
However, the report cautioned that such strategies can carry increased market risk, referencing a flash crash in October that exposed vulnerabilities tied to excessive leverage and the absence of institutional-grade trading infrastructure.
Capital Flows Hit Record Levels
The funds surveyed by AIMA collectively manage about $982 billion in assets, while total global hedge fund capital reached a record $5 trillion in the third quarter of 2025, underscoring strong institutional inflows into the sector.
