Cryptocurrency group Galaxy, owned by American billionaire Mike Novogratz, plans to launch a $100 million hedge fund aimed at profiting from the recent sharp downturn in the digital asset sector. Galaxy, which currently manages $17 billion in digital assets, stated that the new fund will launch in the first quarter of this year and will be able to generate profits through both long (bullish) and short (bearish) trading strategies. The fund will invest up to 30% of its assets in crypto tokens, with the remaining capital allocated to financial services stocks that the firm believes will be impacted by changes in digital asset technology and related regulations. According to people familiar with the matter, the fund has already secured $100 million in investment commitments from family offices, high-net-worth individuals, and some large institutions, with the possibility of a larger final size at launch. Galaxy said it will provide seed funding for the fund but did not disclose the specific amount. The launch of this fund comes as the price of Bitcoin, the world's largest cryptocurrency, has fallen 28% since its peak last October and is now trading significantly below its level when Donald Trump took office as U.S. President in January last year. Trump had pledged to make the U.S. the "global crypto capital." This week, Bitcoin's price has fallen 5%, influenced by Trump's threat to impose tariffs on European countries that do not support his bid to acquire Greenland, and is currently trading around $90,000. "The 'up-only' phase of this cycle may be coming to an end," said Joe Armao, the fund's lead, although he added that he remains bullish on Bitcoin and other major cryptocurrencies like ETH and Solana. "Assuming the stock market and gold market remain stable, and against the backdrop of further interest rate cuts by the Fed, Bitcoin's position this year cannot be ignored," he said. Nine years ago, Novogratz founded Galaxy, which is involved in cryptocurrency investment banking and asset management. The company initially planned to build itself as a hedge fund but later adjusted its direction due to changing market conditions, stating at the time that "emotionally, that didn't feel right." In the third quarter of 2025, Galaxy Digital reported a profit of $505 million. Joe Armao stated that the fund can profit by identifying "winning companies and losing companies," noting that "in the financial services sector, you can structure trades around disruptive forces, winner themes, and loser themes." Last year, several cryptocurrency-related companies, including stablecoin issuer Circle and crypto exchange Gemini, completed public listings, while hundreds of so-called "digital asset treasury companies" began trading globally. Joe Armao also mentioned that banks, payment companies, financial software firms, and other financial services groups could be impacted by digital asset technology, regulatory changes, and artificial intelligence (AI). "Some large payment companies like Fiserv saw their stock price fall 50% last year; some data analytics companies and rating agencies saw their stock plunge 30% in a single quarter due to market concerns about AI. The entire industry is undergoing significant transformation, which is already reflected in stock price movements," said Joe Armao.
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