According to Bloomberg, crypto hedge funds are facing a particularly challenging year in 2025, recording the worst performance since the industry-wide downturn in 2022. As of the end of November, trend-following (directional) trading strategies declined by approximately 2.5%, while fundamental analysis-based and altcoin-focused strategies plummeted up to 23%. Only market-neutral (market-neutral) funds reported gains, with an increase of about 14.4%.
Bloomberg states that institutional capital flowing into crypto through ETFs and structured products has significantly narrowed traditional arbitrage opportunities. In this context, many funds have been forced to reduce their exposure to altcoins and shift towards DeFi, where structural opportunities still exist. After years on the fringes of the market, crypto hedge funds enter 2025 with hopes of breaking through thanks to new regulations, support from the White House, and large institutional flows, but the reality reveals the harshness of the crypto market, even for professional investors built to exploit volatility.
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