A Tougher Crypto Market Is Coming, Galaxy Signals With New Hedge Fund

Source: Coindoo Original Title: A Tougher Crypto Market Is Coming, Galaxy Signals With New Hedge Fund Original Link: Crypto markets may be entering a far less predictable phase, and Galaxy is adjusting its playbook accordingly. Instead of relying on rising prices alone, the firm is preparing a new hedge fund built to operate in both directions of the market - up or down.

The strategy, expected to debut in the first quarter, reflects a growing belief inside Galaxy that digital assets are maturing into a cycle where volatility, dispersion, and relative value matter more than broad rallies.

Key Takeaways

• Galaxy is launching a $100 million hedge fund built for both rising and falling markets
• Only about 30% of capital will go directly into crypto, with the rest targeting financial services equities
• The strategy reflects expectations of higher volatility and fewer “up-only” conditions
• Galaxy remains active in token accumulation despite market pullbacks

A fund designed for uncertainty

The new vehicle is targeting $100 million at launch, capital that has already been committed by family offices, high-net-worth investors, and select institutions. Galaxy itself will also seed the fund, signaling internal conviction, though the size of its contribution has not been made public.

Unlike traditional crypto funds that focus almost entirely on tokens, this strategy blends two worlds. Roughly one-third of the capital will be allocated directly to cryptocurrencies, while the rest will be deployed into publicly traded companies connected to financial infrastructure, payments, data, and regulation-sensitive services.

The idea is to capture shifts caused by blockchain adoption, regulatory change, and technological disruption – even when token prices stall or fall.

Why Galaxy sees the cycle changing

Joe Armao, who will run the fund, has made it clear that the environment is no longer defined by effortless upside. He has pointed to signs that the market’s most aggressive growth phase may be losing momentum, even as long-term confidence in major networks remains intact.

Assets like Ethereum and Solana are still viewed positively, while Bitcoin continues to play a strategic role in portfolios shaped by potential US rate cuts and broader macro stability. The difference now is that price appreciation is no longer assumed – it must be traded.

Looking beyond crypto-native names

Galaxy’s attention is not limited to blockchain projects. Traditional financial companies are increasingly part of the equation. Recent sell-offs in payments and data firms, including names such as Fiserv, have caught the firm’s attention as regulation, distributed ledgers, and artificial intelligence begin to reshape business models across finance.

These shifts create opportunities for both long and short positioning, aligning with the fund’s flexible mandate.

Volatility as an opportunity, not a threat

The timing of the launch is notable. Crypto prices have cooled significantly from recent highs, with Bitcoin trading near $90,000 after a sharp pullback. Rather than stepping away, Galaxy appears to be leaning into the volatility.

That approach is consistent with the firm’s recent activity. Even amid market weakness, Galaxy expanded its exposure to Solana, accumulating more than $1.5 billion worth of the asset over recent months.

Tokenization still a core priority

While trading strategies evolve, Galaxy’s broader vision remains intact. The firm recently completed its first tokenized collateralized loan obligation, Galaxy CLO 2025-1, issued on Avalanche. The structure brings private credit onto blockchain rails, combining on-chain issuance with institutional custody and real-time collateral monitoring.

The deal supports Galaxy’s crypto lending arm and highlights the firm’s belief that capital markets themselves, not just tokens, are moving on-chain.

What this move really signals

Galaxy’s hedge fund launch is less about calling the top and more about acknowledging reality. Crypto is no longer a single-trend market. Price swings, regulatory shifts, and technological change are creating a landscape where adaptability matters more than conviction alone.

For Galaxy, the message is clear: the next phase of crypto rewards firms that can trade complexity, not just optimism.