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Galaxy Digital is launching a $100 million hedge fund to profit from crypto volatility, signaling institutional confidence despite market uncertainty.
Jan 27, 2026
Amid intense volatility in the crypto markets, one of the industry’s leading institutional players makes a bold bet: Galaxy Digital, the crypto investment company headed by billionaire Michael Novogratz, is establishing a $100 million hedge fund to cash in on the ups and downs of digital asset prices and the evolving landscape of financial technology equities. The decision is a sharp contrast to a cautious stance by many traditional finance firms and some crypto investors, who have scaled back exposure during periods of heightened volatility and market pullbacks. Galaxy’s strategy reportedly mixes investments in major cryptocurrencies with investments in financial services companies that are well-poised to benefit from blockchain adoption and regulatory change — a hybrid thesis that aims for “the best of both worlds.”
The proposed new hedge fund is slated to debut in the first quarter of 2026 as the firm raised around $100 million from family offices, high-net-worth individuals, and select institutional investors. Galaxy itself is also investing in the vehicle with its own capital, but the extent of such internal contribution has not been available to the public. While cryptocurrencies such as Bitcoin and Ethereum tend to be among the most monitored assets in international financial markets, interest in crypto at institutions has ebbed and flowed for the last year. Bitcoin, the biggest digital asset by market valuation, has traded in a diverse range across recent months, down about 28 percent from its October 2025 high, per market data.
The composition of the fund — in fact, one comprising both digital assets and traditional financial stocks — is designed to make this kind of volatility accessible. The fund will invest up to 30% of the portfolio directly in crypto tokens, such as Bitcoin, Ethereum, and Solana. The other 70% or more will be invested in financial services companies whose valuation and models need to be reconfigured as their businesses evolve along with blockchain tech, regulation, and the digital asset space more broadly.
Unlike many crypto investment vehicles that follow passive or long-only portfolios — making money only if prices rise — Galaxy’s hedge fund will employ a long-short strategy. In simple terms, the fund is designed to generate profit either as the markets rally or decline by investing in assets in either direction.
And this reflects an industrial maturation of institutional crypto investing, according to industry analysts, with managers using hedge-fund-like tools to spread their risk and seek alpha. Shorting assets — which means betting that they will lose market value — is seen as one way to manage market swings and volatility. While specific target returns haven’t been revealed, the long-short strategy should benefit from Galaxy’s extensive market footprint and trading knowledge.
The fund is to be controlled by Joe Armao, who is a portfolio manager with experience in digital assets strategies and traditional finance. Armao also told reporters that Galaxy perceives the crypto market entering a new phase one when pure “up only growth” is less assured and more detailed, responsive strategies are necessary to capture value.
Armao remarked in comments to The Financial Times that while the heady rally phases that characterized crypto days gone by may not continue, underlying innovation and the uptake of it in society as it once was all show no signs of slowing down. “The ‘up only’ part of this cycle is perhaps about to reach its limit,” he said, reflecting a growing view among institutional investors that risk management is the key issue at present.
Galaxy’s move to launch the fund in the face of continued market uncertainty is unique but strategic. Central to crypto has been a history of wild price swings, regulatory uncertainty and caution from mainstream investors who still consider the digital assets space speculative or high-risk assets.
Bitcoin’s pullback from late-2025 highs — shooting between $87,000 and $90,000 — is symptomatic of broader pressures to correct markets, such as fears around macroeconomic policy, geopolitical risks and squeezed liquidity. But for Galaxy, such conditions constitute opportunities, not retreat.
Another element of the fund is its focus on stocks in traditional financial services and specifically those that are going to be disrupted or advanced by blockchain and the adoption of digital assets. This includes payment processing, banks, asset managers, fintech companies, and custody service providers that are integrating with a blockchain approach.
The combination of crypto exposure and public equities, according to industry analysts, “allows portfolios to mitigate the full impact of crypto’s volatility and still enable investors to participate in crypto-led growth.”
Founded in 2018 by Michael Novogratz, Galaxy Digital is one of the world’s most prominent and influential crypto-based financial corporations. The company is also involved in investment banking, venture capital and several digital finance assets.
Galaxy’s hedge fund inception comes at a time when the crypto scene is seeking signs of institutional spine.
The $100 million raise itself is interpreted by market watchers as a vote of confidence that digital assets remain viable even if short term volatility continues.
But even with the optimism there are natural risks to the venture. Crypto markets are notoriously volatile and regulation and global regulatory frameworks are constantly changing and broader macroeconomic trends like inflation pressure or geopolitical instability can affect asset valuations throughout the economy, in general.
The broader market will be watching Galaxy Digital just as they plan to set up their new hedge fund. The speculation, of course, changes when cryptos begin to move toward speculation alone and is it a sign that crypto is picking up the momentum, or rather choosing strategy with volatility over only speculation?
