A comprehensive survey of hedge funds has revealed a significant shift in investment strategy: 55 % of the firms now hold cryptocurrency-related assets, up from 47 % a year ago. Many of these funds allocate roughly 7 % of their total assets to crypto, though the majority maintain allocations below 2 %.
Driving this shift are a combination of elevated crypto prices in 2025, increasing regulatory clarity in the U.S., and the broader institutionalisation of digital assets. The survey, covering 122 fund managers overseeing nearly $1 trillion in assets, also found that 67 % of the funds with crypto exposure use derivatives rather than direct holdings.
The implications are multifold: first, increased institutional participation means the crypto-market is becoming more intertwined with traditional finance, raising questions of liquidity, correlation and systemic risk. Second, derivative use by funds suggests leverage remains embedded — a factor that might exacerbate volatility in the event of adverse shocks.
While this institutional momentum represents an important milestone for crypto’s maturity, it also brings fresh considerations for investors: managing counterparty risk, avoiding crowding, and discerning when flow-driven rallies may reverse.
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