Galaxy, the digital asset company founded by Mike Novogratz, is gearing up to launch a $100 million hedge fund that will take advantage of both rising and falling crypto prices.

The fund, set to debut in the first quarter, will have a hybrid structure that allows for long and short positions in both digital assets and traditional equities tied to financial infrastructure. This was reported by the Financial Times on Wednesday.

30% of the fund’s capital will be directly allocated to crypto tokens, while the remaining 70% will be invested in financial services stocks that are expected to be impacted by digital asset regulation, blockchain adoption, and technological advancements, according to the report.

The fund has already secured commitments of $100 million from family offices, high-net-worth individuals, and select institutional investors. However, Galaxy may also open the fund to additional capital. The company confirmed to the FT that it will make a seed investment, but did not disclose the amount.

The end of crypto’s “up-only” phase is approaching

Joe Armao, the new fund leader, believes that the market is transitioning into a new phase. In an interview with the outlet, he stated, “The ‘up only’ part of this cycle is potentially coming to an end.” Despite this, Armao remains optimistic about major assets like Ethereum (ETH) and Solana (SOL). He also acknowledges Bitcoin’s (BTC) relevance in a landscape influenced by potential US Federal Reserve rate cuts, as long as equities and gold remain strong.

In addition to crypto-native companies, Galaxy is keeping an eye on traditional players. Armao pointed out sell-offs in payment and data firms such as Fiserv, noting that changing regulations, blockchain adoption, and advancements in artificial intelligence are affecting valuations in the financial services sector.

This development follows a recent downturn in the cryptocurrency market. Bitcoin has dropped by approximately 30% since its peak in October and is currently trading near $90,000.

In September, Galaxy invested around $306 million in Solana, continuing a buying spree that has totaled over $1.5 billion.

Cointelegraph contacted Galaxy for comment but has not yet received a response at the time of publication.

Galaxy Digital Completes First Tokenized CLO on Avalanche for Web 3.0

Last week, Galaxy finalized its initial tokenized collateralized loan obligation (CLO) on Avalanche, marking a significant step towards integrating private credit markets into the blockchain. This deal, known as Galaxy CLO 2025-1, was issued on Avalanche and has financed approximately $75 million in loans so far. The CLO is anchored by a $50 million allocation from Grove, an institutional credit protocol within the Sky ecosystem.

This CLO supports Galaxy’s crypto lending division by purchasing overcollateralized consumer loans backed by Bitcoin and Ether, originated by Arch Lending. It has the potential to expand to $200 million. The bonds were issued and tokenized through INX, with Anchorage Digital Bank handling custody and real-time collateral tracking.

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