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Definition: crypto hedge fund


A hedge fund that invests in cryptocurrencies. Like regular hedge funds, crypto hedge funds not only buy and sell cryptos, but they also invest in crypto derivatives and futures, as well as venture capital and private equity for blockchain startups. Many of these investment instruments are relatively new to the world just like the crypto industry itself, which barely made a dent until the mid-2010s.

Minimums Are Required
Although Grayscale has several cryptocurrency funds that people can purchase in any amount through their stock broker, crypto hedge funds generally require a minimum investment of $100,000 to $1M.

Exclusive and Non-Exclusive
A crypto fund may invest exclusively in crypto assets, or it may make cryptocurrencies part of its investment strategy along with traditional instruments in stocks, bonds, etc. Polychain Capital, Pantera Capital and Galaxy Digital Assets are examples of funds devoted to the crypto space.

A Long Way to Go
With more than a hundred crypto hedge funds in existence, most of which were launched after 2015, the amount of investment in crypto funds is minuscule compared to regular hedge funds (roughly $100 billion compared to $3 trillion as of 2022). However, participation is increasing every year. See high-frequency crypto trading and crypto glossary.