As the cryptocurrency market surges to new heights, major investment firms like Brevan Howard and Galaxy Digital are reaping the rewards. November 2024 marked a turning point for crypto-focused hedge funds, with impressive gains driven by Bitcoin’s record-breaking rally and renewed investor confidence following Donald Trump’s election victory.
Crypto hedge funds posted a remarkable 46% return in November alone, pushing year-to-date performance to 76%, far exceeding the broader hedge fund industry’s average return of 10%. This unprecedented growth highlights the increasing role digital assets play in the portfolios of some of the world’s most influential investment firms.
Cryptocurrencies have had a rollercoaster year, but the final months of 2024 have painted a bullish picture. With Bitcoin surpassing $100,000 and the overall crypto market cap climbing past $3.5 trillion, hedge funds specializing in digital assets are outperforming traditional markets.
Among the biggest winners are Brevan Howard and Galaxy Digital, two firms that have steadily increased their exposure to cryptocurrencies over the past few years. Their success underscores the growing institutional appetite for digital assets, once considered fringe investments.
Brevan Howard Asset Management, known for its prowess in macro trading, expanded into the crypto market in 2021. By November 2024, the firm’s dedicated crypto fund had grown by 33%, contributing to an impressive 51% gain for the year. This growth is part of Brevan Howard’s broader strategy to diversify into emerging asset classes and capture the explosive potential of blockchain technologies.
The firm’s overall assets under management (AUM) now stand at $35 billion, with crypto investments making up a significant portion. Brevan Howard’s approach combines active trading strategies with long-term holdings, allowing the firm to capitalize on short-term price swings while maintaining exposure to the broader upward trend in digital assets.
Galaxy Digital, the brainchild of billionaire investor Mike Novogratz, has been one of the most vocal proponents of cryptocurrency investment. The firm recorded a 43% gain in November, bringing its year-to-date performance to an astounding 90%.
Galaxy Digital’s AUM more than doubled in 2024, now standing at $4.8 billion. This surge reflects not only the overall market rally but also the firm’s aggressive expansion into new crypto products and services, including staking, decentralized finance (DeFi), and digital asset infrastructure.
Novogratz has consistently positioned Galaxy Digital as a bridge between traditional finance and the evolving crypto landscape. His firm’s success mirrors the increasing confidence institutional investors have in the long-term viability of digital assets.
Driving Forces Behind the Boom
Several factors have contributed to the recent surge in cryptocurrency markets and the outperformance of crypto hedge funds:
1. Regulatory Clarity and ETF Approvals:
The U.S. Securities and Exchange Commission’s (SEC) approval of 11 spot Bitcoin exchange-traded funds (ETFs) in January 2024 marked a watershed moment for the industry. These ETFs opened the door for greater institutional participation, driving inflows into the crypto market and providing a new avenue for retail investors to gain exposure.
2. Trump’s Election and Policy Expectations:
Donald Trump’s return to the White House has been met with optimism from the crypto community. His administration is expected to pursue more favorable regulatory policies, fostering innovation and investment in the sector. This political shift has reignited investor confidence, contributing to the market’s upward momentum.
3. Market Momentum and FOMO (Fear of Missing Out):
Bitcoin’s price crossing the $100,000 threshold has sparked widespread excitement, attracting retail and institutional investors looking to capitalize on the rally. As with previous bull runs, rising prices have created a feedback loop, driving further investment and boosting market sentiment.
While traditional hedge funds delivered modest gains in 2024, crypto-focused funds have consistently outperformed. The 76% average return for crypto hedge funds dwarfs the 10% return posted by the broader hedge fund industry, reflecting the unique growth potential of digital assets.
This divergence underscores the appeal of cryptocurrencies as a high-risk, high-reward asset class. For firms willing to navigate the volatility, the returns can be substantial.
Despite the stellar performance, industry experts caution that the crypto market’s volatility remains a double-edged sword. While the potential for further gains is significant, investors must be prepared for sharp corrections and unpredictable price swings.
However, the long-term outlook for crypto hedge funds appears bright. As regulatory frameworks continue to evolve and more institutional investors enter the market, digital assets are likely to become a permanent fixture in diversified portfolios.
The success of Brevan Howard and Galaxy Digital highlights the growing maturity of the cryptocurrency market. What was once the domain of retail investors and tech enthusiasts is now attracting some of the largest and most sophisticated financial institutions in the world.
As the market continues to expand, the lines between traditional finance and digital assets will blur, creating new opportunities for innovation and growth. Firms like Brevan Howard and Galaxy Digital are at the forefront of this transformation, shaping the future of finance in the process.
The recent boom in the cryptocurrency market has propelled hedge funds to record-breaking returns, with Brevan Howard and Galaxy Digital standing out as clear beneficiaries. Fueled by favorable political shifts, regulatory milestones, and rising asset prices, these firms have positioned themselves at the cutting edge of digital asset investment.
As the crypto market matures, the role of hedge funds in shaping its trajectory will only grow, offering investors new avenues for growth in an increasingly digital world. For now, the message is clear—crypto is no longer a fringe asset; it’s a critical component of the modern financial landscape.