Mike Novogratz’s Galaxy to Launch $100M Crypto Hedge Fund as Bitcoin Tumbles

Crypto entrepreneur and billionaire Mike Novogratz's firm Galaxy is launching a $100 million hedge fund in the first quarter of this year that will take both long and short positions, as Bitcoin tumbles from its October peak and trade tensions rattle crypto markets.

The fund will invest up to 30% of its assets in crypto tokens, and the remainder in financial services stocks that Galaxy believes will be affected by changes in digital asset technologies and laws, according to a Financial Times report.

The digital assets infrastructure company has received $100 million in investment from family offices, high-net-worth investors, and some larger institutions, the FT reported, though it may launch with more commitments.

Decrypt has reached out to Galaxy for further comment on the seed investment amount.

Paul Howard, senior director at crypto trading firm Wincent, told Decrypt the fund’s mix of tokens and financial services stocks reflects where alpha is emerging, with returns driven by “bringing financial services on-chain and digital assets into traditional businesses.

He added that backing “a smaller handful of crypto tokens with demonstrable success and partnerships,” many tied to real-world use cases like stablecoins or tokenized assets, offers investors a more prudent path than a scattershot approach.

The hedge fund points to a strategic pivot for Galaxy as volatility returns to digital asset markets.

Bitcoin is currently trading around $88,375, down 3.1% on the day and 7.1% over the past week, according to CoinGecko data.

Crypto market wavers

Fund head Joe Armao told the FT that the "'up only' phase of this cycle is potentially coming to an end," though he remains bullish on Bitcoin and major cryptos like Ethereum (ETH) and Solana (SOL).

"Bitcoin can't be ignored this year in a backdrop of further [Federal Reserve interest rate] cuts, assuming equity markets and gold stay healthy," he said.

Bitcoin dropped from $95,000 on Friday after Trump threatened 10% tariffs on eight European countries opposing U.S. control of Greenland, with measures set to take effect on February 1 and escalate to 25% by June 1.

Europe moved quickly to signal retaliation, with the European Parliament now considering suspending approval of the U.S.-EU trade deal agreed in July.

On prediction market Myriad, owned by Decrypt's parent company Dastan, sentiment is turning bearish, with users now placing a 70% chance on Bitcoin's next move taking it to $100,000 rather than $69,000—down from highs of 84% earlier in the week.

Novogratz tweeted Tuesday that Bitcoin's current price is "disappointing as it is still being met with selling," adding that it has to reclaim $100,000 to $103,000 to regain its upward trend. "I think it will in time," he added. Last July, he argued that Bitcoin could hit $150,000 in 2025, a prediction that failed to come to pass as the cryptocurrency peaked at $126,080 in October.

QCP Capital noted in its latest report that Bitcoin "is trading like a high-beta risk asset, highly sensitive to rates, geopolitics, and cross-market volatility," adding that "rather than behaving as a hedge," crypto is likely to stay “reactive rather than directional" until clearer policy signals emerge.

Against this backdrop, corporate Bitcoin buyers continue accumulating as Michael Saylor’s Strategy notched one of its largest purchases in nearly a year on Tuesday, buying 22,300 Bitcoin for $2.1 billion despite the asset's price wavering.

Armao said Galaxy's fund can profit from finding "winning and losing companies," noting "you can play disrupters, winning and losing themes across financial services."