Traditional Hedge Funds Deepen Crypto Exposure Despite Market Swings

Quick Breakdown 

• 55% of traditional hedge funds now have crypto exposure, up from 47% last year.
• Most funds maintain small allocations, though 71% plan to expand within the next year.
• Shifting U.S. crypto regulations are a major driver of renewed institutional participation.

 

More than half of traditional hedge funds are now invested in digital assets as institutional interest in crypto continues to gain ground, according to a new industry survey released on Thursday.

Source : AIMA

The report from the Alternative Investment Management Association (AIMA) shows that 55% of hedge funds currently hold some form of crypto exposure in 2025. This marks an increase from 47% in 2024, signaling a gradual shift in sentiment even amid recent price turbulence and regulatory scrutiny.

Growing exposure, but allocation still modest

The survey — which polled 122 hedge fund managers overseeing roughly $982 billion in assets — found that hedge funds dedicate an average of 7% of their portfolios to crypto-related assets. However, most still remain cautious, with the majority allocating less than 2%.

Importantly, 71% of the surveyed funds say they plan to increase their crypto exposure over the next 12 months, reflecting a view that the digital asset market is moving toward greater maturity.

Derivatives dominate entry strategy

Despite rising interest, 67% of hedge funds prefer gaining crypto exposure through derivatives, avoiding direct ownership of digital tokens.

The report cautions that the market’s recent flash crash highlighted structural weaknesses — particularly excessive leverage and the lack of high-grade institutional support for derivatives markets.

Regulatory shifts in the U.S. fuel optimism

Nearly 47% of respondents pointed to changing U.S. regulatory dynamics as a key factor behind renewed confidence in digital assets. This comes after policy developments under the Trump administration and ongoing bipartisan negotiations in the Senate on a comprehensive crypto market structure bill.

Lawmakers have been working to push forward crypto-focused regulation before political activity tied to upcoming elections begins to slow legislative momentum. Meanwhile, the GENIUS Act, which proposes a national framework for stablecoin-based payments, recently entered its second public comment phase — a sign it may be inching closer to implementation.

 

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