Galaxy Digital, the digital asset investment firm led by Mike Novogratz, has secured $100 million to launch a new hedge fund that blends direct cryptocurrency exposure with investments in traditional financial services stocks. The fund is expected to begin operations in the first quarter of 2026, according to reporting from the Financial Times.
Novogratz’s Galaxy to launch $100mn crypto hedge fund https://t.co/NhadvA7my8
— Financial Times (@FT) January 21, 2026
The strategy reflects Galaxy’s view that digital assets and legacy finance now share overlapping risk and opportunity. Rather than pursue a pure crypto mandate, the fund will allocate roughly 30% of capital to crypto tokens such as Bitcoin and Ethereum, while directing the remaining 70% toward publicly listed financial services companies influenced by blockchain adoption, regulatory change, and advances in artificial intelligence.
A hybrid strategy built for uncertain markets
The fund will take both long and short positions, with the aim of generating returns in rising and falling market conditions, the Financial Times reported. Galaxy has secured commitments from family offices, high-net-worth individuals, and select institutional investors, and the firm has confirmed it will seed the fund with its own capital, though it has not disclosed the amount.
Joe Armao, who will manage the fund, told the newspaper that the current environment favors flexible strategies over directional bets. He said the market has entered a phase where structural shifts matter more than momentum alone.
In separate comments cited in earlier reporting, Armao said “the ‘up only’ phase of this cycle might be ending,” while adding that Bitcoin “cannot be overlooked this year with more Federal Reserve interest rate cuts, as long as equity markets and gold perform well.”
Positioning crypto within financial services disruption
Galaxy’s decision to limit direct crypto exposure to 30% reflects both risk management considerations and regulatory realities. The remaining capital will target banks, payment processors, asset managers, and financial technology firms that face pressure from digital asset infrastructure, shifting compliance standards, and automation.
Regulatory clarity also plays a role. Recent developments in the United States and Europe have reduced legal uncertainty for financial firms that engage with crypto. The European Union’s MiCA framework and updated regulatory guidance in the United States under President Donald Trump have coincided with greater participation from Wall Street institutions.
Galaxy’s broader expansion beyond asset management
The hedge fund launch follows a period of strong financial performance for Galaxy. The company reported $505 million in profit during the third quarter of 2025, driven by asset management, trading, and investment banking activity. Galaxy now oversees approximately $17 billion in assets, according to its website.
Beyond investment products, Galaxy has expanded its infrastructure footprint. In late 2025, the firm secured approval to add 830 megawatts of power capacity to its Helios data center campus in West Texas after completing a large-load interconnection study with ERCOT. The company has also pursued diversification after Bitcoin’s fourth halving in April 2024.
In October 2025, Galaxy announced a $460 million strategic investment to convert part of its Texas mining facility into an artificial intelligence data center hub for CoreWeave. More recently, the firm closed a $75 million tokenized collateralized loan obligation on the Avalanche blockchain to finance consumer loans through Arch Lending.
Timing the fund amid crypto market pressure
Galaxy’s hedge fund plans emerge during a period of renewed stress in crypto markets. Bitcoin has traded well below its recent highs, with reports noting a decline of roughly 28% from its all-time peak last October. The asset has also faced short-term pressure amid broader macro uncertainty tied to tariffs and global trade tensions.
Despite those conditions, Galaxy’s leadership appears focused on longer-term positioning rather than short-term price recovery. Armao has emphasized the need to analyze both potential winners and losers within financial services as digital assets, regulation, and artificial intelligence reshape the sector.
“There are major payments firms like Fiserv that dropped by 50% last year… data analytics and ratings companies have seen a 30% decline in a quarter due to fears around AI,” he said in comments cited by earlier reports. “The entire sector is experiencing significant changes, which is reflected in stock prices.”
A return to Galaxy’s original roots
Founded in 2018, Galaxy was initially conceived as a hedge fund before Novogratz shifted its focus toward crypto investment banking and asset management. The new fund marks a partial return to that original vision, though with a structure shaped by lessons from past cycles.
Shares of Galaxy Digital fell more than 6% during a broader market sell-off earlier this week, which highlights the volatility that continues to define both crypto and fintech equities.
For Galaxy, the new hedge fund represents a bet that disciplined exposure to disruption, rather than pure crypto risk, offers the best path forward in a market where digital assets and traditional finance increasingly intersect.
Anastasiia G
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