Galaxy, a leading, publicly traded financial services and investment management firm under the leadership of US billionaire Michael Novogratz, intends to implement a revenue-driven strategy by establishing a $100 million hedge fund to solidify its position in the digital asset market.
Sources familiar with the plan say the fund is expected to be operational in the first quarter of this year. Once launched, it will be designed to generate profits in both rising and falling markets.
To demonstrate its commitment to exploring the crypto industry, Galaxy asserted that it will allocate around 30% of its total assets to crypto tokens. In comparison, the remaining 70% will be invested in the stocks of financial services firms that are vulnerable to shifts in digital asset technologies and regulations.
Sources with knowledge of the situation who wished to remain anonymous revealed that Galaxy has already raised $100 million in funding from wealthy investors, family offices, and some significant institutions. However, they pointed out the likelihood that the company would start this strategic move with much greater commitments.
Concerning Galaxy’s plan for a new hedge fund, reports noted that the company stated it will provide initial capital for the fund but did not specify the precise amount.
Notably, this move was adopted just after Bitcoin’s price hit a 28% low since its all-time high last October. This level has ignited tension in the crypto market, further raising concerns among investors after the current price dropped significantly from the level reached when US President Donald Trump assumed office, vowing to establish the United States as the global hub for digital asset innovation and regulation.
To further illustrate the growing uncertainty in the crypto market, recent reports highlighted that Bitcoin’s price drastically declined by approximately 5% this week. As of now, the cryptocurrency is trading at around $89,207.26, down 1.92% over the last 24 hours. This recent drop is projected to result from Trump’s announcement that he will impose stiff tariffs on eight European countries that refuse to support his plan to acquire Greenland in its entirety.
In the meantime, several reports demonstrated heightened interest in Galaxy’s project and reached out to Joe Armao, who leads the fund, for more clarity on the hedge fund plan. Responding to their request for comment, Armao said, “the ‘up only’ phase of this cycle might be ending,” but expressed optimism about the fate of Bitcoin and other leading cryptocurrencies such as ETH and Solana.
Based on his argument, Bitcoin “cannot be overlooked this year with more Federal Reserve interest rate cuts, as long as equity markets and gold perform well.”
Founded in 2018, Galaxy was originally intended to operate as a hedge fund. However, due to changing market conditions, Michael Novogratz shifted the company’s focus to crypto investment banking and asset management. Despite this change, Novogratz admitted he felt uneasy about the decision.
Even with these challenges, he expressed pride in the company’s performance, noting that financial reports showed Galaxy earned around $505 million in profit in the third quarter of last year.
After the report, Armao said the new fund is a strong idea but emphasized that its success depends on analyzing both winning and losing firms. He added that the strategy should focus on disruptors and emerging trends in financial services.
Several major crypto firms, including Circle, the issuer of the regulated, dollar-backed stablecoin USDC, and cryptocurrency exchange Gemini, secured initial public offerings (IPOs) last year. At the same time, hundreds of digital asset treasury companies were globally listed.
Following this success, Armao issued a warning that some banks, payment firms, financial software providers, and other financial service groups are at risk of significant disruption from digital asset technologies, regulations, and the influence of AI.
He explained that, “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. The entire sector is experiencing significant changes, which is reflected in stock prices.”
Sharpen your strategy with mentorship + daily ideas - 30 days free access to our trading program
