Crypto-focused hedge funds have outperformed the broader hedge fund industry's 10% growth, achieving strong returns of 46% in November and 76% YTD, with Brevan Howard Asset Management and Galaxy Digital among the biggest winners, according to a report by the Financial Times citing data from Hedge Fund Research.

Brevan Howard’s crypto fund rose 33% in November and 51% for the year, while Galaxy’s strategy surged 43% and 90%, respectively. Galaxy also doubled its assets under management to $4.8bn, partly by acquiring assets from bankrupt crypto firms.

Bitcoin’s 130% rise this year to around $100,000 added $1.8tn to the market value of crypto tokens, now totalling $3.5tn, per the FT Wiltshire Digital Assets Dashboard. This rally, driven by Donald Trump’s election victory, renewed optimism for a more crypto-friendly regulatory environment compared to the Biden administration’s cautious stance.

The crypto market’s rebound marks a dramatic turnaround from the 2022 downturn, when the collapse of Sam Bankman-Fried’s FTX exchange pushed bitcoin to $15,500. Galaxy Digital, for instance, reported a $1bn loss during that crisis.

Momentum returned in January 2024 when the US Securities and Exchange Commission approved 11 bitcoin exchange-traded funds, opening new investment opportunities. BlackRock, the world’s largest asset manager, has since endorsed bitcoin’s inclusion in multi-asset portfolios.

NextGen Digital Venture, a $120m crypto equity fund, gained 330% since its March 2023 launch, benefiting from investments in bitcoin ETFs, Coinbase, and MicroStrategy, which rose 60% and 400%, respectively.

Macro hedge funds also increased exposure to digital assets. MP Alpha Capital’s $20m global macro fund gained over 30% this year, driven by investments in bitcoin, ether, and bitcoin miners.