A growing share of global hedge funds are gaining exposure to digital assets, with 55% of funds now invested in crypto, up from 47% last year, according to a new report by the Alternative Investment Management Association (AIMA) and PwC.

The survey – covering 122 hedge fund managers representing $982bn in assets — found that, on average, funds allocate 7% of their portfolios to crypto-related assets. However, most maintain relatively modest exposure, with more than half investing less than 2% of total assets in the sector.

The rise in hedge fund participation comes amid renewed optimism in the digital asset market, spurred by supportive regulatory signals from the US government and record-breaking cryptocurrency prices in 2025. Bitcoin’s rally – underpinned by the Trump administration’s push for crypto-friendly regulation – has strengthened institutional confidence in the sector.

Among hedge funds with crypto exposure, two-thirds (67%) are investing primarily via derivatives, enabling them to take positions on price movements without directly holding digital tokens. However, the report also warned that these instruments introduce market and leverage risks, referencing an October “flash crash” that exposed structural weaknesses in crypto market infrastructure.

The report suggests continued growth ahead, with funds already in crypto planning to increase exposure over the next 12 months, signalling confidence that regulatory clarity will support deeper institutional adoption.