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Majority of cryptocurrency hedge funds will exit the market

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Galaxy Digital founder and CEO Mike Novogratz is not very optimistic about the future of crypto funds. Instead, he is predicting a difficult path for cryptocurrency hedge funds.

According to Novogratz, not all funds that offer cryptocurrency exposure will survive. He points out that two-thirds of existing hedge funds invested in the cryptocurrency sector will fail.

66 % of crypto hedge funds will exit the market

“There are literally 1,900 cryptocurrency hedge funds. My guess is that two-thirds will go under,” he pointed out.

As highlighted, this will occur due to the continued bear market of BTC and cryptocurrencies in general.

He gave his opinion during the Piper Sandler Global Exchange and Brokerage Conference. At the time, he explained that of the estimated 1,900 cryptocurrency hedge funds, 66% will go bankrupt or go out of business.

“The volume will go down. So hedge funds will have to restructure and most will not survive,” he said.

Novogratz explained that the potential collapse of hedge funds will also bear the macro-economic impact. That is, they will also be affected by the withdrawal of economic stimulus by the US Federal Reserve.

In this sense, as there is less interest in cryptocurrencies and more economic pressure, funds will be the first to fall.


The collapse of TerraUSD (UST) and Terra (LUNA) last month applied additional selling pressure to digital assets.

Regarding tokens, Mike Novogratz explained that the Terra project was not strong enough. Furthermore, he highlighted that stablecoin UST, like LUNA, lacked the strength to deal with the effects of a bear market.

“It was not strong enough to deal with the headwinds of BTC prices falling,” he stated.

Finally, Novogratz pointed out that Do Kwon, the founder of Terra, was charismatic but very impulsive and with little knowledge of macroeconomics.

The CEO also said that Galaxy Digital will continue to hire despite continued bear market in the market.

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All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

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