Novogratz Pivots To Hedge Fund As Bitcoin Momentum Stalls: FT

The move marks a strategic return to active management for Novogratz, who originally founded the firm nine years ago with a hedge fund model before pivoting to investment banking and asset management.

Shifting from beta to alpha

The new vehicle arrives as the crypto sector grapples with a sharp cooling of the momentum that followed the US election cycle. The fund has secured $100mn from family offices, high-net-worth individuals and institutional investors, according to reports in the Financial Times. Galaxy will also provide seed capital for the venture.

Unlike the firm's previous long-only offerings, this fund will bet on both rising and falling prices. The allocation is split between digital assets and traditional equities, with 30% of capital dedicated to tokens such as Bitcoin, Ethereum and Solana. The remaining 70% will target financial services stocks, specifically those Galaxy believes will be "winners or losers" in the face of onchain technological disruption and new regulations.

Macro volatility and the Greenland factor

The timing of the launch reflects a sobering reality for the market. Bitcoin has fallen 28% from its October peak and is currently trading near $90,000, down 5% this week alone. This retreat follows threats from President Donald Trump to impose tariffs on European nations that fail to support his proposed seizure of Greenland.

Joe Armao, who is set to lead the fund, told the Financial Times that the "up only" phase of the current cycle is likely over. This sentiment echoes the broader market caution seen in the BitGo IPO pricing, where investors favored regulated infrastructure over speculative upside. While firms like Strategy continue to absorb supply, Galaxy is betting that the immediate future requires a more surgical approach to generate returns.

Targeting the fintech fallout

Galaxy’s strategy is a direct bet on the obsolescence of legacy financial infrastructure. Armao highlighted massive dislocations in the payments sector, noting that firms like Fiserv saw their stock prices drop 50% last year. The fund intends to short incumbents that are failing to adapt to digital asset rules, such as those proposed in the revived Senate Agriculture bill, or are being hollowed out by the integration of AI.

The launch follows a period of significant growth for Galaxy, which reported profits of $505mn for the quarter ending 30 Sep 2025. By managing $17bn in assets, the firm is utilizing its institutional scale to move beyond simple token exposure. This pivot toward active "picking" reflects the same maturity being argued for at the World Economic Forum, where Brian Armstrong recently clashed with central bankers over the future of the "Bitcoin standard."