Crypto hedge funds are emerging as a potential lifeline for digital asset treasury companies grappling with falling token prices and sharply lower equity valuations, as the buy-and-hold model that fuelled their rise comes under strain, according to a report by Financial News Lindon.
Digital asset treasury companies (DATCOs) raised more than $15bn between January and August last year as bitcoin surged to a record high of $126,000 in October. Firms issued equity to accumulate bitcoin and other cryptocurrencies, betting that rising prices would drive shareholder returns. That strategy has been tested by a renewed crypto downturn, with bitcoin, ether and other major tokens down more than 50% since October.
Share prices across the sector have fallen sharply. Strategy, led by long-time crypto bull Michael Saylor, has seen its stock decline around 66% since October, while ether-focused Bitmine Immersion Technologies is down roughly 70% over the same period, and peers including Twenty One Capital and Sharplink have suffered even steeper losses.
With another prolonged crypto winter a growing concern, treasury companies are increasingly exploring active strategies to generate returns. Allocations to crypto hedge funds and yield-focused products are gaining traction as a way to offset market weakness and stabilise balance sheets.
“We can’t just sit and hope for a bull run,” said the chair of a Europe-based bitcoin treasury firm. “It’s about survival during tough market conditions. Crypto hedge funds and other yield generation products suit us.”
Industry observers say this shift reflects a maturing approach to treasury management. Andy Martinez, founder of Crypto Insights Group, said many treasury firms had spent time building governance and risk frameworks before deploying capital more actively. “We’re now seeing treasury capital move across yield products and active managers in ways designed to compound digital asset holdings over time,” he said.
Performance data suggests hedge funds have weathered the downturn better than spot markets. Despite bitcoin falling more than 10% in January and ether dropping nearly 20%, several crypto hedge funds posted positive returns. Edge Capital, which manages around $450m, gained 1% in January, while Pythagoras Investments reported a 2.9% gain in its Absolute Return strategy. Eltican Asset Management posted an 8% gain for the month.
