At the start of the year, Galaxy Digital CEO and founder Mike Novogratz announced the launch of a new $100 million hedge fund that would target crypto and fintech. This new venture, led by Joe Armao, had strong institutional backing through several high-net-worth individuals and family offices. Galaxy, which oversees $17 billion in total assets, believed that the structural macro shifts and expanding use of cryptocurrencies made it the ideal moment to launch.
Armao, a former long-short equity specialist at Senator and Blackstone, believes the fund reflects a process he has been developing for several years.“This is what I’ve been doing for a long time – integrating digital assets into a long-short investment strategy. Within this new fund, I can focus on long-short equities, late-stage private investments, digital assets and capital structure opportunities, which all aim to capture changes in financial services.”
The dual focus of digital assets and equities put Galaxy in a unique position and allows them flexibility across different asset classes. Joe firmly sees this as “the next evolution of investing across the capital structure”, where Galaxy will allocate depending on where it sees the best opportunities across equities or tokens. Even if those books are pulling in opposite directions, Armao notes that each investment is “its own attractive opportunity” and ultimately aids diversification across the portfolio.
One of the primary areas the fund is focusing on is AI-driven disruption. Galaxy’s role is not just a platform, but one that also has deep, operational insights into areas such as AI, meaning the fund can act with greater conviction in its investment decisions. Armao notes there are several compelling short opportunities at present, “We’re seeing software stocks down 20% or more, especially in areas like tax, accounting and legal services – sectors that are highly vulnerable to AI.” Moreover, the role of tokenisation of digital assets is a key area of focus and one that is set to rapidly develop in the coming years. “We’re seeing blockchain used in mortgage origination and major exchanges are exploring tokenised equities. It has the potential to rapidly transform markets, improving liquidity, 24/7 trading and increasing transparency.”
The fund is also aided by the broader sentiment towards digital assets shifting considerably in the past few years. Previous administrations recognised the growing relevance of digital assets in the financial ecosystem – this has been accelerated under Trump. During the Bitcoin 2024 conference last July, he declared that the US “would become the crypto capital of the world” and pledged to establish a strategic bitcoin reserve. Armao says that these “tailwinds” have been invaluable for the industry as it creates “long-term structural support”.
Watch the full Alternative Views with Joe Armao below.
