Hedge Fund (Crypto)

A crypto hedge fund is a pooled investment vehicle, generally open only to accredited investors (see Kaavon's "Accredited Investor" glossary definition) or other institutional investors (see Kaavon's "Institutional Investor" glossary definition) rather than the general public, that actively manages a portfolio of crypto assets using a range of strategies — which can include directional trading, market-neutral arbitrage, derivatives-based hedging, or venture-style investment in early-stage crypto projects — in pursuit of returns for its investors, in exchange for management and performance fees.

Crypto hedge funds differ from passive crypto investment vehicles like a spot ETF in that they actively trade and take directional or strategy-specific bets rather than simply tracking an underlying asset's price, and they typically carry less daily liquidity and transparency than a publicly traded fund, since investors usually can only redeem their investment at specific intervals rather than continuously trading shares on an exchange. Crypto-focused hedge funds have existed since crypto markets' earliest years and represent one of the oldest forms of institutional crypto investment vehicle.