Bitcoin News Today: Regulatory Shifts Under Trump Unlock Crypto for Hedge Funds

Trump's Pro-Crypto Policies Draw Hedge Funds Into Digital Assets

Hedge funds are increasingly allocating capital to cryptocurrencies, driven by regulatory clarity under President Donald Trump's administration and a surge in institutional interest. A global survey by the Alternative Investment Management Association (AIMA) and PwC found that 55% of hedge funds now hold crypto-related assets, up from 47% in 2024, with an average allocation of 7% of their portfolios, according to an AIMA and PwC survey. This marks a significant shift for an industry long wary of the asset class's volatility, as Trump's pro-crypto policies—including the GENIUS Act, which established stablecoin standards—have reduced legal uncertainties, Cryptopolitan reported.

The U.S. government's embrace of digital assets has been a key catalyst. Trump's administration appointed crypto-friendly regulators and launched a Strategic Bitcoin Reserve, signaling institutional legitimacy to the sector, as Coinpedia reported. James Delaney of AIMA noted that regulatory barriers are "starting to be removed," with this year's report representing a "turning point" for hedge funds, according to a Bloomberg report. The shift is also fueled by fear of missing out on crypto's explosive gains, even as recent market turbulence—such as a $20 billion liquidation event in October—highlights lingering risks, according to a CryptoFront News report.

Derivatives dominate hedge fund strategies, with 67% of crypto-exposed funds using them to bet on price movements without holding physical assets, the AIMA and PwC survey found. This approach surged from 58% in 2024, reflecting a preference for managing exposure through futures and options. Meanwhile, spot trading—direct buying and selling of cryptocurrencies—grew to 40% of hedge fund activity from 25%, according to the Bloomberg report. The popularity of Bitcoin ETFs also rose, with 33% of funds using them in 2025, up from 25% the prior year, the same Bloomberg coverage noted.

Institutional adoption is accelerating beyond traditional hedge funds. BlackRock, Fidelity, and MicroStrategy now hold Bitcoin, while governments in the U.S., Canada, and El Salvador have added it to their reserves, as an FXStreet piece observed. DeFi is also drawing attention, with 43% of traditional hedge funds planning to expand their decentralized finance activities within three years, per the Bloomberg report. However, critics warn of systemic risks, as the October flash crash exposed vulnerabilities in leverage and infrastructure, the AIMA and PwC survey cautioned.

Regulatory debates continue. Coinbase recently urged the U.S. Treasury to avoid overreach in implementing the GENIUS Act, arguing that excessive rules could stifle innovation, Coinbase urged the U.S. Treasury. Conversely, lawmakers like Senator Elizabeth Warren have criticized the law as insufficient, calling it a "soft regulatory structure for crypto banks." The tension between fostering growth and ensuring stability underscores the sector's evolving maturity.

Robinhood, meanwhile, remains cautious. Despite crypto revenue tripling year-over-year to $268 million, executives have yet to decide whether to add Bitcoin to its corporate treasury, Crypto Economy reported. The fintech's leadership emphasizes balancing capital efficiency, global expansion, and shareholder interests before committing to a crypto-backed strategy, according to a Seeking Alpha report.

As hedge funds deepen their crypto engagement, the market's trajectory hinges on regulatory balance. While Trump's policies have unlocked new opportunities, the recent volatility and debates over derivatives, DeFi, and stablecoins highlight the need for frameworks that mitigate risks without stifling innovation. For now, the sector's momentum shows no sign of slowing, with 71% of surveyed funds planning to increase crypto exposure in the next year, the Bloomberg report found.