FILE PHOTO: Representation of cryptocurrencies are seen in this illustration created on September 10, 2025. REUTERS/Dado Ruvic/Illustration/File Photo
PARIS (Reuters) -Global hedge funds' exposure to crypto markets is increasing, and more than half are now invested in the sector, with the U.S. government's embrace of digital assets boosting interest, according to an industry report published on Thursday.
Fifty-five percent of hedge funds hold some crypto-related assets, up from 47% the year before, with funds allocating on average 7% of their holdings to crypto, a survey of 122 investors and fund managers by the Alternative Investment Management Association (AIMA) in the first six months of 2025 found.
The investments are relatively small. More than half of the hedge funds with crypto are investing less than 2% of their assets init, the report by AIMA and PwC said.
Cryptocurrency prices have risen in 2025 with bitcoin hitting a series of record highs, boosted by U.S. President Donald Trump's support for the industry and his administration's push for crypto-friendly regulations.
Regulators around the world have warned about risks to financial stability, as crypto becomes more connected to mainstream finance.
"The past year has marked a turning point for US crypto regulation," the report said.
"The US may finally be laying the groundwork for long-term regulatory stability."
Funds that are already invested in crypto say they are planning to buy more in the next 12 months. A majority (67%) are investing via crypto derivatives, which allow them to take a position on cryptocurrency price movements without holding the underlying assets.
These derivatives can introduce market risks, the report said, citing a flash crash in October which it said "exposed vulnerabilities related to excessive leverage and a lack of institutional-grade infrastructure."
The funds surveyed by AIMA are responsible for investing around $982 billion of assets, the report said.
There has been an influx of new money into hedge funds, with capital hitting a record high of nearly $5 trillion in the third quarter of 2025.
(Reporting by Elizabeth Howcroft; Editing by Tommy Reggiori Wilkes and Hugh Lawson)
