What’s going on here?

As we edge into 2025, hedge fund investors are leaning heavily on macro strategies, anticipating market volatility from policy changes under US President-elect Donald Trump. This shift in focus is overshadowing the waning interest in cryptocurrencies.

What does this mean?

Hedge fund investors are eyeing macro strategies as they prepare for financial instability likely triggered by Trump’s reentry to the White House. Expected policy shifts, like potential US tariff hikes, could unsettle currency markets and restrict the Federal Reserve’s ability to cut rates. A survey from Societe Generale highlights that 40% of 239 investment firms are turning towards macro investments, despite a 24.5% return from crypto hedge funds in 2024. Regulatory uncertainties have dulled enthusiasm for digital assets, with Trump’s endorsements failing to significantly boost institutional interest.

Why should I care?

For markets: Strategic foresight shapes financial fortresses.

Currency fluctuations loom due to anticipated US tariff hikes, prompting smart investors to focus on macro strategies. A weakening yuan and euro may alter global trade dynamics, and the Fed’s rate decisions remain uncertain. Hedge funds are shifting from traditional bonds to more adaptable strategies to steer through these turbulent times.

The bigger picture: Crypto sees cautious optimism amid regulatory fog.

Though hedge funds like Millennium Management and Tudor Investment are cautiously exploring crypto with US spot bitcoin ETFs, broader adoption lags behind due to regulatory concerns. Despite significant returns from funds like NextGen Digital Venture, experts like Anthony Scaramucci indicate that regulatory clarity is essential before major institutional investment occurs.