Global crypto markets faced intense volatility in April 2025 after the U.S. government introduced sweeping tariff hikes targeting tech components and digital infrastructure products. While most assets struggled under this geopolitical stress, a handful of crypto hedge funds managed to not only survive but outperform, posting positive returns amid chaos.
These funds did not rely on luck. They used tactical asset rotation, market-neutral strategies, and algorithmic precision to dodge the dip and capture alpha. With Bitcoin and Ethereum experiencing sharp swings and market cap erasing nearly $500 billion in just two weeks, most investors expected hedge funds to post heavy drawdowns. However, some firms bucked that trend and proved the power of agile crypto fund management.
Market Conditions: Chaos at the Gate
On April 1, 2025, the Trump administration announced fresh tariffs targeting electronic components and server hardware imported from Asia, including key products used by major blockchain validators and crypto infrastructure providers. This announcement triggered immediate panic in both equity and crypto markets.
Bitcoin dropped from $91,000 to $74,000 in just five trading sessions. Ethereum followed, crashing from $5,200 to $4,000. Altcoins like Solana, Chainlink, and Polygon suffered even sharper declines. Investors rushed to exit risky positions, and leverage unwinding led to over $2 billion in liquidations across major exchanges.
Despite this turmoil, some crypto hedge funds posted surprising gains.
Eltican Asset Management Stays Green
Eltican Asset Management, a mid-sized London-based crypto hedge fund, recorded a 1% gain month-to-date as of April 9. Their portfolio team avoided directional bets and instead deployed market-neutral strategies that rely on arbitrage, basis trading, and volatility harvesting.
They spotted inefficiencies between spot and futures prices across U.S. and Asia-based exchanges. As volatility surged, spreads widened, creating arbitrage windows that Eltican capitalized on quickly. Their quant team also executed mean-reversion trades on oversold DeFi tokens that rebounded within short timeframes.
By avoiding exposure to long-only portfolios and hedging through perpetual swap shorts, Eltican protected capital and ended up profiting from dislocations others feared.
Fasanara Digital Executes Tactical Rotation
Fasanara Digital, the crypto arm of the multi-asset fund Fasanara Capital, handled the volatility through tactical asset rotation and early reallocation. Their CIO anticipated macro shocks in late March and rebalanced the portfolio before the tariff announcement reached mainstream news.
By April 14, Fasanara Digital reported a 0.5% gain month-to-date and 3.1% year-to-date. Their managers moved a large share of capital into cash, stables, and short-duration tokenized T-bills just days before Bitcoin’s plunge. They also deployed delta-neutral positions in options markets to bet on rising volatility without directional exposure.
This proactive approach helped them sidestep the carnage and deploy capital into distressed tokens after the selloff, capturing post-panic rebounds in assets like Optimism (OP), Lido (LDO), and Render (RNDR).
Volatility Trading Takes Center Stage
Volatility, usually the enemy of long-only crypto portfolios, served as the primary profit engine for these funds. Crypto hedge funds like Galois, BlockTower, and HyperQuant also tapped into the VIX-like metrics in crypto (such as DVOL and implied volatility on Deribit) to structure profitable trades.
These funds used long straddles and strangles to bet on volatility breakouts without picking price directions. They entered positions in BTC and ETH options markets when implied volatility traded below 60%. When tariffs spiked uncertainty, IV exploded to over 90%, creating instant gains for holders of long-volatility strategies.
In crypto, volatility always presents opportunity—hedge funds that understand derivatives and on-chain liquidity models always seek to monetize it.
Shorting Altcoins: A Bold, Profitable Move
Another tactic that paid off involved shorting inflated altcoins that previously rallied too far, too fast. Several funds used perpetual futures and margin shorts to bet against meme coins and high-beta Layer 2 tokens, predicting sharp corrections once macro stress hit the market.
Altcoins like PEPE, BONK, and FLOKI dropped 35% to 50% during the downturn. Hedge funds that established short positions in late March closed those trades with double-digit returns by mid-April.
Rather than chase hype cycles, these funds assessed overextended charts, declining on-chain activity, and dropping social sentiment scores—then acted decisively.
Lessons in Risk Management
Crypto hedge funds that performed well in April displayed robust risk management. They didn’t rely on prediction—they built flexible models that adjusted to conditions in real time. Their systems used risk triggers, stop-loss logic, and liquidity models to react quickly to large moves.
They avoided leverage-heavy positions. Instead, they used hedges and diversified capital across centralized exchanges (CEXs), decentralized protocols (DeFi), and custody solutions. When one leg of their portfolio faltered, others kicked in to offset losses.
Firms that failed to respect volatility limits or held onto leverage saw sharp drawdowns. Funds that adhered to disciplined risk management survived and in many cases thrived.
Investor Confidence Grows in Hedge Fund Models
Crypto hedge funds have gained significant traction among institutional investors in the past two years. Pension funds, family offices, and sovereign wealth funds now allocate capital to these vehicles to diversify beyond traditional assets.
The performance in April 2025 validated their utility again. When global markets sold off and digital assets corrected, select hedge funds protected capital and generated gains.
Investors will likely increase allocations to these funds, especially those that proved consistent and adaptable across both bullish and bearish conditions.
Crypto Hedge Funds Embrace Multi-Strategy Models
Today’s top-performing crypto hedge funds don’t rely on a single playbook. They run multi-strategy models that combine:
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Quantitative arbitrage
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Options-based volatility trading
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Event-driven trades (airdrops, unlocks, forks)
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Fundamental DeFi long/short
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Sentiment and on-chain data signals
This diversification allows them to pivot quickly and extract alpha from multiple market segments. When one strategy stalls, another often surges.
For example, when price momentum died during the crash, volatility and arbitrage models took the spotlight. As prices stabilized, DeFi farming and reentry into oversold majors delivered alpha.
What Comes Next for Crypto Hedge Funds?
As the market moves past the April tariff shock, crypto hedge funds now shift to opportunistic mode. Many managers plan to reenter high-conviction tokens that dropped to attractive levels. Others will wait for macro signals from the Federal Reserve or geopolitical clarity before increasing exposure.
Most funds remain cautious. They hold high cash reserves, maintain dynamic hedges, and avoid crowded trades. But they also scan the landscape for asymmetric bets—tokens with depressed valuations, high development activity, or growing user metrics.
New strategies may also emerge. Some funds explore real-world asset (RWA) tokenization plays. Others dive into the booming restaking and Layer 3 ecosystems. Capital rotates fast in crypto—and hedge funds stay ready.
Conclusion
April 2025 brought a storm to crypto markets. U.S. tariff hikes, rising interest rates, and global uncertainty wiped out $500 billion in market cap within weeks. But not all investors sank.
Crypto hedge funds like Eltican and Fasanara Digital outperformed by acting early, diversifying strategies, and embracing volatility. Their proactive decisions turned chaos into opportunity. They didn’t just survive—they thrived.
While many retail investors and long-only portfolios suffered, these funds showed that disciplined strategy, flexibility, and risk management create consistent edges—even in the most volatile asset class on Earth.
As institutions look for reliable crypto exposure, they now have evidence: smart hedge funds can handle the storm—and sometimes profit from it.
