Brevan Howards Crypto Fund 30 Per Cent Slide

Brevan Howard’s flagship crypto strategy suffered its worst year since launch in 2025, underscoring how exposed even the most established hedge funds remain to the volatility of digital assets.

The BH Digital Asset fund fell 29.5 per cent over the course of the year, according to people familiar with its performance. The decline followed two years of strong gains and marks a sharp reversal for one of the hedge fund industry’s most high-profile bets on the sector.

The strategy was launched in 2021 with backing from Alan Howard, the billionaire co-founder of Brevan Howard and one of the earliest major hedge fund managers to embrace digital assets. Howard has long been a vocal advocate of cryptocurrencies and blockchain technology, personally backing a range of start-ups across the industry.

At the start of 2025, Brevan Howard’s digital assets unit managed roughly $2.4bn, the majority of which sat within the BH Digital Asset fund. The scale of the operation signalled how seriously the firm had committed to crypto, even as some rivals maintained only limited exposure.

Performance in the early years appeared to justify that confidence. The fund gained 43 per cent in 2023 and a further 52 per cent in 2024, riding a broad rally in digital assets as institutional adoption expanded and bitcoin pushed to record highs.

That momentum did not last.

Digital currencies endured a bruising 2025 as technology stocks came under pressure and investors reassessed valuations in sectors seen as vulnerable to rapid advances in artificial intelligence. Crypto assets, which have often traded in line with high-growth tech shares, were swept up in the sell-off.

Bitcoin, the world’s largest digital currency, fell 6 per cent over the year. While modest compared with previous boom-and-bust cycles, the decline followed a record-breaking rally and was accompanied by sharp swings that unsettled investors. More speculative tokens suffered steeper losses.

The structure of the BH Digital Asset fund compounded the impact. Unlike vehicles that focus solely on liquid trading strategies, the fund also allocates capital to venture-style investments in digital asset companies. These private equity and venture capital holdings tend to be less liquid and can underperform in risk-off environments.

“There are a lot of private equity and venture capital type investments in the fund,” said one hedge fund investor. “They have underperformed bitcoin but to give them some credit, last year was terrible for crypto.”

The drawdown has also coincided with management changes. Gautam Sharma, the fund’s chief executive and chief investment officer, departed Brevan Howard during the year. He was replaced by Chris Rayner-Cook, formerly head of trading and financing at crypto exchange Coinbase.

Leadership transitions during periods of weak performance inevitably invite scrutiny. For Brevan Howard, the challenge is to demonstrate that the strategy remains disciplined and scalable despite the setback.

Alan Howard’s personal involvement in crypto predates the launch of the fund. He made early venture investments in companies including Copper, a crypto custody and trading firm chaired by former UK chancellor Philip Hammond; Bullish Global, a digital asset exchange; and Derby Stars, a blockchain-based horseracing game.

Such investments reflected Howard’s conviction that blockchain technology would reshape elements of finance and digital commerce. The BH Digital Asset fund was intended to institutionalise that conviction within a structured hedge fund framework.

Even during a difficult year for markets, the fund continued to participate in new funding rounds. It backed Superstate, a company seeking to place traditional assets such as equities and bonds on blockchain infrastructure, and TRM Labs, which provides analytics to track illicit activity on digital ledgers.

These investments suggest that Brevan Howard remains committed to the longer-term development of digital asset infrastructure, despite the cyclical downturn in token prices.

The broader market environment at the start of 2026 offers little immediate relief. Bitcoin has fallen more than 20 per cent this year to around $68,000 per coin, having peaked above $125,000 in October. The decline has renewed debate over whether the asset can sustain its narrative as “digital gold” in periods of tightening financial conditions.

Institutional interest in crypto has grown in recent years, supported by clearer regulatory frameworks in several jurisdictions and the launch of exchange traded products linked to bitcoin. Yet the asset class remains prone to sharp swings in sentiment.

For hedge funds, that volatility cuts both ways. It offers opportunities for active trading strategies but also increases the risk of steep drawdowns, particularly for funds combining liquid trading with venture-style allocations.

Brevan Howard’s experience mirrors a broader pattern among traditional asset managers that entered crypto markets during the latest bull cycle. Early gains encouraged expansion, but subsequent corrections have tested investor patience.

The firm’s other strategies delivered modest returns in 2025. Its flagship Master fund, which trades macroeconomic themes across currencies, rates and commodities, gained less than 1 per cent over the year, according to a person familiar with the matter. However, it began 2026 strongly, rising more than 4 per cent in January.

Compared with the volatility in digital assets, those figures highlight the relative stability of Brevan Howard’s core macro business. The contrast may reinforce the perception that crypto remains a higher-risk adjunct rather than a replacement for traditional hedge fund strategies.

For investors in the BH Digital Asset fund, the key question is whether the setback represents a cyclical dip or a more structural reassessment of valuations in the sector. Crypto markets have historically experienced deep corrections followed by renewed rallies. However, as institutional participation increases, price movements may become more closely tied to broader macroeconomic trends.

Brevan Howard has not publicly commented on the fund’s performance. In private, supporters argue that exposure to early-stage blockchain companies provides optionality if digital asset infrastructure continues to mature. Critics counter that venture-style investments can magnify losses when sentiment turns.

The 29.5 per cent decline does not erase the gains of the preceding two years, but it does underline the fragility of returns in an asset class still defining its role within mainstream finance.

For Alan Howard, one of the hedge fund industry’s most influential figures, the episode is a reminder that conviction in emerging technologies must coexist with market reality. Crypto may yet deliver on its promise of reshaping parts of the financial system. For now, however, even seasoned managers are not immune to its volatility.