Brevan Howard, the $40 billion macro hedge fund titan, watched its dedicated crypto arm suffer a 29.5 percent loss in 2025, marking the worst calendar year for the BH Digital Asset fund since its September 2021 launch. The numbers, first reported by the Financial Times on February 18, 2026, reveal a stark gap: Bitcoin itself declined roughly 6 percent over the same period, meaning a passive index hold would have outperformed one of the most sophisticated institutional crypto operations on the planet by more than 23 percentage points.
A $2.4 Billion Fund That Couldn't Outrun Its Own Bets
BH Digital managed approximately $2.4 billion at the start of 2025, with the bulk sitting inside the BH Digital Asset fund. The fund was built by Brevan Howard co-founder Alan Howard as a bridge between traditional macro trading and digital assets, combining liquid token positions with venture capital and private equity allocations across the blockchain sector.
That VC and PE exposure became the anchor that dragged returns underwater. According to CoinDesk's reporting, the fund contained "a lot of private equity and venture capital type instruments" whose markdowns accounted for the bulk of the performance gap versus Bitcoin. Unlike liquid tokens that reprice in real time, these illiquid positions lack continuous pricing mechanisms, meaning valuation adjustments tend to cluster during downturns rather than spread evenly across quarters.
Partnership profits at the digital assets unit fell to 61.4 million pounds, and fee income declined 20.7 percent year over year, signaling revenue pressure beyond just portfolio markdowns.
From 52 Percent Gain to 29.5 Percent Loss in 12 Months
The reversal is jarring when placed against BH Digital's recent track record:
- 2023: +43 percent
- 2024: +52 percent
- 2025: -29.5 percent
During 2023 and 2024, the fund rode Bitcoin's rally from post-FTX lows through the $100,000 milestone in December 2024. Those gains attracted more institutional capital and reinforced the narrative that professional crypto fund managers could deliver alpha above simple Bitcoin exposure. The 2025 results challenge that thesis directly.
One hedge fund investor quoted in the FT coverage offered a measured defense: "They have underperformed bitcoin but to give them credit, last year was terrible for crypto." That framing, however, raises its own question. If a fund with over 1,000 support staff, quantitative trading strategies across exchanges, and staking and yield-generation capabilities cannot beat a passive Bitcoin allocation during a modest downturn, what exactly is the management fee paying for?
Why Illiquid Venture Exposure Is the Hidden Tax
The BH Digital story is not unique. It reflects a structural problem across institutional crypto funds that blended liquid trading desks with longer-duration private investments during the 2021-2022 funding boom.
When crypto venture funding peaked, dozens of hedge funds and multi-strategy allocators poured capital into early-stage token projects, blockchain infrastructure plays, and DeFi protocol equity rounds. Many of those positions were marked at their last funding round valuation, which often reflected 2021 or early 2022 peak-market pricing. As 2025 brought tighter conditions, funds were forced to write down these positions to reflect reality, and the losses clustered painfully.
For BH Digital, the VC drag was roughly 23.5 percentage points beyond Bitcoin's own decline. That is the gap between the liquid market's -6 percent and the fund's -29.5 percent, and it represents the cost of holding illiquid bets that could not be exited or hedged during the drawdown.
How Peers Fared by Comparison
While BH Digital struggled, several macro peers posted strong 2025 results by avoiding or minimizing crypto venture exposure:
- Bridgewater Pure Alpha: approximately +33 percent
- Discovery Capital: approximately +36 percent
- Rokos Capital and D.E. Shaw macro strategies also outperformed
These funds operated primarily in traditional macro markets, currencies, rates, and commodities, where 2025's volatility created opportunities rather than traps. The comparison highlights a recurring pattern: pure-play macro funds and pure-play liquid crypto strategies tend to outperform blended models that straddle both worlds without fully committing to either.
What This Means for Institutional Crypto Allocation
The BH Digital results will ripple through institutional allocator conversations throughout 2026. Several implications stand out:
Liquid-only mandates gain appeal. Pension funds and endowments evaluating crypto exposure may increasingly favor liquid-only vehicles, including spot Bitcoin and Ethereum ETFs, over blended funds that bundle VC exposure. The staking yield products emerging across the crypto card space reflect this same trend toward transparent, liquid-first exposure.
Fee scrutiny intensifies. A 29.5 percent loss in a 2-and-20 fee structure means investors paid management fees on a shrinking asset base while the fund underperformed a zero-fee Bitcoin self-custody strategy. Products like self-custody crypto cards that let users hold their own keys represent the retail version of this same "skip the middleman" impulse.
VC markdowns are not over. Many institutional crypto funds still carry 2021-vintage venture positions at inflated valuations. If BH Digital, one of the best-resourced operations in the space, took a 23-point VC haircut, smaller funds with less diversification face potentially steeper writedowns ahead.
Leadership transitions follow performance. The report notes a leadership transition at BH Digital's digital asset unit. Performance-driven management changes are standard in traditional finance, and as crypto funds mature, investors should expect the same accountability frameworks.
The Broader Signal for Crypto Markets
Brevan Howard's stumble is not a verdict on crypto itself. Bitcoin's 6 percent decline in 2025 is mild by historical standards, and the asset class continues to attract sovereign wealth funds, with Abu Dhabi holding over $1 billion in BlackRock's Bitcoin ETF as of late 2025. The story is really about fund structure, not market direction.
The lesson for retail and institutional investors alike: complexity is not alpha. A $40 billion hedge fund with hundreds of staff, proprietary trading infrastructure, and multi-strategy mandates lost to a strategy anyone can execute with a hardware wallet and patience. That does not mean active management has no value. It means the specific blend of illiquid venture exposure layered on top of liquid crypto trading created a drag that professional talent could not offset.
For crypto card users watching from the sidelines, the takeaway is simpler. Whether you are earning cashback rewards in BTC or holding stablecoins through a no-fee card, your cost basis is transparent and your exposure is liquid. That is a structural advantage over any fund charging 2-and-20 on a locked-up portfolio of seed-round tokens.
FAQ
How much did Brevan Howard's crypto fund lose in 2025? The BH Digital Asset fund lost 29.5 percent in 2025, its worst year since launching in September 2021. This compares to Bitcoin's approximately 6 percent decline over the same period.
What caused the underperformance? The primary drag came from illiquid private equity and venture capital positions within the fund. These investments lacked continuous pricing and suffered clustered markdowns as 2025 market conditions tightened.
How much did BH Digital manage? BH Digital managed approximately $2.4 billion at the start of 2025, with the bulk held in the BH Digital Asset fund. The parent company, Brevan Howard, manages over $40 billion across all strategies.
Did other hedge funds also lose money in crypto? BH Digital's loss was notably worse than peers. Traditional macro funds like Bridgewater's Pure Alpha (+33%) and Discovery Capital (+36%) posted strong gains by focusing on non-crypto macro strategies.
Is Brevan Howard exiting crypto? There is no indication of a market exit. The fund has undergone a leadership transition at its digital asset unit and continues to deploy capital, though strategy adjustments are expected.
Overview
Brevan Howard's BH Digital Asset fund posted a 29.5 percent loss in 2025, its worst performance since the fund launched in 2021. The primary driver was illiquid venture capital and private equity positions that suffered delayed markdowns, creating a 23-plus percentage point performance gap versus Bitcoin's own 6 percent decline. With $2.4 billion under management, the fund's struggle raises pointed questions about blended liquid-plus-VC crypto fund structures at a time when simpler, liquid-only vehicles like spot ETFs and self-custody solutions continue gaining traction. Fee income at the digital assets unit dropped 20.7 percent, and a leadership transition is underway. For retail investors, the story reinforces a familiar lesson: transparent, liquid exposure often beats complex institutional wrappers.
Recommended Reading
- Dragonfly Closes $650 Million Fourth Fund While Crypto VCs Face What Its Own Partner Calls a Mass Extinction
- Harvard Trims Its Bitcoin ETF by 21% and Opens a First-Ever $87 Million Ethereum Position
- Abu Dhabi Sovereign Funds Held Over $1 Billion of BlackRock Bitcoin ETF at the End of 2025
