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It’s no secret that crypto prices are booming again, with Bitcoin sitting north of $60,000 since late February and memecoins driving a frenzy of speculation not seen since the early days of 2022. And yet, investors I speak with seem hesitant to assign the label “bull market,” maybe scarred by the dramatic collapses of the past couple of years, or recognizing that public awareness of crypto’s resurgence is still nonexistent.

Despite Bitcoin repeatedly hitting all-time highs, retail traders still appear to be absent from the recent rally, which is instead driven by January’s approval of Bitcoin ETFs and the long-awaited promise of traditional firms like asset managers entering the space. Institutional capital will always lead hobbyist traders, and the explosion in prices has jumpstarted that cycle.

As Bloomberg reported in December, before the ETFs had even launched, crypto hedge funds had been preparing for this moment. After a brutal 2022, which saw some flagship funds like Pantera Capital fall by 80%, results began to improve as Bitcoin crept back up. Stoka Capital, founded by a Goldman alum that invests mostly in altcoins, gained 268% by the end of November.

New crypto hedge funds, which take outside capital and invest in both public and private market assets from liquid tokens to shares in companies, have also begun to pop. In January, I reported the launch of Split Capital, founded by alumni from LedgerPrime, a trading firm acquired by FTX. Different LedgerPrime alumni launched another hedge fund in February, signaling the escalating trading opportunities—and interest from limited partners, or outside investors, who want to park their money with the new vehicles.

Today, yet another new crypto hedge fund is emerging—Lekker Capital, founded by Quinn Thompson, who had previously worked at the digital asset lending platform Maple Finance as well as the traditional investment firm Guggenheim Partners. I spoke with Thompson last week, who told me that he is targeting a $20 million raise for Lekker and plans to start trading in May.

Unlike many crypto hedge funds, which focus on liquid tokens from Ether to smaller altcoins, Thompson said that he will invest in both digital native tokens and public equities like Bitcoin miners, Microstrategy, and Coinbase, with a rough split of 50/50 between the two types of assets. That strategy is driven by his outlook on the crypto market, which he says has been dominated by venture-style investment in private companies and was over-allocated during the previous cycle.

“The only liquidity events for all these venture funds are either IPOs or tokens, and there’s just not the capital base of investment allocation to really finance that and be natural buyers in the liquid market,” he said. “You’re getting a return to the traditional capital markets now that things are opening up a bit.”

Thompson told me that he believes the broader macro-environment supports crypto, with the Federal Reserve seemingly poised to start cutting interest rates. I asked whether he was concerned with regulatory uncertainty, especially after Coinbase’s loss in court last week. He said that despite the hostility of the current administration, everything could change with the U.S. elections later this year. “November has the potential to be a huge catalyst for the industry,” Thompson told me. “It’s tough to get too one-way until then.”

Leo Schwartz
leo.schwartz@fortune.com
@leomschwartz

DECENTRALIZED NEWS

Xion, a blockchain built for consumer-focused developers, closed a $25 million Series A round with investment from Multicoin and Arrington Capital. (Fortune)

The Monetary Authority of Singapore announced that it is expanding the scope of its regulations that will be more stringent for companies offering crypto services. (The Block)

Roman Storm, the developer of the crypto mixer Tornado Cash, filed a motion to dismiss money laundering charges brought against him by the Department of Justice. (CoinDesk)

The hedge fund GoldenTree Asset Management sold its crypto subsidiary to the digital asset investment firm Republic, citing "regulatory and reputational issues" in the crypto space. (Bloomberg)

Sam Bankman-Fried spoke via email with ABC News following last week's sentencing, reiterating that he never thought he was committing illegal acts. (ABC News)