The recent downturn in digital assets has prompted investors to rethink strategies, as some of the most hyped corners of the crypto market faced steep declines. Bitcoin dropped roughly 36% from its October peak, while companies heavily invested in cryptocurrencies, including treasury and mining firms, suffered sharper losses.
Treasury-focused firms, such as Strategy Inc, which hold large portions of bitcoin as corporate reserves, saw their stock values tumble as premiums tied to crypto holdings vanished. Strategy’s share price fell 54% since bitcoin’s October high and is down 63% since mid-July. Japanese company Metaplanet and a host of smaller imitators experienced similar declines. Mining companies, including IREN, CleanSpark, Riot, and MARA Holdings, previously investor favorites, are pivoting toward AI data centers to stabilize revenue and offset market volatility.
“Those stocks have been the best performers of the year because they combine two powerful themes: digital assets via their bitcoin exposure and AI,” said Matthew Sigel, portfolio manager of VanEck Onchain Economy ETF. However, heavy debt burdens and constant capital requirements for expansion and technology upgrades have made profitability uncertain, keeping investors cautious.
The convergence of crypto and AI is expected to define the next wave of investment opportunities. Analysts highlight that converting mining operations to power AI data centers could address looming energy shortages. Morgan Stanley estimates U.S. data centers face a 47-gigawatt power deficit through 2028, with repurposed crypto miners potentially contributing 10 to 15 gigawatts toward closing the gap. This dual exposure to cryptocurrency and AI makes these companies particularly appealing to long-term investors.
Amid market turbulence, actively managed and hedged investment strategies are gaining momentum. Sigel’s VanEck ETF has posted a 32% return since May by underweighting over-leveraged companies. Activist investor Eric Jackson’s EMJ Crypto Technologies launched the first actively hedged digital-asset treasury fund, managing bitcoin, ethereum, and selected altcoins while generating yield through options rather than repeated equity issuance. SRx Health Solutions announced plans to acquire EMJX, with the combined entity expected to trade under the EMJX ticker in early 2026.
Bitcoin itself remains the dominant cryptocurrency, reinforced by institutional backing. Harvard University’s endowment has made BlackRock’s iShares Bitcoin Trust its largest publicly disclosed stock position, while sovereign wealth funds in Luxembourg, Abu Dhabi, and the Czech Republic are expanding their stakes. Miners also continue to hold bitcoin as a preferred reserve asset, signaling confidence in its long-term viability.
“The universe of crypto investment alternatives has expanded dramatically,” said John D’Agostino, head of strategy at Coinbase Institutional. “The nuances matter in terms of leverage and hedging. Investors now have more ways to manage exposure across derivatives, ETFs, mining equities, and direct holdings.” As regulated exchanges, safe custody solutions, and sophisticated trading tools emerge, digital assets increasingly resemble traditional commodities, offering investors multiple strategies to mitigate risk while participating in growth.
Despite growing options, caution remains key. Lyn Alden, founder of Lyn Alden Investment Strategy, described the previous surge as “a localized bubble” and noted that investors are now more selective, wary of overpaying for highly leveraged positions. The market’s maturation, combined with hedging strategies and institutional adoption, is fostering a more disciplined approach, positioning actively managed funds as the preferred solution in an evolving sector.
With crypto now intertwined with AI, energy infrastructure, and institutional finance, the investment landscape is changing. Analysts suggest that investors who balance risk, leverage, and hedging techniques could capture long-term upside while avoiding the pitfalls of prior speculative surges.
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