Blockstream Unveils New Crypto Funds Amid Growing Institutional Interest

March 5, 2025 by Bena Ilyas

• Blockstream is launching three new crypto funds with distinct strategies, including Bitcoin-backed loans and hedge fund-style approaches.
• The Income Fund will provide U.S. dollar loans against Bitcoin collateral, targeting a $5 million market gap.
• A $75 million investment in Komainu enhances Blockstream’s institutional presence through Liquid Network integration.

Canada-based Blockstream, a prominent player in the Bitcoin ecosystem, recently revealed the upcoming launch of three new funds to expand its reach within the crypto Market. In January, the announcement laid the groundwork for Blockstream’s foray into asset management, driven by a $210 million investment round led by Fulgur Ventures.

According to Bloomberg’s March report, each of the three funds has distinct investment strategies. One fund will focus on Bitcoin-backed loans, providing liquidity by using Bitcoin as collateral to offer loans in U.S. dollars. A second fund will use U.S. dollars as collateral for purchasing cryptocurrency.

At the same time, a third will function similarly to a hedge fund, combining various strategies to ensure consistent, risk-adjusted outperformance within the Bitcoin ecosystem. Blockstream confirmed these details shortly after the Bloomberg report surfaced on the social media platform X.

The funds are set to go live on April 1, with external capital expected to be added starting July 1. This marks the launch of Blockstream’s asset management division, a milestone for the company as it continues to build upon its layer-2 technology. The investment round from Fulgur Ventures accelerated this development and contributed to the growth of Swiss crypto bank Sygnum, which achieved unicorn status after receiving funding from Fulgur Ventures.

Bitcoin Loans Blockstream Targets $5M Market Gap

The Blockstream Income Fund is poised to address a gap in the Market by providing U.S. dollar loans against Bitcoin collateral. Targeting loans ranging from $100,000 to $5 million, the fund focuses on an underserved sector in the crypto space. The company aims to tap into its extensive network of Bitcoin-native startups and businesses, many of which establish Bitcoin treasuries, creating a steady pipeline of potential borrowers.

The fund targets high single-digit yields to low teens, making it an attractive option for institutional and qualified investors. Meanwhile, the Blockstream Alpha Fund will employ uncorrelated strategies to offer consistent returns in the volatile Bitcoin market.

This hedge fund-like approach aims to provide investors with a balanced portfolio that delivers “risk-adjusted outperformance” within the Bitcoin ecosystem. The company’s website also hints at the launch of a Bitcoin Yield Fund, promising yet another investment opportunity within the rapidly evolving crypto Market.

Blockstream’s $75M Investment and Bitcoin Loans

These new funds come as the industry is recovering from the 2022 “crypto winter,” a period marked by the collapse of several major lending platforms, including BlockFi, Genesis Global Capital, Voyager Digital, and Celsius. The liquidation of these platforms and the downfall of FTX left a significant liquidity void within the Market.

Despite this, some centralized and decentralized exchanges and decentralized finance (DeFi) apps continue to offer loans, helping to fill the gap. Blockstream’s Bitcoin-backed loans are set to play a pivotal role in rebuilding trust and liquidity in the crypto space. The company is betting that its unique approach to lending will attract institutions and qualified investors looking for alternative ways to gain exposure to Bitcoin.

In addition to the new funds, Blockstream made headlines in January with a $75 million strategic investment in Komainu, a digital asset services and custody provider. The partnership aims to integrate Blockstream’s Liquid Network asset management platform into Komainu’s off-exchange margining and settlement solution, reducing transaction times from hours to minutes.

This integration will also incorporate Blockstream’s HSM wallet technology, further solidifying the company’s position in the institutional crypto space.

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