President Donald Trump’s recent executive orders imposing tariffs, the spectre of a trade war, inflation, and interest-rate cuts uncertainty have introduced notable volatility into the stock market.
As of February 2025, 47.3% of individual investors anticipate a decline in stock prices over the next six months, according to the latest survey from the American Association of Individual Investors.
That is the highest level since November 2023.
Despite the long-term bullishness attached to a pro-crypto Trump presidency, crypto markets have also not gone unscathed since inauguration day, as investors’ shift towards safer assets and profit-taking has triggered a sell-off.
Invezz turned to James L Koutoulas, founder and CEO of multi-strategy hedge fund Typhon Capital, to understand how hedge fund strategies are being impacted by the broad macroeconomic shifts, how Typhon’s crypto investment strategy has evolved in recent times, and why, he feels this time, markets “won’t get fooled again” by Trump’s tweets, taking tariff talks as more of a negotiating ploy.
Excerpts from an emailed interaction:
Commodity prices will continue to rise, hedge funds have also re-engaged in grains, oilseeds
Invezz: How do you see the current macroeconomic environment affecting commodities and hedge fund strategies?
We think the higher volatility under Trump makes hedge fund strategies much more valuable if they are good at risk management.
Commodity prices have been going up over the last six months (food) and will continue to move higher.
Hedge funds should have made the move into those traditional commodities a while ago.
Animal proteins are diminishing due to weather and disease globally, and prices have reflected that.
Grains, oil seeds, and soft commodities are all experiencing similar situations to varying degrees—just look at cocoa and coffee prices as examples.
Funds have re-engaged in those.
Invezz: How do you see Trump’s proposed steel and aluminum tariffs affecting commodity markets and supply chains? How do investors navigate this phase of tariff imposition and possible retaliations?
The first time around, markets seemed to take Trump’s tweets as gospel, much to their detriment.
This time, they are channeling The Who and “Won’t Get Fooled Again,” taking the tariff talk as a negotiating ploy.
Evolution of Typhon Capital’s crypto investment strategy
Invezz: How is Typhon Capital approaching crypto investments today as compared to the last few years?
We’ve stuck to our core approach of thorough counterparty and coin due diligence, which has ensured that we have never invested even $1 in an exchange or coin that subsequently failed.
We have also mostly maintained our relative value, risk-adjusted return focus, which has led us to achieve a 4 Sortino ratio and one-third of the max drawdown of BTC over eight years.
Last year though, we added a systematic BTC and ETH futures trend-following strategy into the fund, and this year we have added some limited DeFi exposure through CoinBase Prime’s On-Chain Wallet.
Crypto to continue being a “risk-on” asset with strong correlation to equities
Invezz: Are hedge funds and traditional asset managers allocating more capital to crypto in 2025?
Absolutely. Gary Gensler’s departure, combined with a pro-crypto, meme-coin-repping President Trump, has removed the regulatory stigma from the space and created a new wave of optimism.
Invezz: Given the recent correlation between Bitcoin and tech stocks, do you think institutional adoption will further align crypto with equity markets, or will it decouple over time?
We think crypto will continue to be a “risk-on” asset with a strong correlation to equities.
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