Bank exposure to hedge funds has climbed to the highest level ever recorded, surpassing $28 trillion as of mid-2026.
Goldman Sachs, Morgan Stanley, and JPMorgan each serviced over 1,000 hedge funds as of 2022, according to Bank for International Settlements data. Three banks, each with more than a thousand hedge fund clients relying on them for financing, trade execution, and securities lending.
Since then, the exposure has only grown. Hedge fund gross leverage has reached near-record levels through late 2024 and into 2025, with macro and relative value strategies driving much of the increase.
As of 2025, 55% of hedge funds reported holding digital assets, up from 47% the previous year. More than half of the hedge fund industry now has some skin in the crypto game.
When banks extend record levels of financing to hedge funds, and those hedge funds are increasingly allocated to Bitcoin, Ethereum, and other digital assets, the traditional financial system becomes more exposed to crypto volatility than the balance sheets might suggest at first glance.
