Crypto hedge funds are experiencing their most challenging year since the 2022 downturn, with directional strategies down 2.5% and fundamental and altcoin-heavy strategies plummeting 23% through November. Only market-neutral funds have posted gains, rising 14.4%. The influx of institutional investments via ETFs and structured products has squeezed traditional arbitrage opportunities, leading many funds to reduce altcoin exposure. In response, these funds are increasingly turning to decentralized finance (DeFi) for structural opportunities that remain viable.