Harvard University Endowment Decision Slash Bitcoin holding The simultaneous increase in investments in Ethereum (ETH) also raises a familiar question: Are endowments betting on Ethereum instead of Bitcoin, or are they simply adjusting for risk?
The answer may not be as dramatic as it seems, and could be good for the industry.
Michael Markov, co-founder and chairman of Markov Processes International, which studies university endowments, said cryptocurrencies may be the most volatile part of Harvard University’s public market portfolio. Price volatility for both Bitcoin and Ethereum increased significantly in the fourth quarter of 2025, with both assets losing approximately 25% of their value.
These wild price swings caused Harvard, at least in part, to rebalance its portfolio, even if it didn’t change its long-term view on Bitcoin. Cutting assets can restore balance when assets become more volatile and riskier than expected in the portfolio.
“When volatility rises sharply, the sleeve’s risk contribution may expand disproportionately relative to its capital weight,” Markov said, adding that in such cases, cutting exposure could occur “without implying a shift in strategy.”
In short, Harvard, which bought the BlackRock Bitcoin ETF last year, may not have lost faith in Bitcoin; instead, it is starting to rebalance risk appetite.
In fact, this is not just a cryptocurrency-specific initiative. What most Wall Street portfolio managers do to maintain fixed returns is to move capital out of well-performing assets and into underperforming sectors. The idea is to rebalance portfolios ahead of market rotations, moving outperforming assets to underperforming assets to capture eventual shifts in sentiment.
For example, given the sky-high valuations of traditional stocks, some endowments leaning toward long-term returns have begun exploring other alternative investment ideas, including ETFs related to digital assets. Harvard first purchased Bitcoin in the third quarter of 2025, allocating approximately 20% of its U.S.-listed public stock holdings to the crypto asset. The idea is not to overhaul a portfolio but to add measurable exposure that could boost returns in a time when cryptocurrencies or underperforming assets perform well and traditional stocks start to lose their higher valuations.
Another possibility is liquidity.
Markoff noted that Harvard has increased its allocation to private equity in recent years, putting more capital into long-term, illiquid investments. Meanwhile, billions of dollars in unfunded commitments remain on the books. This puts pressure on smaller portions of portfolios that can be sold quickly.
“This means that the liquid sleeve is relatively small compared to capital call obligations,” he said. When that happens and investors like Harvard need to fund capital investment requests from private equity, they often sell more liquid publicly traded assets to meet those commitments.
“Mechanically, selling some public ETFs, including crypto ETFs, is the easiest way to deal with this pressure,” Markov said.
cryptocurrency demand
Despite the need to rebalance volatile assets or fund other capital commitments, Harvard is not exiting cryptocurrencies.
Instead, it added nearly 3.9 million shares of BlackRock’s Ethereum ETF, currently valued at $56.6 million.
Samir Kerbage, chief investment officer at Hashdex, believes the move is part of a broader institutional shift toward digital assets beyond just investing in Bitcoin.
“Harvard’s purchase of the Ethereum ETF is a clear sign of institutional demand for crypto assets beyond Bitcoin,” Kerbage said, noting that the GENIUS Act, passed into law in July, made it easier for large allocators to navigate the cryptocurrency space.
As the rules surrounding stablecoins and tokenized securities further take shape, investment committees of large institutions may feel more comfortable supporting networks that support these applications.
Ethereum is at the center of most of the activity. Over the past few years, it has become the dominant network for stablecoins, tokenized funds, and other on-chain financial applications used by asset managers and fintech companies. Unlike Bitcoin, it offers institutional-level staking, allowing holders to lock up their tokens to help secure the network and earn yield. This feature could make Ethereum look less like a pure directional bet and more like access to the underlying infrastructure that supports digital financial services.
Kerbage also expects institutions to move beyond Bitcoin in favor of diversified products, but only slowly. While some allocators may consider assets such as Ethereum, XRP or Solana (SOL) in isolation, he said many will likely opt for index-based instruments.
“This ongoing trend is not because it is a fashionable choice, but because the alternative is really difficult,” Kerbage said, citing issues such as which tokens to hold, how many tokens to allocate, and when to rebalance. “These are not cryptocurrency-specific issues.”
However, for a large fund like Harvard to show a desire to expand further into digital assets, even slowly, could be a boon for cryptocurrencies, as this would have been unthinkable even a few years ago.
Overall, Harvard’s Bitcoin cuts and Ethereum purchases likely reflect two things: managing short-term risk and cash needs while slowly expanding beyond Bitcoin as U.S. cryptocurrency rules become clearer. Ultimately, this could be a broader sign of further institutional confidence in digital assets.
