Harvard University endowment’s decision to trim his bitcoin holdings while adding exposure to ether (ETH) has raised a familiar question: Does the endowment take a bet on Ethereum over Bitcoin, or simply adjust the risk?
The answer may be less dramatic than it seems, and potentially positive for the sector.
Michael Markov, co-founder and chairman of Markov Processes International, which studies university grants, said crypto is probably the most volatile part of Harvard’s public market portfolio. In the fourth quarter of 2025, price volatility increased in both bitcoin and ether, with both assets losing around 25% of their value.
These sharp price swings have at least partially prompted Harvard to rebalance its portfolio, although it did not change its long-term view on bitcoin. When an asset becomes more volatile and riskier than calculated in a portfolio, a cut restores balance.
“When volatility spikes, the risk contribution from that sleeve can expand disproportionately to its capital weight,” Markov said. In that setting, he added, trimming exposure can happen “without implying a strategic shift.”
In short, Harvard, which bought BlackRock’s bitcoin ETFs last year, probably didn’t lose its faith in bitcoin; rather, it moved to restore its appetite for risk.
In fact, it’s not just a crypto-specific feature. Rebalancing capital out of assets that have performed well and into underperforming sectors is something most Wall Street portfolio managers do to lock in returns. The idea is to rebalance the portfolio ahead of a market rotation and move outperforming assets to underperformers to capture any shift in sentiment.
For example, given soaring valuations of traditional stocks, some of these endowments, which tend to focus on long-term returns, have begun to explore other alternative investment ideas, including digital asset-related ETFs. Harvard first bought bitcoin in the third quarter of 2025, allocating about 20% of its reported US-listed public equity holdings to the crypto-asset. The idea is not to overhaul portfolios, but to add measured exposure that can lift returns in years when crypto or underperforming assets do well and traditional stocks start to lose their higher valuations.
Another option is liquidity.
Harvard has increased its allocation to private equity in recent years, Markov noted, pushing more capital into long-term, illiquid investments. At the same time, billions of dollars in unfunded liabilities remain on the books. This creates pressure on the smaller part of the portfolio that can be sold quickly.
“This means the liquidity cuff is relatively small compared to the capital call obligations,” he said. When that happens, and investors like Harvard have to fund capital investment requests from private equity, they tend to sell more liquid, publicly traded assets to meet those obligations.
“Selling some public ETFs — including crypto ETFs — is mechanically the easiest way to deal with that pressure,” according to Markov.
Demand for crypto
Despite the need to rebalance out of volatile assets or to fund other capital commitments, Harvard did not abandon crypto.
Instead, it added nearly 3.9 million shares of BlackRock’s ether ETF, which is currently valued at $56.6 million.
Samir Kerbage, chief investment officer at Hashdex, sees this move as part of a broader institutional shift into digital assets and beyond simply investing in bitcoin.
“Harvard’s purchase of Ethereum ETFs is a clear sign of institutional demand for crypto assets beyond bitcoin,” Kerbage said. He pointed to the GENIUS Act — passed into law in July — which makes it easier for large allocators to navigate the crypto landscape.
As the regulations surrounding stablecoins and tokenized securities take further shape, investment committees at large institutions may feel more comfortable supporting networks that support these applications.
Ethereum is at the center of much of this activity. Over the past few years, it has become the main network for stablecoins, tokenized funds and other onchain financial applications used by asset managers and fintech firms. Unlike bitcoin, it offers institutional-level staking, allowing holders to lock tokens to help secure the network and earn returns. This feature can make ether look less like a purely directional effort and more like exposure to the underlying infrastructure that powers digital financial services.
Kerbage also expects institutions moving beyond bitcoin to favor diversified products, but slowly. While some allocators might consider assets like ether, XRP or solana (SOL) on their own, he said many will likely opt for index-style vehicles instead.
“This ongoing trend is not because it is the fashionable choice, but because the alternatives are really difficult,” Kerbage said, citing issues such as which tokens to hold, how much to allocate and when to rebalance. “These are not crypto-specific issues.”
But for a giant foundation like Harvard to signal a desire to expand further into digital assets, even slowly, is likely positive for crypto, as this was unthinkable even a few years ago.
Taken together, Harvard’s bitcoin trim and ether purchases may reflect two things: managing short-term risks and cash needs while slowly expanding beyond bitcoin as US crypto regulations become clearer. Ultimately, it’s likely a broader sign of further institutional confidence in digital assets.
