The Harvard University Foundation’s decision to cut your bitcoin assets while the addition of ether (ETH) exposure raised a familiar question: is the endowment betting on Ethereum rather than Bitcoin, or is it simply adjusting for risk?
The answer could be less dramatic than it seems and potentially optimistic for the sector.
Michael Markov, co-founder and president of Markov Processes International, which studies university endowments, said crypto is probably the most volatile part of Harvard’s public markets portfolio. In the fourth quarter of 2025, Bitcoin and Ether price fluctuations increased, with both assets losing approximately 25% of their value.
These sharp price swings have, at least in part, led Harvard to rebalance its portfolio, although it has not changed its long-term view of bitcoin. When an asset becomes more volatile and riskier than expected in a portfolio, reduction restores balance.
“When volatility increases sharply, the risk contribution of this segment can increase disproportionately to its capital weight,” Markov said. In this context, he added, reducing exposure can occur “without implying a strategic change”.
Simply put, Harvard, which purchased BlackRock’s Bitcoin ETFs last year, probably hasn’t lost its belief in Bitcoin; instead, he decided to rebalance his appetite for risk.
In fact, this is not just a crypto-specific decision. Rebalancing capital from assets that have performed well to underperforming sectors is something most Wall Street portfolio managers do to keep returns fixed. The idea is to rebalance the portfolio before a market rotation, moving outperforming assets to underperforming assets to capture a possible change in sentiment.
For example, given the sky-high valuations of traditional stocks, some of these foundations, which tend to focus on long-term returns, have started looking for other alternative investment ideas, including ETFs linked to digital assets. Harvard purchased Bitcoin for the first time in the third quarter of 2025, allocating approximately 20% of its U.S.-listed public holdings to the crypto asset. The idea is not to reshuffle portfolios, but to add measured exposure that could boost returns in years when underperforming cryptocurrencies or assets perform well and traditional stocks start to lose their higher valuations.
Another possibility is liquidity.
Harvard has increased its allocation to private equity in recent years, Markov noted, pushing more capital toward long-term illiquid investments. At the same time, billions of dollars of unfunded commitments remain on the books. This creates pressure on the smallest slice of the portfolio that can be sold quickly.
“This means that the liquidity reserve is relatively small compared to the capital call obligations,” he said. When this happens and investors such as Harvard need to fund their private equity investment demands, they tend to sell more liquid, publicly traded assets to fulfill their commitments.
“Selling some public ETFs – including crypto ETFs – is mechanically the easiest way to manage this pressure,” according to Markov.
Crypto application
Despite the need to rebalance volatile assets or fund other capital commitments, Harvard has not abandoned crypto.
Instead, he added nearly 3.9 million shares of BlackRock’s ether ETF, currently valued at $56.6 million.
Samir Kerbage, chief investment officer at Hashdex, sees this development as part of a broader institutional shift toward digital assets and beyond just 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 in July – which makes it easier for large distributors to navigate the crypto landscape.
As rules surrounding stablecoins and tokenized securities take 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 leading network of stablecoins, tokenized funds, and other on-chain financial applications used by asset managers and fintech companies. Unlike bitcoin, it offers institution-level staking, allowing holders to lock up tokens to help secure the network and generate revenue. This feature can make ether feel less like a purely directional bet and more like exposure to the underlying infrastructure that powers digital financial services.
Kerbage also expects institutions moving beyond bitcoin to embrace diversified products, but slowly. While some allocators may consider assets such as ether, XRP or solana (SOL) on their own, he said many would likely choose index-style vehicles instead.
“This current trend is not because it is a fashionable choice, but because the alternatives are genuinely difficult,” Kerbage said, citing questions such as which tokens to hold, how much to allocate and when to rebalance. “These are not crypto-specific issues.”
However, for a giant fund like Harvard to signal its desire to expand further into digital assets, even slowly, is likely positive for crypto, as just a few years ago this was unthinkable.
Taken together, the bitcoin shortfall and Harvard Ether buy may reflect two things: managing short-term risk and cash flow needs, while slowly expanding beyond bitcoin as U.S. crypto rules become clearer. Ultimately, this is likely a broader sign of increased institutional confidence in digital assets.
