Shariah crypto funds maintain appeal amid flash crash and sudden boom

Words such as collapse, rally, crash and boom often color the cryptocurrency market, many times in the span of just 24 hours. This is certainly not for the faint-hearted. As we monitor the space, we have observed that discerning investors are remaining calm and if anything, are increasing their exposure to Shariah compliant crypto funds.

Between a potential Federal Reserve rate cut, crypto ETF approvals and the leaders of the world biggest economies (US and China) meeting, investor sentiments swung wildly this past week, sending cryptos into a tailspin. This roller coaster ride is the norm in the crypto world, which is both its allure and repulsion.

Chart 1: Bitcoin price trend from 24^th October – 30^th October 2025

Source: CoinMarketCap

Chart 2: Ethereum price trend from 24^th October – 30^th October 2025

Source: CoinMarketCap

This asset class certainly has piqued the interest of Islamic investors, evident by the phenomenal flow of capital into Islamic crypto funds. Year-on-year, the AuM of Islamic crypto funds have exploded by almost 300% in Q3 2025, according to IFN Investor data (see Table 1).

There is a caveat, however. This upswing is propelled from a low base – Islamic crypto funds remain few and small. Regulated Shariah compliant crypto funds, for now, are only available in Malaysia and only offered by a single provider, Halogen Capital. The digital asset management company has launched four crypto funds – all approved by Islamic scholars. Our calculations exclude the fourth fund, Halogen Shariah Defensive Bitcoin Fund, as its asset allocation is dominated by money market instruments, with spot BTC only holding a minority share of 11.5%.

Table 1: AuM of Islamic crypto funds in RM million

Source: Halogen Capital as compiled by IFN Investor

High-net-worth individuals are the ones driving this growth.

“Amid a volatile market environment where tweets matter more than data releases, we see astute ‘buying the dip’ activity from these investors,” Executive Director Fuad Alhabshi tells IFN Investor.

“In the grander scheme, we are seeing a structural shift from ‘Should I own crypto?’ to “What is my crypto accumulation strategy?’ as investors take a page out of digital asset treasury playbooks such as Strategy and Metaplanet,” he explained.

There is certainly this evolution in investor appetite and strategy as more investment managers are considering expanding their product suite to include Islamic crypto funds. IFN Investor understands we can expect such funds from Bahrain and the UAE in the near future.

“With the Big Beautiful Bill still circulating and yet to be passed, coupled with a low tax regime, we see higher deficits and higher spending led by the US so the longer-term outlook supports Bitcoin and gold as the limited supply are beneficiaries of debasement,” projects Fuad.

The Big Beautiful Bill, officially known as the One Big, Beautiful Bill Act, is a sweeping US federal statute containing hundreds of tax and spending provisions forming the core of President Donald Trump's second-term economic agenda. It also includes a US$5 trillion debt ceiling increase, promoting deficit spending.

Nonetheless, it will not be an easy ride for virtual currencies.

Trade talk will likely continue to spur volatility, but as Fuad says, “right sizing your allocations and steady buying on dips will benefit investors who have a long-term investment horizon.”