Crypto-focused hedge funds have doubled their belongings beneath administration in 2020, researchers at PricewaterhouseCoopers revealed.
Might 24, 2021 at 8:00 pm UTC · 2 min learn
Round 21% of conventional hedge funds on the earth have already invested in cryptocurrencies—whereas crypto-focused ones doubled their belongings beneath administration (AUM) over the course of 2020, says a brand new report by skilled companies community PricewaterhouseCoopers (PwC).
“We estimate that the overall belongings beneath administration (AuM) of crypto hedge funds globally elevated to just about US$3.8 billion in 2020 from US$2 billion the earlier 12 months. The proportion of crypto hedge funds with AuM over US$20 million elevated in 2020 from 35% to 46%,” the agency famous.
Hedge funds double down on crypto
Per PwC’s third annual “Global Crypto Hedge Fund Report,” Bitcoin is the most well-liked asset as 92% of crypto funds are buying and selling it. The coin is adopted by Ethereum (67% of funds traded it), Litecoin (34%), Chainlink (30%), Polkadot (28%), and Aave (27%).
In the meantime, the overwhelming majority of crypto hedge fund traders are high-net-worth people (54%) and household workplaces (30%).
“The median ticket dimension is US$0.4 million, whereas the common ticket dimension is US$1.1 million. Over half of crypto hedge funds have common ticket sizes of US$0.5 million and beneath. Crypto hedge funds have a median of 23 separate traders,” the report famous.
On the similar time, each fifth “conventional” hedge fund—or roughly 21%—can be investing in cryptocurrencies in the present day. On common, such organizations have allotted round 3% of their AUM in digital belongings, however almost all of them (85%) are already planning to buy extra crypto by the top of 2021.
Challenges of embracing crypto
Additional, 26% of hedge fund managers who aren’t investing in crypto reported that they’re “in late-stage planning to take a position or seeking to make investments” in digital belongings. Nonetheless, 82% of them additionally argued that regulatory uncertainty is among the main obstacles that stand in the way in which of embracing crypto.
In the meantime, 50% of funds that already spend money on digital belongings have equally said that crypto presents “a serious problem,” citing excessive shopper response/reputational danger (77%) in addition to the truth that cryptocurrencies are at present “exterior the scope of present funding mandates” (68%). Almost two-thirds of PwC’s respondents additionally acknowledged that they “don’t have sufficient information of digital belongings.”
But when the aforementioned obstacles to entry have been eliminated, 64% of hedge funds “would positively begin/speed up their involvement/funding or doubtlessly change their strategy and change into extra concerned” in cryptocurrencies, the report concluded.
Get an edge on the cryptoasset market
Entry extra crypto insights and context in each article as a paid member of CryptoSlate Edge.
Join now for $19/month Discover all advantages
Like what you see? Subscribe for updates.