Crypto-focused hedge funds have doubled their property underneath administration in 2020, researchers at PricewaterhouseCoopers revealed.
Could 24, 2021 at 8:00 pm UTC · 2 min learn
Round 21% of conventional hedge funds on the planet have already invested in cryptocurrencies—whereas crypto-focused ones doubled their property underneath administration (AUM) over the course of 2020, says a brand new report by skilled providers community PricewaterhouseCoopers (PwC).
“We estimate that the overall property underneath administration (AuM) of crypto hedge funds globally elevated to almost US$3.8 billion in 2020 from US$2 billion the earlier yr. The share 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 typical 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 identical time, each fifth “conventional” hedge fund—or roughly 21%—can also be investing in cryptocurrencies immediately. On common, such organizations have allotted round 3% of their AUM in digital property, however practically 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 are usually not investing in crypto reported that they’re “in late-stage planning to speculate or seeking to make investments” in digital property. Nevertheless, 82% of them additionally argued that regulatory uncertainty is without doubt one of the main obstacles that stand in the best way of embracing crypto.
In the meantime, 50% of funds that already spend money on digital property have equally said that crypto presents “a serious problem,” citing excessive consumer response/reputational danger (77%) in addition to the truth that cryptocurrencies are presently “exterior the scope of present funding mandates” (68%). Practically two-thirds of PwC’s respondents additionally acknowledged that they “don’t have sufficient information of digital property.”
But when the aforementioned boundaries to entry have been eliminated, 64% of hedge funds “would undoubtedly begin/speed up their involvement/funding or doubtlessly change their method and turn 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.