Every fifth hedge fund already invests in cryptocurrencies, reports PwC

 Every fifth hedge fund already invests in cryptocurrencies, reports PwC


Crypto-focused hedge funds have doubled their property underneath administration in 2020, researchers at PricewaterhouseCoopers revealed.

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Every fifth hedge fund already invests in cryptocurrencies, reports PwC

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.

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