Every fifth hedge fund already invests in cryptocurrencies, reports PwC

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Crypto-centered hedge resources have doubled their assets less than administration in 2020, researchers at PricewaterhouseCoopers exposed.

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All around 21% of standard hedge money in the globe have already invested in cryptocurrencies—while crypto-concentrated kinds doubled their belongings less than administration (AUM) above the system of 2020, claims a new report by specialist services community PricewaterhouseCoopers (PwC).

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“We estimate that the overall assets beneath management (AuM) of crypto hedge funds globally enhanced to just about US$3.8 billion in 2020 from US$2 billion the prior year. The percentage of crypto hedge resources with AuM in excess of US$20 million increased in 2020 from 35% to 46%,” the agency noted.

Hedge funds double down on crypto

For each PwC’s 3rd once-a-year “World Crypto Hedge Fund Report,” Bitcoin is the most preferred asset as 92% of crypto funds are buying and selling it. The coin is followed by Ethereum (67% of cash traded it), Litecoin (34%), Chainlink (30%), Polkadot (28%), and Aave (27%).

In the meantime, the huge the greater part of crypto hedge fund investors are large-web-well worth individuals (54%) and loved ones places of work (30%).

“The median ticket size is US$.4 million, though the ordinary ticket size is US$1.1 million. Over 50 percent of crypto hedge cash have regular ticket measurements of US$.5 million and under. Crypto hedge funds have a median of 23 independent traders,” the report mentioned.

At the same time, each fifth “traditional” hedge fund—or around 21%—is also investing in cryptocurrencies today. On average, this sort of companies have allotted about 3% of their AUM in digital belongings, but approximately all of them (85%) are previously arranging to buy extra crypto by the conclusion of 2021.

Worries of embracing crypto

Additional, 26% of hedge fund professionals who are not investing in crypto described that they are “in late-phase organizing to spend or searching to invest” in electronic assets. Nonetheless, 82% of them also argued that regulatory uncertainty is a single of the significant obstructions that stand in the way of embracing crypto.

In the meantime, 50% of cash that presently devote in electronic assets have similarly mentioned that crypto offers “a big obstacle,” citing higher customer response/reputational chance (77%) as properly as the fact that cryptocurrencies are presently “outside the scope of existing financial investment mandates” (68%). Just about two-thirds of PwC’s respondents also acknowledged that they “don’t have enough information of electronic belongings.”

But if the aforementioned limitations to entry were taken off, 64% of hedge funds “would undoubtedly get started/accelerate their involvement/investment decision or likely modify their strategy and turn into extra involved” in cryptocurrencies, the report concluded.

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