The PwC survey sees more hedge funds investing in cryptocurrencies, despite the volatility

Volatility in the industry hasn’t deterred more traditional hedge funds from investing in cryptocurrencies, and more specialized crypto funds are being created as digital assets gain acceptance, according to PwC’s 4th Global annual Cryptocurrency Hedge Fund Report 2022, released earlier this week.

John Garvey, PwC’s global financial services leader in the United States, said in a report Press release: “The recent Earth crash has clearly demonstrated the potential risks in digital assets. There will continue to be volatility, but the market is maturing and with that will come not only many more crypto-focused hedge funds and higher AuMs, but also more traditional funds entering the cryptocurrency space. “

Of the traditional hedge funds surveyed, 38% are investing in digital assets, up from 21% a year earlier. The number of specialized cryptocurrency hedge funds is estimated at more than 300 globally, with an accelerating pace of creation over the past two years.

According to the report, most traditional hedge funds are still lowering their fingers, as 57% have less than 1% of total assets under management (AuM) in digital assets. However, for 20% of these funds, digital assets represent between 5% and 50% of AuM. In addition, two-thirds of funds currently investing in digital assets intend to use more capital by the end of this year.

Managed savings

For the cryptocurrency hedge funds surveyed, the average Aum more than doubled to around $ 59 million from $ 23 million a year earlier. From 2020 to 2021, the percentage of crypto hedge funds with AuM above $ 20 million increased from 46% to 59%.

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Cryptocurrency hedge funds continue to experience strong growth despite the volatility of cryptocurrencies. The PwC report states that the median crypto fund returned + 63.4% in 2021. However, this was significantly lower than the average return of + 127.55% in 2020.

Most cryptocurrency hedge funds traded Bitcoin (BTC) at 86%; followed by Ethereum (ETH) at 81%; Solana (SOL) at 56%; Pois (DOT) at 53%; Earth (LUNA) at 49% and Avalanche (AVAX) at 47%.

While more traditional hedge funds are investing in cryptocurrencies, some remain hesitant.

However, the number of traditional hedge fund managers not investing in digital assets is shrinking, dropping to 62% of respondents from 79% the year before.

Regulatory uncertainty appears to be the key issue for hedge funds, whether or not they are currently invested in digital assets. Lack of regulatory and fiscal clarity was cited as a major challenge by 89% of hedge fund managers currently investing in digital assets. For managers who are not currently investing in cryptocurrencies, regulatory uncertainty has been ranked as a top 83% hurdle.

The PwC report shared the results of survey-based research conducted in the first quarter of 2022, produced together with the Alternative Investment Management Association and Elwood Asset Management (now part of CoinShares).

© 2022 The Block Crypto, Inc. All rights reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.

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