• Growing interest in digital assets from hedge fund managers
• Crypto hedge funds invest primarily in Bitcoin, Ethereum and Solana
• Regulatory uncertainty as the main reason for not investing
According to a study conducted for the fourth time by the management consultancy PwC, the AIMA (Alternative Investment Management Association), Elwood Technologies and the asset manager CoinShares, interest in cryptocurrencies is unbroken.
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For the first quarter of 2022, the authors record a significant increase in crypto investors among hedge fund managers: In the current study, 38 percent of those surveyed state that they are already invested in crypto, compared to 21 percent in the same quarter of the previous year.
crypto hedge fund
According to the study data, around half of the current 300+ crypto hedge funds were launched in the last three years. A correlation between the Bitcoin rate and the number of newly launched funds can be seen, with activities involving the Bitcoin rate increasing in 2021 in particular. The main investments are in Bitcoin, Ethereum and Solana. Investor strategies categorize into the different categories, with market neutral strategies accounting for nearly a third of all crypto hedge fund strategies. Overall, the authors state that crypto hedge funds’ trading strategies are becoming more mature and that returns are healthy. “The increasing sophistication of crypto specialty funds can be seen in management’s experience, penchant for higher quality assets and the interplay of digital assets, on-chain/off-chain return vehicles and traditional derivatives markets. Hoping for further regulatory clarity.” Both crypto specialists and traditional hedge funds are optimistic about the long-term future of digital assets and their value,” the study reads.
Increasing investment volume
Both the number of traditional hedge fund managers investing in cryptocurrencies and the total assets under management in crypto funds have increased significantly compared to the previous year. For most hedge fund managers, however, crypto investments represent only a small part of the investment volume.
According to the authors of the study, 57 percent of the respondents invest less than one percent of the total volume in digital assets, 39 percent of the study participants are invested with two to five percent. But here, too, the authors recorded an increase and draw a positive outlook, because 67 percent want to invest more in the future. However, this is a decrease compared to last year, when 86 percent of respondents said they were investing more in cybercurrency.
The answers from managers who have not yet invested in cryptocurrencies are particularly interesting: 16 percent state that they already have concrete investment plans for the current year, 31 percent of those surveyed show a wait-and-see attitude, but emphasize that they are interested in investments . A total of 41 percent of the managers surveyed stated that they did not want to invest in Bitcoin, Ethereum and Co. in the next three years. In the previous year, it was still 57 percent of those surveyed.
Against Bitcoin, Ethereum, Ripple & Co: Reasons for rejecting digital assets
The lack of regulation and tax uncertainties are given by 83 percent of those surveyed as the main reasons for not investing in cryptocurrencies. 79 percent fear reputational risks or negative reactions from their clients. 77 percent state that they have not yet invested due to a lack of infrastructure and service providers
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