Despite The Volatility Seen In PWC Survey Most Hedge Funds Continue To Invest In Crypto
According to the survey, 38% of traditional hedge
funds are investing in digital assets, up from 21% last year.
Experts estimate the number of crypto hedge funds to
exceed 300 globally, with the momentum associated with their creation
accelerating over a period of the past 2 years.
Despite the volatility seen in the PwC survey, most
hedge funds continue to invest in crypto: According to PwC's Fourth Annual
Global Crypto Hedge Fund Report 2022, released earlier this week, the ongoing
volatility in the sector has driven most of the traditional hedge funds. That
hasn't stopped funds from investing in crypto, but more specialist crypto funds
are being created as digital assets gain acceptance.
John Garvey, global financial services leader at PwC
United States, said in a news release: “The recent collapse of Tera clearly
demonstrated the potential risks in digital assets. Volatility will always be
there, but so will the market as it matures. And with it not only are many more
crypto-focused hedge funds and high AUM markets entering the market, but many
more traditional funds entering the crypto space as well.
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According to this survey, 38% of traditional hedge
funds are investing in digital assets, up from a mere 21% last year. With
expert estimates that the number of crypto hedge funds is expected to exceed
300 globally, the pace of their creation has shown an uptick in the past 2
years.
According to the report, most traditional hedge funds
are still patting their toes, as 57% of these still hold less than 1% of the
total assets under management (AUM) in digital assets. Nevertheless, 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 aim to infuse more
capital into them by the end of the year.
Assets Under Management
According to the survey, the average AUM for crypto
hedge funds is $59 million this year compared to $23 million last year. From
the year 2020 to 2021, the percentage of crypto hedge funds with an AUM of more
than $20 million has also increased from 46% to 59%.
Overall, crypto hedge funds continue to achieve strong
growth despite the volatility of crypto. The PwC report states that the mean
cryptocurrency funds return in the year 2021 with +63.4% but still, it was much
lower than the +127.55% average return for the year 2020.
Bitcoin (BTC) is traded at 86% by most crypto hedge
funds; This is followed by Ethereum (ETH) at 81%; Solana (SOL) at 56%; Polkadot
(dot) 53%; Terra (LUNA) at 49% and Avalanche (AVAX) at 47%.
While most traditional hedge funds are still investing
in crypto today, there are others who are hesitant.
Yet overall, the number of traditional hedge fund managers
who do not invest in digital assets has declined from 79 percent to 62 percent
over the past year.
Regulatory uncertainty associated with hedge funds
appears to be a major issue, whether or not they have been invested in digital
assets in recent times. The lack of regulatory and tax clarity was perceived as
a top challenge by 89% of hedge fund managers currently investing in digital
assets. Regulatory uncertainty is ranked 83% as the main obstacle for managers
who are not currently investing in crypto.
Related Tags: Cryptocurrency, Hedge fund, Investment fund
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