According to PwC 4, the desire in the industry has not prevented more traditional hedge funds from investing in cryptocurrencies, and according to PwC 4, more cryptocurrency-focused funds are being created as digital assets become increasingly recognized.e The annual report of the Global Crypto Hedge Fund 2022, published earlier this week.
John Garvey, head of global financial services at PwC USA, said in a press release: “The recent collapse of Terra has clearly demonstrated the potential risks of digital assets. There will always be some will, but the market is maturing, and with that comes not only many more cryptocurrency-focused hedge funds and more AuMs, but also more traditional cryptocurrency funds.
Of the traditional hedge funds surveyed, 38% invest in digital assets, up from 21% a year earlier. The number of cryptocurrency-focused hedge funds is more than 300 worldwide, and the pace of creation has accelerated over the past two years.
According to the report, most traditional hedge funds are simply sinking, as 57% have less than 1% of total assets under management (AuM) in digital assets. However, for 20% of these funds, digital assets range from 5% to 50% AuM. In addition, two-thirds of funds currently investing in digital assets intend to optimize more capital there by the end of this year.
Assets under management
For specialized crypto-hedge funds, the average AuM has more than doubled to about $ 59 million from $ 23 million last year. From 2020 to 2021, the percentage of crypto-hedge funds with AuM over $ 20 million increased from 46% to 59%.
Crypto hedge funds will continue to grow strongly, despite the will of cryptocurrencies. The PwC report states that the median return on cryptocurrency is + 63.4% in 2021. However, this was significantly lower than the median return of + 127.55% in 2020.
Most crypto hedge funds traded bitcoins (BTC) by 86%; followed by Ethereum (ETH) by 81%; Salt (SOL) at 56%; Peas (DOT) 53%; Terra (LUNA) by 49% and Avalanche (AVAX) by 47%.
Although more traditional hedge funds are investing in cryptocurrencies, some remain hesitant.
However, the number of traditional hedge fund managers who do not invest in digital assets is declining, down to 62% from 79% a year earlier.
Uncertainty over regulation seems to be a key issue for hedge funds, whether they are currently investing in digital assets or not. 89% of hedge fund managers who now invest in digital assets called the lack of clarity of regulations and taxation a major challenge. For managers who do not currently invest in cryptocurrency, 83% assessed the uncertainty of regulatory regulation as a major obstacle.
The PwC report published the results of a survey conducted in the first quarter of 2022, prepared jointly with the Association for Alternative Investment Management and Elwood Asset Management (now part of CoinShares).
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