PwC, the accounting, financial advisory and tax consultancy, and Elwood Asset Management have published their third annual report that examines the global crypto hedge fund landscape. The report is based on data from research in the first quarter of 2021 on crypto hedge funds. The report was also created in partnership with the Alternative Investment Management Association (AIMA) and provides insights into how traditional hedge funds are looking at cryptocurrency.
- For purely crypto hedge funds, the report estimates that the total assets under management (AuM) has increased globally from US$2 billion in 2019 to nearly US$3.8 billion in 2020. Most crypto hedge funds trade Bitcoin/BTC (92%) followed by Ethereum/ETH (67%), Litcoin/LTC (34%), Chainlink/LINK (30%), Polkadot/DOT (28%) and Aave/AAVE (27%).
- Around 20% of the traditional hedge funds surveyed — which represent around US$180 billion in assets under management — are currently investing in digital assets, and the average percentage of their total AUM invested in digital assets is 3%. According to the report, 86% of those traditional funds that are already investing in cryptocurrency intend to invest more capital into the digital asset class by the end of 2021.
- “This year for the first time, we also covered the traditional hedge funds in the space and what has been really remarkable is that according to the data — 46% of traditional hedge funds representing about US$180 billion in AUM have either invested in crypto or very close to doing so,” said Henri Arslanian, PwC’s global crypto leader, in an interview with Forkast.News. “And that, I think, is definitely more than many people in the market expected to see.
- According to the report, 82% of those surveyed said regulatory uncertainty remains the greatest barrier to investing in cryptocurrency. Even those who already invest in digital assets cite it as a major challenge (50%). The lack of infrastructure or service provider availability also remains a barrier, with custody being the area most in need for improvement.