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Despite bearish development, hedge funds are dipping their toes in crypto: PwC

Despite bearish development, hedge funds are dipping their toes in crypto: PwC thumbnail
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Traditional hedge funds are slowly embracing cryptocurrency investments however are conserving their publicity restricted because the market continues to mature, in line with new analysis from PricewaterhouseCoopers, or PwC.

In its 4th Annual Global Crypto Hedge Fund Report 2022, PwC mentioned roughly one-third of conventional hedge funds surveyed are already investing in digital belongings comparable to Bitcoin (BTC). So-called “multi-strategy” hedge funds have been almost definitely to speculate, adopted by macro technique and fairness technique corporations, respectively.

Of the hedge funds presently invested within the crypto house, 57% have allotted lower than 1% of their whole belongings below administration. Two-thirds of the corporations presently invested plan to extend their publicity by the tip of 2022.

Respondents cited “regulatory and tax uncertainty” as the one best barrier to investing. Specifically, hedge funds are involved a couple of fragmented regulatory surroundings globally in addition to unclear steerage on how the asset class shall be ruled.

A complete of 89 hedge funds have been included within the survey, which was carried out throughout the first quarter of 2022.

A majority of the hedge funds surveyed by PwC have greater than $1 billion in belongings below administration. Source: PwC

Hedge funds and different conventional asset managers have been eyeing developments within the crypto sector to gauge whether or not they need to start investing within the house. While a number of hedge funds have launched crypto divisions and began investing within the house, the vast majority of corporations stay on the sidelines. Interestingly, a 2021 survey of 100 international hedge funds revealed that managers count on to allocate an common of 10.6% to crypto inside 5 years.

Related: What is driving establishments to put money into crypto? BlockFi’s David Olsson explains

Although crypto belongings have been in a protracted bear marketplace for a lot of 2022, institutional traders look like shopping for the newest worth dip. Inflows into Bitcoin funding merchandise, comparable to exchange-traded funds and Grayscale’s GBTC product, elevated by $126 million final week, in line with CoinShares. Bitcoin funding funds have quietly added over $500 million in web inflows this 12 months.

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