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

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Traditional hedge funds are slowly embracing cryptocurrency investments however are preserving their publicity restricted because the market continues to mature, in response to 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 similar to Bitcoin (BTC). So-called “multi-strategy” hedge funds had been almost definitely to speculate, adopted by macro technique and fairness technique companies, respectively.

Of the hedge funds at present invested within the crypto area, 57% have allotted lower than 1% of their complete belongings below administration. Two-thirds of the companies at present invested plan to extend their publicity by the tip of 2022.

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

A complete of 89 hedge funds had 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 area. While a number of hedge funds have launched crypto divisions and began investing within the area, nearly all of companies stay on the sidelines. Interestingly, a 2021 survey of 100 international hedge funds revealed that managers anticipate to allocate a median of 10.6% to crypto inside 5 years.

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

Although crypto belongings have been in a protracted bear marketplace for a lot of 2022, institutional traders seem like shopping for the latest value dip. Inflows into Bitcoin funding merchandise, similar to exchange-traded funds and Grayscale’s GBTC product, elevated by $126 million final week, in response to CoinShares. Bitcoin funding funds have quietly added over $500 million in web inflows this yr.