PwC Survey Reveals Most Effective Strategy For Cryptocurrency Hedge Funds Is ‘Long Only’

According to the PwC paper, there is a significant amount of non-crypto hedge funds that are investing resources in the crypto space.

The report also mentions that in 2020 the digital currency-centered hedge funds increased their respected AUM by 100% compared to 2019. The report suggests that in 2020 the mean of returned funds topped 120% compared to 30% in the previous year.

The increasing influence of digital asset hedge funds

AIMA, along with PwC in their 3rd yearly global fund report, dived in the effectiveness of different hedge fund digital asset investments in liquid, generally available digital currencies.

AIMA and PwC both managed to locate 200 hedge funds currently employed in crypto trading, and 81% of them were set in motion in the previous three years. Regardless, the year 2020 was a huge hit, especially for the cryptocurrency market primarily, because of the surge in price and the introduction of significant investors.

Because of this, crypto-centric hedge funds have raised their asset under management to $3.8b from $2b in the previous year. Hedge funds with AUM greater than $20 million surged from 35% – 46%.

The paper reads that the mean AUM for the year funds surged from $12.8 million — $42.8 million. Subsequently, the median asset under management increased from $3.8 million — $15 million.

On average, hedge funds gained around 128% for the year 2020, while the average return represents 30% of the previous year from the survey. However, those hedge funds that followed the long-only strategy gained the most profitable result of 300%. Crypto-centric companies have reported that the 54% of their consumers have a high net worth, and coming in second place is family offices.

Hedge funds not affiliated with crypto are also getting involved

Aima and PwC, in their survey, also looked at the opinions and likelihood of involvement in the crypto space by conventional hedge funds. To no one surprise, the number of such hedge funds increased following the industry boom.

The result of the survey showed that close to a quarter of conventional hedge funds was involved, with digital currencies like BTC topping the most favorable investment cryptocurrency. However, the investment allocated for a given fund’s portfolio was only 3%, but more than 85% of hedge funds intend to push more investment.

Moreover, the hedge funds that are still uninvolved with cryptocurrencies state regulating unpredictability as the main obstacle for them not to join the bandwagon. The rest did not comprehend how their customers would react. More than 60% stated lack of knowledge regarding crypto and could reconsider if they get better educated regarding the crypto world.

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