As a seasoned researcher with over two decades of experience in financial markets, I’ve seen my fair share of trends and shifts. The recent surge of traditional hedge funds into cryptocurrencies is undeniably intriguing. Regulatory clarity and the emergence of ETFs are indeed compelling catalysts for this shift.
Almost fifty percent of conventional asset-focused hedge funds are incorporating cryptocurrencies into their portfolios due to increased regulatory certainty and the advent of ETFs, as per a recent poll.
An increasing number of conventional hedge funds are adopting cryptocurrencies, fueled primarily by improved regulatory understanding and the debut of exchange-traded funds in the United States and Asia, according to Bloomberg’s latest report based on a survey conducted by the Alternative Investment Management Association and PricewaterhouseCoopers.
As a researcher, I’ve uncovered an interesting trend: In 2022, about one-third (37%) of hedge funds dealing in traditional markets had dipped their toes into cryptocurrencies. By 2023, this percentage jumped to nearly a third (29%), and as of now, a substantial 47% are actively engaged in crypto trading. Furthermore, among these crypto-investing hedge funds, approximately two-thirds (67%) aim to sustain their current level of investment in the digital currency market. The remaining funds express their intention to ramp up their exposure by the end of 2024.
To begin with, a significant number of hedge funds entered the cryptocurrency market by exchanging tokens in the traditional market. However, the report suggests a transition towards more complex trading methods, as it is projected that 58% of these funds will be engaged in crypto derivative trading in 2024, compared to 38% the year before. Simultaneously, the percentage of funds dealing with spot markets has dropped from a high of 69% last year to only 25%.
Regardless of the rising curiosity, a significant portion of hedge fund managers continue to show reluctance. A study found that about 76% of those not currently investing in cryptocurrency are unlikely to alter their position within the next three years, which represents an increase from 54% in 2023.
Furthermore, it was found that approximately two out of every three conventional hedge funds are not considering incorporating Bitcoin ETFs into their current cryptocurrency-centric strategies. The survey, comprising responses from 100 hedge funds (42% specializing in traditional assets and the remaining 58% focused on cryptocurrencies), was carried out during Q2.
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2024-10-10 12:41