Almost 50% of hedge funds concentrating on traditional assets have now ventured into cryptocurrency, fueled by clearer regulations and the introduction of ETFs, according to a recent survey.
An increasing number of hedge funds specializing in traditional asset classes are turning to crypto, propelled by improved regulatory clarity and the rollout of exchange-traded funds in the United States and Asia, Bloomberg reports, referencing a new survey conducted by the Alternative Investment Management Association and PricewaterhouseCoopers.
The findings revealed that 47% of hedge funds actively trading in traditional markets now possess cryptocurrency exposure, a rise from 29% in 2023 and 37% in 2022. Among these funds, 67% intend to maintain their current cryptocurrency investment levels, with the balance planning to boost their exposure by the conclusion of 2024.
Initially, many hedge funds entered the crypto space by engaging in spot market trading. However, the report highlights a transition toward more advanced trading methodologies, with 58% of funds participating in crypto derivatives trading in 2024, an increase from 38% the previous year. Concurrently, the proportion of funds trading in spot markets has fallen to 25% from a high of 69% last year.
Despite the increasing enthusiasm, some hedge fund managers continue to express caution, as the survey indicated that 76% of those not currently invested in crypto are unlikely to alter their position in the next three years, up from 54% in 2023.
Moreover, two-thirds of traditional hedge funds do not plan to incorporate Bitcoin ETFs into their current crypto-focused strategies. The survey, which included 100 hedge funds — 42% concentrated on traditional assets and the remainder on crypto — was conducted in the second quarter.
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