Bitcoin’s worth soared final 12 months, boosting the property of crypto hedge funds from $2 billion to $3.8 billion. Whereas the median return in 2020 amongst crypto hedge funds was 128% (in comparison with 30% in 2019), discretionary long-only funds carried out finest with a median return of 294%, the report mentioned. Hedge funds with quantitative methods — the commonest, representing 37% of crypto funds — had a median return of 72%.
A number of cryptocurrencies surged earlier this 12 months however the previous month has been particularly risky, with Bitcoin’s value down from a excessive above $60,000 to commerce beneath $40,000 on Tuesday.
Bitcoin was the commonest holding amongst crypto hedge funds (92%), adopted by Ethereum
(67%), Litecoin (34%), Chainlink (30%), Polkadot (28%) and Aave (27%), the report mentioned.
Past the crypto-focused funds, the survey discovered 21% of conventional hedge funds had some crypto publicity — a median of three% of their whole property. The overwhelming majority (86%) of funds that held digital property deliberate to extend their publicity this 12 months, whereas roughly one-quarter of funds not presently invested in digital property mentioned they supposed to be.
The survey discovered regulatory uncertainty to be the best barrier (82%) for managers, adopted by consumer response or reputational danger (77%) and digital property falling exterior the scope of funding mandates (68%).
Henri Arslanian, PwC’s crypto chief, mentioned he expects inflows into crypto hedge funds to extend over the approaching months.
“For a lot of institutional buyers, an allocation to a crypto hedge fund is the pure first step of their crypto journey because it permits them to watch and study in regards to the asset class through a automobile and construction they’re acquainted and comfy with,” Arslanian mentioned in a launch.
The median administration price for crypto hedge funds final 12 months was 2%, with a 20% efficiency price.