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

Conventional 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 International Crypto Hedge Fund Report 2022, PwC said roughly one-third of conventional hedge funds surveyed are already investing in digital belongings akin to Bitcoin (BTC). So-called “multi-strategy” hedge funds had been probably to take a position, adopted by macro technique and fairness technique corporations, respectively.

Of the hedge funds presently invested within the crypto house, 57% have allotted lower than 1% of their complete belongings beneath administration. Two-thirds of the corporations presently invested plan to extend their publicity by the top of 2022.

Respondents cited “regulatory and tax uncertainty” as the only biggest barrier to investing. Particularly, 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 performed throughout the first quarter of 2022.

A majority of the hedge funds surveyed by PwC have greater than $1 billion in belongings beneath administration. Supply: 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 house. Whereas a number of hedge funds have launched crypto divisions and started investing in the space, nearly all of corporations stay on the sidelines. Apparently, a 2021 survey of 100 world hedge funds revealed that managers count on to allocate an average of 10.6% to crypto inside 5 years.

Associated: What is driving institutions to invest in crypto? BlockFi’s David Olsson explains

Though crypto belongings have been in a protracted bear marketplace for a lot of 2022, institutional buyers seem like shopping for the newest value dip. Inflows into Bitcoin funding merchandise, akin to exchange-traded funds and Grayscale’s GBTC product, increased by $126 million last week, in response to CoinShares. Bitcoin funding funds have quietly added over $500 million in internet inflows this 12 months.