Crypto Hedge Funds Doubled Down on Publicity in 2020: PwC Report

In accordance with PricewaterhouseCoopers (PwC), the overall variety of belongings below administration of crypto hedge funds globally doubled in 2020, leaping from $2 billion in 2019 to $3.8 billion. 

The PwC report indicated that greater than 90% of crypto funds commerce in Bitcoin (BTC).

Following shut behind is Ethereum (ETH), which options in 67% of all crypto hedge funds. Rounding off the highest 5 crypto belongings are Litecoin (LTC) at 34%, Chainlink (LINK) at 30%, and Polkadot (DOT) at 28%. 

Roughly half of the crypto hedge funds surveyed commerce in derivatives (56%), though the report indicated that short-selling drastically diminished in 2020 from 48% to twenty-eight%.

Crypto hedge funds had been additionally discovered to be actively concerned in staking, lending, and borrowing actions.

Very similar to conventional hedge funds, PwC discovered that the majority crypto funds are based mostly within the Cayman Islands—the offshore jurisdiction homes 34% of funds working in crypto. America and Gibraltar are available second and third, opening their respective doorways to 33% and 9% of crypto hedge funds. 

Crypto hedge fund managers, nevertheless, are based mostly elsewhere. 

America leads the way in which with 43%, adopted by the UK and Hong Kong, which home 19% and 11% of fund managers respectively. 

What’s behind the rise of the crypto hedge fund? 

In accordance with PwC, the launch of the crypto hedge fund is broadly correlated with the  worth of Bitcoin

“The worth spike in 2018 seems to have been a catalyst for additional crypto funds to launch whereas the lower in 2018 led to fewer funds being launched in 2019,” the report stated, including, “18% of the survey respondents had been launched in 2020 when costs had been rising once more.”

Rising costs could be attracting newcomers to the market, however there stay some issues concerning the trade. 

In accordance with the report, roughly 4 in 5 respondents (82%) stated they had been involved about regulatory uncertainty throughout the wider crypto trade. “Regulatory uncertainty is by far the best barrier,” the report stated, including, “Even those that do spend money on digital belongings cite it as a significant problem.” 

Different dangers embody reputational dangers—which 77% of respondents cited—in addition to merely inadequate information about digital belongings, which 64% of respondents included of their solutions. 

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