PwC launched its fifth annual international crypto hedge fund report on July 12 based mostly on surveys of crypto-native and conventional hedge funds carried out within the first quarter of 2023. Towards the backdrop of the current crypto winter and persevering with regulatory uncertainty in america and elsewhere, the report discovered a reasonably constructive outlook among the many funds.
Crypto-native hedge funds are “working in direction of attaining a brand new business dynamic which centres round rebuilding confidence and making their wants heard,” and almost all of them (93%) anticipate the market cap to rise over the 12 months, the report discovered. Nearly all of them (53%) reported no publicity to FTX or the Terra Luna ecosystem.
think about paying your crypto hf 2% comish on this efficiency
per pwc fifth annual hf report pic.twitter.com/TJk1cf7CKw
— Monty (@MontyHall_) July 12, 2023
Many of the funds carried out higher than the worth of Bitcoin (BTC) in 2022. The report discovered:
“Crypto hedge funds stay widespread funding automobiles for buyers in search of publicity to the crypto-asset market.”
Greater than half of the funds (54%) have operations within the U.S., however these funds didn’t reply in a different way from others to U.S. rules, with 42% saying these rules will not be anticipated to affect them. The funds listed segregation of property (75%), monetary audits (62%) and an impartial assertion of reserve property (60%) as necessities they wish to see for buying and selling venues.
Tokenization appears to not have made an enormous splash within the sector. Solely 15% of funds are contemplating investing in tokenized securities, and solely 4% tokenize models in their very own funds.
Associated: Crypto custody market reached $448 billion in 2022: Report
The portion of conventional hedge funds that put money into crypto fell from 37% in 2022 to 29% in 2023. Of the funds nonetheless investing in crypto, 62% maintain lower than 5% of their property beneath administration in crypto and solely 8% maintain greater than 20% in crypto. Forty-six % of these respondents mentioned they might enhance crypto investing this 12 months, down from 67% final 12 months. None of them mentioned they might lower their capital ranges deployed in crypto.
Among the many funds not investing in crypto, “shopper response or reputational threat” has overtaken “regulatory uncertainty” as the principle cause, however 40% mentioned that the elimination of regulatory obstacles wouldn’t transfer them to start investing in crypto.
PwC partnered with various asset supervisor CoinShares to survey 131 crypto-native funds. The Various Funding Administration Affiliation obtained knowledge from 59 conventional hedge funds for that part.
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