According to a report by the consulting company PwC and the firm Elwood Asset Management, the volume of assets under management (AUM) of cryptocurrency hedge funds has doubled in 2019 and reached $2 billion.
PwC and Elwood Asset Management published a report indicating that the total amount of assets managed by cryptocurrency hedge funds doubled last year. At the end of 2018, the amount of assets was about $1 billion. The share of hedge funds with digital assets worth more than $20 million increased from 19% to 35% in 2019, the average amount of assets under their management jumped from $21.9 million to $44 million, and the median AUM rose from $4.3 million to $8.2 million.
PwC and Elwood divided cryptocurrency hedge funds into four categories, depending on their trading strategy.
Hedge funds with long retention periods for investors ‘ assets. The median figure held at 40%, while the average increase was 42%.
Funds with long / short positions (using hybrid strategies). The average and median growth of such funds was 33%.
Funds focused on quantitative trading and working with liquid cryptocurrencies. The median indicator increased by 30%.
Funds that use a combination of the first three strategies. The median growth rate increased by 15%.
According to PwC and Elwood, almost half of cryptocurrency hedge funds use “quantitative” trading, while the remaining 50% of funds use other strategies. The firms added that the above data was provided by cryptocurrency hedge Fund managers and was not verified by third-party auditors.
Last year, 97% of hedge funds traded BTC, 67% – ETH, 38% – XRP and LTC, 31% – BCH and 25% – EOS. The report indicates that many hedge funds have shown interest in litecoin despite the fact that its market capitalization is smaller compared to other altcoins. About 56% of hedge funds traded derivatives, 48% – focused on short sales, 42% – engaged in cryptocurrency staking, 38% – provided loans.
48% of cryptocurrency hedge funds were family equity trust companies and 42% were high-income individuals. None of the sub-Fund is not mentioned pension funds as investors.
According to Henri Arslanian, head of cryptocurrency at PwC, there have been many changes in the cryptocurrency hedge Fund industry over the past 12 months. The introduction of additional regulatory rules indicates that more and more institutional investors are entering the industry.
“In the next few years, the cryptocurrency hedge Fund industry will become even more developed. Institutional investors now have the opportunity to easily invest in the digital asset industry, ” said Henry Arslanian.
Last month, PwC presented another report, according to which in 2019, the financing of cryptocurrency firms significantly decreased.