PwC hedge fund survey finds crypto stays viable regardless of current market turmoil


PwC launched its fifth annual international crypto hedge fund report on July 12 primarily based on surveys of crypto-native and conventional hedge funds performed within the first quarter of this yr. Towards the backdrop of the current crypto winter and persevering with regulatory uncertainty in the USA and elsewhere, the report discovered a relatively constructive outlook among the many funds.

Crypto-native hedge funds are “working in direction of attaining a brand new trade dynamic which centres round rebuilding confidence and making their wants heard,” and practically all of them (93%) count on the market cap to rise over the yr, the report discovered. The vast majority of them (53%) reported no publicity to FTX or the Terra Luna ecosystem.

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 traders in search of publicity to the crypto-asset market.”

Greater than half of the funds (54%) have operations in the USA, however these funds didn’t reply otherwise from others to U.S. laws, with 42% saying these laws are usually not anticipated to influence 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 a giant splash within the sector. Solely 15% of funds are contemplating investing in tokenized securities, and solely 4% tokenize models in their very own funds.

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The portion of conventional hedge funds that put money into crypto fell from 37% in 2022 to 29% this yr. Of the funds nonetheless investing in crypto, 62% maintain lower than 5% of their property below administration in crypto and solely 8% maintain greater than 20% in crypto. Forty-six % of these respondents stated they might enhance crypto investing this yr, down from 67% final yr. None of them stated they might lower their capital ranges deployed in crypto.

Among the many funds not investing in crypto, “consumer response or reputational threat” has overtaken “regulatory uncertainty” as the principle motive, however 40% stated that the removing of regulatory obstacles wouldn’t transfer them to start investing in crypto.

PwC partnered with different 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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