Crypto hedge funds expect digital assets will be up by the end of the year

Traditional hedge funds already invested in crypto intend to stick with their positions or potentially increase their exposure, the study found

article-image

Sergey Kohl/Shutterstock, modified by Blockworks

share

A majority of crypto-native hedge funds expect higher market capitalizations for digital assets by the end of 2023 compared to 2022, according to a PwC study released Thursday.

Bitcoin has demonstrated an upward trend since the end of last year, with an 85% year-to-date rally alongside recoveries in global equity indexes. The total crypto capitalization has jumped 50% in that time, from $828 million to $1.25 trillion, with bitcoin making up about half.

“Despite market volatility, a fall in digital asset prices and the collapse of a number of crypto businesses, investment in crypto assets is expected to remain strong in 2023,” John Garvey, global financial services leader at PwC US, said in the report.

The study separately found the percentage of traditional hedge funds investing in crypto assets declined from 37% last year to 29%, as the crypto landscape grappled with regulatory strife in the US.

Still, those hedge funds already invested in crypto assets intend to uphold or even increase their exposure, regardless of market volatility and regulatory challenges, it noted.

The report utilized data from two separate surveys, one involving 131 crypto-native hedge funds and the other gathering information from 59 traditional hedge funds.

Traditional funds more interested in tokenization than crypto-natives

Traditional hedge funds showed more interest in blockchain-powered assets and securities, with around 25% exploring tokenization. 

However, unlike last year when one in five traditional hedge funds invested in non-fungible tokens (NFTs), no hedge funds reported NFT investments this time.

Among the crypto hedge funds surveyed, market neutral strategies, designed to generate profits irrespective of market direction, remained the preferred choice.

Meanwhile, the usage of discretionary long-only strategies rose from 14% in the last survey to 19%, while more quantitative long-and-short styles fell from 25% to 18%.

In terms of response to regulatory enforcement, 12% of crypto hedge funds were found contemplating a shift from the US to jurisdictions that offer a more favorable environment for crypto.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Templates.png

Research

ZKPs enable efficient offchain transaction processing and validation, resulting in increased throughput and reduced fees. Solana's ZK Compression leverages ZKPs to minimize onchain storage costs, while Sui's zkLogin streamlines user onboarding by replacing complex key management with familiar OAuth credentials.

article-image

North Korea suspected in breach of Indian exchange’s multisig wallet

article-image

Plus, Sanctum’s CLOUD token has officially launched — but not without problems

article-image

It’s not yet clear whether Donald Trump is pumping bitcoin. But an unofficial memecoin is still seeing benefit.

article-image

StarkWare takes a step towards making StarkNet for Bitcoin

article-image

The numbers point to one conclusion: Risk is back, or at least it was during the first half of the year