On May 11, 2020, a survey by Elwood Asset Management and the consulting company PricewaterhouseCoopers (PwC) revealed that the value of assets under management at crypto hedge funds more than doubled in 2019 to reach $2 billion.
According to the PwC partner Henri Arslanian, the report surveyed more than 50 funds and found out that more crypto hedge funds trade ETH (67%), than any crypto derivatives (56%). However, BTC is still leading an investment volume of 97%.
Arslanian said the Covid-19 pandemic had stimulated more investors to ask how hedge fund managers decrease counterparty risks on crypto investments.
Arslanian was quoted saying:
“One macro trend we’ve seen since the coronavirus is more general interest in cryptocurrencies.”
The PwC report also found that the percentage of crypto hedge funds with more than $20 million under management jumped up from 19% to 35% of surveyed funds.
Arslanian expects the crypto hedge fund industry to grow significantly over the coming years. This is more likely now as crypto gains institutional interest as a store of value and hedge against inflation amidst the coronavirus.
Crypto Hedge at Funds Reaping the Benefits of Volatility
National economies are sinking into a recession, but bitcoin is still growing throughout the coronavirus crisis, even recently surging to $10,000 due to increased buying pressure as the halving event draws nigh.
Crypto hedge funds, in particular, are reaping the benefits of global volatility, as demonstrated by the recent PwC reports. For instance, Eric Ervin, co-founder of Blockforce Capital, recently revealed that his crypto funds earnings are up 18% so far this year.
All in all, Arslanian expects investors to learn about the crypto market via institutions and ultimately bring some of that trading activity in-house.
Bitcoin Halving Comes at Crucial Time for Crypto
Investing in a crypto fund is emerging as the most familiar entry point for many institutional investors looking at entering the digital assets space.
The growing interest in crypto just before the upcoming Bitcoin halving on May 12th signals that a major rally may be underway, with individual and institutional investors involved.
Indeed, institutional investors are gaining BTC exposure. Just recently, Bloomberg reported that famous macro investor Paul Tudor Jones, a legendary hedge fund investor who has been paving the way for the institutional influx of BTC, is buying Bitcoin as a hedge against inflation.
This is great for BTC, as the halving event has only magnified interest in crypto and could mean that Bitcoin remains the last assets still trading amidst growing market turmoil caused by coronavirus.