June 07, 2021

The Main Highlights of PwC Crypto Hedge Fund Report

In May PricewaterhouseCoopers (PwC) released its annual report on hedge funds that invest in cryptocurrency. According to a multinational professional services network, the total number of assets managed by crypto funds in the world doubled last year. The figure increased by almost $ 2 billion compared to 2019. In the meantime, special attention is paid to the tokens of the DeFi protocols. They are actively used in portfolios, but first things first.

What Is Behind the Rise of Crypto Hedge Funds?

The 3d annual PwC Global Crypto Hedge Fund Report, compiled in collaboration with Elwood Asset Management, indicates that the hike in virtual asset prices in 2018 was the catalyst for the launch of new crypto funds. The reduction, in turn, resulted in fewer funds being launched in 2019. Moreover, almost 20% of the respondents to the survey were launched a year ago, when prices began to go up again.

Rising prices can attract new entrants to the market. The document says that 21% of traditional funds invested in digital cash (mostly in BTC, obviously). Although their average allocation is now only 3% of all portfolios, more than 85% of participants intend to invest more by the end of 2021.

However, there are still some concerns about the industry. The majority is worried about regulatory uncertainty. At the moment, it is perhaps the main obstacle. Even those who invest in virtual coins call it a serious problem. Among other risks are reputational ones (77%) and a lack of knowledge about the high-yielding alternative asset class  - 64%.

Interest in De-Fi

For fans in the world of crypto and blockchain, 2020 was definitely the year of Defi. The number of new users and projects grew like weeds. No wonder 31% of respondents gave decentralized exchanges a try. The undoubted leader is Uniswap (16% of usage) followed by 1inch (8%) and SushiSwap (4%).

While the popular coins fall in price, De-Fi tokens continue to grow. Chainlink accounted for 20% of hedge fund investments, Polkadot - 28%, AAVE - 27%.

Traditional funds are showing a bit of interest in a blockchain-inspired form of finance as well. Of course, they are still far from using decentralized applications. Nevertheless, many institutions are trying to get a better understanding of the impact of DeFi on the future of financial services. According to experts, interest in this sector will continue to grow.

This document gives special prominence to speculation. About this and much more you will learn from our next article.

What May Lie in Store for the Crypto Market in the Future?

Despite the pullback from it's all-time highs, the market of virtual assets is still moving up (discover more about the trends here). This is reported by Bloomberg experts in their new report. Analysts believe that digital gold will resume appreciating toward $100,000 resistance rather than sustaining below $20,000. This will be facilitated by the release of the market from the excess of speculative positions. They describe the recent plunge in Bitcoin price as “discounted and refreshed”.

What is more, experts say that if the trend continues, ETH can edge out BTC for the title of the first cryptocurrency. The team encourages you to take a closer look at ETH as part of portfolio diversification (learn why you need a portfolio at all here).

We will carry out further analysis on the report from PwC in our next article, so stay tuned.

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