Assets under the management of cryptocurrency hedge funds more than doubled in 2019, according to the research by PWC and Elwood Asset Management Services, published on the bitcoin’s halving day. The data takes into account the world’s largest cryptocurrency hedge funds, including index funds and cryptoassets capital funds.
According to the survey, there are 150 cryptocurrency funds currently active. Almost two thirds of them (63%) were launched in 2018 or 2019. The volume under management went from US$ 1 billion to US$ 2 billion last year – an average of US$ 21.9 million per fund to US$ 44 million.
Most cryptocurrency hedge funds operate with bitcoin
Most cryptocurrency hedge funds surveyed (97%) were trading BTC, followed by ETH (67%), XRP (38%), LTC (38%), BCH (31%) and EOS (25%). The substantial increase in assets under management can also be a result of an increase in cryptocurrency prices. The price of the bitcoin, for example, rose from US$ 3,872 on January 1 last year to US$ 7,174 on December 31.
In 2019, the percentage of cryptoassets hedge funds using an independent custodian also increased from 52% to 81%; and 86% used an independent fund manager.
And what is the investor profile? About 90% are family offices or individuals with high net worth. A small percentage of respondents were foundations, endowment funds, venture capital funds or fund funds – none of them were pension funds.
In addition, cryptocurrency hedge funds tend to be domiciled in the same jurisdictions as traditional hedge funds, mostly in the Cayman Islands (42%), followed by the US (38%) and British Virgin Islands (8%).
The report also points out that the launching of funds is highly correlated with the price of bitcoin. Thus, the price increase in 2018 was a catalyst for launching other funds. After bitcoin’s third halving, there is an expectation that the price will rise by the end of the year.
Transfero has three cryptocurrency hedge funds
Transfero Swiss started fundraising for its three cryptocurrency hedge funds at the end of 2019. Aimed at institutional clients and professional investors, crypto hedge funds aim to give greater institutionality to the crypto market. One of them is Counter Cyclical, a passive fund that invests 75% in gold and 25% in bitcoin. This fund is intended for those who want to invest in so-called anti-cyclical assets, which means, that have no correlation with the stock market.