PwC Global Crypto Hedge Fund Report 2022

More than a third of traditional hedge funds now invest in digital assets, nearly double a year ago

This report provides an overview of the Global Crypto Hedge Fund Market, offers insight into how this dynamic sector is evolving, and seeks to identify key trends that are relevant to industry participants, investors, and service providers.

It is divided into two parts based upon a distinction between specialist crypto asset hedge funds (those created with the expressed intent of dealing primarily in digital asset investments), and “traditional” asset-based hedges funds:

Part 1 – Crypto Hedge Funds Digital Asset markets for crypto-specialist funds, using data collected by CoinShares.

Part 2 – Traditional Hedge Funds Digital Assets markets for “traditional” hedge funds, prepared in cooperation with the Alternative Investment Management Association (AIMA).

Key Findings

Even with the tremendous volatility in the sector, there are many more traditional hedge funds investing in crypto and more specialist crypto funds being created as the digital asset class gains acceptance.
The number of specialist crypto hedge funds is estimated to now top 300 globally, with the pace of new funds being created accelerating in the past two years.
Total assets under management (AuM) of crypto hedge funds surveyed was US$4.1bn in 2021, up 8% from the year prior.
Regulatory uncertainty is a key issue for hedge funds, whether or not they are currently invested in digital assets.
Most traditional hedge funds getting into digital assets are still just dipping their toes – 57% have less than 1% of total AuM in digital assets. But it is notable that for 20% of these funds, digital assets represent between 5% and 50% of AuM. Further, two-thirds of funds (67%) currently investing in digital assets intend to deploy more capital into the asset class by the end of 2022.
For specialist crypto hedge funds surveyed, the average AuM more than doubled to US$58.6mn from US$23.4mn in the previous year, while median AuM nearly tripled to US$24.5mn from US$8.5mn. From 2020 to 2021, the percentage of crypto hedge funds with AuM exceeding $20mn increased from 46% to 59%.

AuM at Crypto Hedge Funds and Digital Asset acceptance among Traditional Hedge Funds continued to grow during 2021 with the former yielding healthy returns and maturing trading strategies familiar to the latter. The increased sophistication of the Crypto Specialist funds can be evidenced in experience of management, preference towards higher quality assets, and the interplay between of Digital Asset, on-chain/off-chain yield earning instruments, and traditional derivatives markets. With the hopes of further regulatory clarity, both Crypto Specialist and Traditional Hedge Funds are bullish about the long term future of Digital Assets and their value.