Every year, the auditors at PricewaterhouseCoopers (PwC) examine the status quo of crypto hedge funds – and their tills are ringing.
How healthy is the crypto market? PwC investigates this question in an annual study on the crypto hedge fund landscape. The survey, in which numerous crypto hedge funds, including the Amber Group and Crypto Fund AG, took part, paints a bullish picture. The majority of respondents see the Bitcoin exchange rate between 50,000 US dollars (USD) and 100,000 USD by the end of 2021. 21 percent of the funds even anticipate prices beyond USD 100,000.
But price forecasts were not the only focus of the “3rd Annual Global Crypto Hedge Fund Report 2021“. The authors were also interested in who the crypto hedge fund customers were. The results were clear: similar to traditional hedge funds, the funds’ capital comes primarily from the pockets of so-called high net worth individuals (HNI), i.e. wealthy individuals. Accordingly, over 50 percent of the capital comes from HNIs. Another 30 percent come from family offices. A look at the investment level also shows that crypto hedge funds are not for small fish. On average, each investor puts out USD 1.1 million.
Market capitalization was also the focus of the study – and that grew significantly in 2020. While the accumulated hedge fund AUM (Assets Under Management) was USD 2 billion in 2019, it was USD 3.8 billion in 2020. This means that crypto hedge funds have seen capital grow by 90 percent in just one year. The funds thus follow the general trend of the crypto market. After all, Bitcoin market capitalization grew by over 350 percent in 2020.
The return is also impressive. The median of the profit generated by the hedge funds was 184 percent in 2020. However, the performance is slightly worse than that of the Bitcoin market. After all, an investment in the No. 1 cryptocurrency yielded a full 305 percent profit in the same year.
King Bitcoin unchallenged
Most of the funds surveyed in the study were diversified crypto hedge funds. But Bitcoin was almost always in the portfolio. 92 percent of the crypto hedge funds said they participate in the BTC price. This was followed by Ether (ETH) (67 percent) and Litecoin (LTC) with 34 percent.
All in all, the report paints a more than healthy picture of the Bitcoin market. The crash in May of this year was not part of the investigation. However, it is unlikely that hedge funds will be unsettled by price corrections like this. After all, the so-called corona crash of March last year had hardly any noteworthy reactions from crypto high finance. 61 percent of the funds surveyed had left the crash, in which BTC had fallen by over 35 percent within a day, completely cold.
