Half of conventional hedge funds already invested in cryptocurrencies

A research by the Different Funding Administration Affiliation (AIMA) reveals that funding in cryptocurrencies by conventional hedge funds in the US has elevated considerably.

In response to the report, investments in digital belongings are rising as regulatory readability and ETFs enhance confidence amongst traders. By the numbers, practically half (47%) of conventional hedge funds surveyed this 12 months have publicity to digital belongings, in comparison with 29% in 2023 and 37% in 2022.

This enhance is pushed by larger regulatory readability and the launch of spot bitcoin (BTC) and ether (ETH) ETFs in Asia and the US. Among the many funds already invested, 67% plan to take care of the identical stage of fundingwhereas the remaining 33% plan to extend their capital in digital belongings by the top of 2024.

The renewed curiosity in digital belongings isn’t solely restricted to hedge funds themselves, however can be mirrored within the rising demand amongst their institutional purchasers.

43% of conventional hedge funds, whether or not or not they spend money on digital belongings, report larger curiosity from their institutional purchasers. Personal organizations that handle the wealth of rich households and excessive web price people (HNWIs) stay the biggest classes of traders in hedge funds centered on digital belongings, adopted by hedge funds, the report says.

Curiosity in fund tokenization can be on the rise, with 33% of respondents both dedicated to or exploring this selection, in comparison with a few quarter of respondents final 12 months. Though solely 12% of digital asset-focused hedge funds are at present investing in tokenized belongings, regulatory challenges characterize the primary impediment to broader adoption, the report highlights.

James Delaney, managing director of Asset Administration Regulation at AIMA, stated the findings of this 12 months’s report “point out a gentle restoration in confidence over the previous 12 months”.

“Institutional traders are displaying renewed curiosity, pushed by a number of key elements, together with larger regulatory readability such because the European Union’s MiCA regulation, advances in infrastructure, and the approval of recent merchandise corresponding to spot bitcoin and ether ETFs. by the U.S. Securities and Change Fee,” he added.

Regardless of the expansion of the cryptocurrency business, the hedge fund sector stays cautious. 76% of funds that don’t at present spend money on digital belongings They think about it unlikely to enter this market within the subsequent three years, a rise of 54% in 2023.

The primary barrier, talked about by 38% of the funds, is the exclusion of digital belongings from funding contractsa priority that has risen to fourth place this 12 months. Though regulatory uncertainty stays a priority, it has decreased due to the adoption of clearer regulatory frameworks, such because the EU’s MiCA.

This curiosity and adoption by hedge funds coincides with the rising presence of bitcoin in fund treasuries, with greater than 50,000 BTC reported within the portfolios of US hedge funds, as reported by CriptoNoticias in August this 12 months.

This text was created utilizing synthetic intelligence and edited by a human Editor.