Hedge funds’ long-term cryptocurrency interest remains robust even as investment ratios decline: PwC

The proportion of traditional hedge funds investing in cryptocurrency assets has declined over the past 12 months, although the long-term outlook remains positive, according to a new report from Big Four accounting firm PricewaterhouseCoopers (PwC).

According to the Global Crypto Hedge Funds report, the proportion of funds with cryptocurrency exposure decreased from 37% to 29% in 2022. None of the traditional hedge funds said they plan to reduce their exposure this year.

More than a third (37%) of funds without cryptocurrency exposure say they are curious but are waiting for the asset class to mature further. This is an increase from 30% reported a year ago. More than half, 54%, said they were unlikely to invest in the next three years, compared to 41% in the previous report.

Overall, the report reveals mixed feelings about cryptocurrencies from traditional financial institutions, with the keyword “regulatory uncertainty” as is often the case. PwC found that nearly a quarter of hedge funds are reassessing their strategies due to the U.S. regulatory environment, and 12% are considering relocating from the U.S. to more cryptocurrency-friendly jurisdictions.

“Despite market volatility, falling digital asset prices, and the collapse of a number of cryptocurrency companies, investment in cryptocurrency assets is expected to remain strong in 2023,” said Jon Garvey, global financial services leader at PwC United States. . “Traditional hedge funds that are committed to the markets for the long term only increase the number of crypto assets under management, but they do not maintain or increase the amount of capital deployed in the ecosystem.”