Nearly half of hedge funds focused on traditional assets now have crypto exposure, driven by regulatory clarity and the launch of ETFs, according to a new survey.
A growing number of hedge funds focused on traditional asset classes are embracing crypto, a move driven by enhanced regulatory clarity and the launch of exchange-traded funds in the U.S. and Asia, Bloomberg reports, citing a new survey by the Alternative Investment Management Association and PricewaterhouseCoopers.
The report found that 47% of hedge funds trading in traditional markets now have exposure to cryptocurrencies, up from 29% in 2023 and 37% in 2022. Among these funds, 67% plan to maintain their current level of investment in cryptocurrencies, while the remainder intend to increase their exposure by the end of 2024.
You might also like: Goldman Sachs hedge fund clients show interest in crypto options trading
Initially, many hedge funds ventured into crypto by trading tokens in the spot market. However, the report indicates a shift towards more sophisticated trading strategies, with 58% of funds involved in crypto trading derivatives in 2024, up from 38% the previous year. At the same time, the proportion of funds trading spot markets has decreased to 25% from a peak of 69% last year.
Despite the growing interest, some hedge fund managers still remain hesitant as the survey revealed that 76% of those not currently invested in crypto are unlikely to change their stance in the next three years, an increase from 54% in 2023.
Additionally, two-thirds of traditional hedge funds do not plan to integrate Bitcoin ETFs into their existing crypto-focused strategies. The survey, which involved 100 hedge funds — 42% focusing on traditional assets and the rest on crypto — was conducted in Q2.
Read more: Analyst: Crypto ETFs to form 5% of hedge fund by 2025