According to a new study, the assents under management (AUM) of cryptocurrency-focused hedge funds had doubled in 2019 compared to 2018.
Despite some challenges in the field, Bitcoin remains the most frequently traded digital asset, with Ethereum and Ripple following.
According to the report citing the survey compiled by PwC and the digital asset investment company Elwood Asset Management Services Ltd, cryptocurrency funds have increased their AUM to more than $2 billion at the end of 2019. This represents a jump of over 100% from the 2018 amount of approximately $1 billion.
Funds accepting only long positions, better known as “discretionary long-only funds,” marked the best median performance at 40% and an average gain of 42%, the survey explained. Discretionary long/short saw equal increases of 33% of gains and median.
Quantitative funds registered a 30% median advance and even more impressive averaged gains of 58%. Such large point difference hinted that there were some outsized performers, the study added.
Henri Arslanian, PwC global crypto leader and partner, believes that “the volatility of cryptocurrency markets offers many opportunities for quant traders.” He added that the results displayed by digital asset quant funds are typically more linked with the market volatility instead of its performance.
Quant traders operate with mathematical computations and number crunching strategies to find optimal trading possibilities.
Somewhat expectedly, 97% of all respondents noted that they have traded with the largest cryptocurrency by market cap, Bitcoin. Ethereum (67%), XRP (38%), Litecoin (38%), Bitcoin Cash (31%), and EOS (25) were next.
“It is interesting to note that Litecoin was mentioned by funds as one of their top traded altcoins despite its market cap being relatively smaller than the other mentioned altcoins.” – reads the report.
Rise Of Institutional Interest?
With the inclusion of this survey, the cryptocurrency space maintains a particularly intriguing period of several consecutive weeks in which institutional investors are demonstrating increased interest in the market.
Paul Tudor Jones II, among the most prominent traditional investors and hedge fund managers, said that he is buying Bitcoin to fight the potential increase of interest rates. His BTC asset allocation is “just over 1%,” as he later explained.
A Wall Street-linked company, called the New York Digital Investment Group (NYDIG), recently disclosed selling nearly $140 million in a little-known Bitcoin fund.
As a result, PwC’s Arslanian concluded that interest in the field could be expected to continue developing:
“I expect the crypto hedge fund industry to grow significantly over the coming years as investing in a crypto fund may be the easiest and most familiar entry point for many institutional investors looking at entering this space.”