Category: Cryptocurrency, Stream | Tags: AIMA, Cryptocurrency, Hedge Fund, Institutional Investor, Regulation, Research
Posted by Colin Lambert. Last updated: October 13, 2024
AIMA’s 6th Annual Global Cryptocurrency Hedge Fund Report finds increasing optimism among hedge funds regarding digital assets thanks to regulatory clarity and the approval of crypto ETFs earlier this year has become clear.
This report examines the current state and evolution of the digital asset hedge fund market over the past year by examining nearly 100 hedge funds (with a focus on both TradFi and cryptocurrencies) in Q2 2024 I’m doing it. The study was conducted by AIMA and PwC and included funds from over six geographic regions with an estimated total assets under management (AUM) of $124.5 billion.
For this study, AIMA defines digital asset-focused hedge funds as hedge funds that invest at least 50% of their assets under management in digital assets. Data from cryptocurrency index funds and cryptocurrency venture capital funds is excluded. Specifically, the survey questions are designed to understand the impact of the past year on fund managers and highlight key themes and trends.
According to AIMA, the key findings are that investments in digital assets are on the rise, with almost half (47%) of traditional hedge funds surveyed having exposure to digital assets, and by 2023. This is an increase from 29% in 2019 and 37% in 2022. It gained attention due to regulatory clarity and the launch of spot crypto ETFs in Asia and the US. Of the companies that have already invested, 67% plan to maintain the same level of capital, while the remaining 33% plan to invest further capital by the end of 2024.
The study also found that there is a shift towards derivatives as investment strategies become more sophisticated. “The shift by traditional hedge funds to derivative trading of digital assets has been significant, with usage rising to 58% in 2024 (up from 38% in 2023), compared to spot trading at 69%. After reaching a peak, it has fallen to 25% this year’ last year. “This shows that hedge fund strategies are becoming increasingly sophisticated,” the association said.
Interest in fund tokenization is also increasing, with 33% of hedge fund respondents committing to tokenization, compared to about a quarter of traditional hedge funds last year, according to the report. Or answered that they are considering it. Among hedge funds focused on digital assets, 12% have already invested in tokenized assets, but regulatory challenges remain the biggest hurdle to widespread adoption.
Demand from institutional clients, a long-standing key to the asset class’s growth, is also emerging, with research showing that 43% of traditional hedge funds have no interest from institutional clients, regardless of whether they invest in digital assets. was found to be increasing. Currently, family offices and high net worth individuals (HNWIs) remain the largest investor category for hedge funds focused on digital assets, followed by funds of funds.
Perhaps inevitably, this report includes a caveat, noting that despite the industry’s growth, many traditional hedge fund managers remain hesitant, with 76% of managers currently not investing in digital assets. % are unlikely to enter the sector within the next year, research shows. 3 years. This is up from 54% in 2023.
The biggest barrier cited by 38% of funds was the exclusion of digital assets from investment obligations, up from fourth place last year. Regulatory uncertainty remains a key concern, but AIMA says it has been alleviated somewhat with the adoption of clearer regulatory frameworks such as the EU’s MiCA.
