Nearly 50% of traditional hedge funds have crypto exposure: PwC

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.

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.