Nearly 50% of Traditional Hedge Funds Now Invest in Cryptocurrencies: Report

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Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

Nearly half of traditional hedge funds now invest in cryptocurrencies, according to a survey published Thursday by the Alternative Investment Management Association and PwC. This marks a significant increase from 29% in 2023, and 37% in 2022.

This growth is driven by increased regulatory clarity and the launch of spot cryptocurrency ETFs in Asia and the US. Among the funds already invested, 67% plan to maintain their current capital levels. Meanwhile, 33% intend to invest more by the end of 2024.

The most popular digital asset strategies among traditional hedge funds are market-neutral and discretionary long-only, each adopted by 33% of respondents.

This survey was conducted in the second quarter this year. It included nearly 100 hedge funds from over six regions, managing about $124.5b in total assets.

Centralized exchanges were found to be the preferred trading venues for 58% of traditional hedge funds. These platforms are favored for their liquidity and ease of use. Decentralized exchanges, used by 33%, offer greater control over assets. Over-the-counter (OTC) trading is preferred by 25%, as it allows large trades without impacting market prices.

Also, there is a notable shift towards derivative trading in digital assets. Its use rose to 58% in 2024 from 38% in 2023, while spot trading dropped to 25% after peaking at 69% last year. This shift signals growing sophistication in hedge fund strategies.

Image Source: AIMA/PwC

Interest in fund tokenization is also growing. About 33% of hedge fund respondents are committed to or exploring tokenization, up from around 25% last year. Among digital