Pricewaterhouse Coopers, one of the world’s largest accounting firms and a member of the Big Four, has unveiled its “Z-Yearly Review of the Global Cryptocurrency Hedge Fund Market.” In it, it named the median return for cryptocurrency hedge funds globally in 2020 at plus 128%, which is significantly higher than the 2019 results (+30%).
The image of the average investor in such a fund is mostly an individual with a median investment of $400,000. If we consider this figure in terms of the usual median, we are talking about investments at the $1.1 million level.
Most hedge funds (92%) included bitcoin investments in their cryptocurrency portfolio. Ethereum is in second place by popularity and with a significant lag: 67% of all cryptocurrency hedge funds have it in their product offerings. Other assets include Litecoin, Chainlink, Polkadot and Aave. More than half of these funds (56%) trade cryptocurrency derivatives.
Bitcoin is the central asset for such structures: at least half of the daily turnover with digital assets of 56% of such organizations are transactions with the cryptocurrency #1, and every seventh fund invests in bitcoins and carries out transactions only with them. Among the trends is the decrease, from 81% to 76%, over the year in the share of those funds that use external custodial service providers to hold cryptocurrencies.
Most cryptocurrency hedge funds are registered in the Cayman Islands (34%), the U.S. (33%) and Gibraltar (9%), with the majority of managers of such organizations located in the U.S. (43%), the UK (19%) and Hong Kong (11%).
Notably, one in five classic hedge funds has also started investing in digital assets, allocating an average share of 3% to this in their investment portfolio. Moreover, 85% of such funds investing in cryptocurrencies intend to invest even more capital in such assets by the end of 2021. At the same time, one in four classic hedge funds that have not yet invested in digital assets noted that they plan/are going to invest in cryptocurrencies.
The majority (82%) cited unclear regulatory practices regarding this asset class as a major barrier to investing in digital assets. At the same time, 64% of fund representatives admitted that they do not have sufficient knowledge about digital assets.