Gradually, cryptocurrencies find their way into the classic financial markets. More and more financial institutions are working on crypto ETFs, for example, and in the first countries such products are already on the market. Furthermore, more and more brokers and CFD traders are incorporating digital currencies on their platforms.
A recent survey also shows that there is still much more potential in this area. A survey of 100 hedge fund managers finds that 98 percent plan to invest in cryptocurrencies by 2026. Accordingly, more billions could flow into the market in the future.
Hedge funds plan investment in Bitcoin and Co
The Dutch company administration Intertrust Group asked 100 executives of large hedge funds in a survey about their plans around the crypto market. Clear result: 98 percent of respondents plan to invest in the market by 2026. They want to build some kind of crypto exposure in this context, as an” overwhelming majority ” of survey participants stated. The fact that this is more than just small marginal investments is shown by the average investment volume that hedge funds have in store for their strategies.
According to the survey results, asset managers want to invest an average of 7.2 percent of their billion-dollar assets in Bitcoin (BTC), Ethereum (ETH) and Co. As the Intertrust Group noted, the entries of institutional investors and the remarkable growth of many cryptocurrencies have attracted the interest of hedge funds. Many would currently consider an entry and are preparing to change their asset allocation. This includes, for example, the custody and management of crypto assets.
We’re pleased to see our hedge fund report featured in the @ FinancialTimes this morning – highlighting a predicted hike in demand for cryptocurrencies.
– Intertrust Group (@intertrustgroup) June 16, 2021
Cryptocurrencies Make Even Critical Hedge Funds Think
Recently, the interest of hedge funds in the crypto market already seemed to intensify. With Bridewater Associates – the largest hedge fund in the world-even the asset manager, who has been rather pessimistic in recent years, recently commented on Bitcoin. Bridgewater highlighted the role of the largest cryptocurrency by market capitalization in the overall market. The fund’s founder, Ray Dalio, has called Bitcoin a “hellish invention” in the recent past. Meanwhile, Bridgewater also recognizes the” fantastic sides ” of Bitcoin.
In particular, North American, European and British hedge funds said that as early as 2026, cryptocurrencies account for 1% of the total portfolio. The trading platform FalconX came to the conclusion that the first hedge funds already bought BTC, ETH and Co on a large scale during the Bitcoin correction in mid-May. Preqin’s data analysts calculated that around $ 312 billion could flow into the market in the future if the funds really invest the volume mentioned in the market.
However, Morgan Stanley and the consulting firm Oliver Wyman currently see only a relatively small group of investors as potential clients for the hedge funds. Due to the volatility of cryptocurrencies, corresponding investment products would only be suitable for risk-prone customers. There are still some critical voices in the financial scene. Just recently, Paul Singer’s Elliot management called cryptocurrencies the ” biggest financial fraud in history.” An important aspect is likely to continue to be a possible regulation of cryptocurrencies, which currently discourages some funds from investing.
Conclusion: Hedge funds check entry into the crypto market
Many cryptocurrencies saw significant price increases last year and this year. As a result, the interest of hedge funds in the crypto markets grew and first asset managers are apparently already examining an entry. A recent survey also shows that virtually all major hedge funds want to invest in cryptocurrencies by 2026.
The Intertrust Group came to the conclusion in a survey that on average 7.2 percent of the assets of hedge funds could flow into BTC, ETH and Co. Conversely, this would mean that billions could flow into the crypto market in the coming years. For the acceptance of cryptocurrencies, the entry of the “big players” would be an important sign.