It’s somewhat intriguing that amidst the whirlwind of cryptocurrency excitement, traditional hedge funds seem to be stepping back. According to a recent report from the Big Four accounting firm PricewaterhouseCoopers (PwC), the percentage of funds investing in cryptocurrencies has dropped to 29% from last year’s 37%, a notable downturn.
This doesn’t necessarily spell maximum caution, though. The same report also states that no existing hedge funds are planning to decrease their crypto exposure this year. But it does reflect a more cautious approach and might dent the heads-up sentiment of some crypto enthusiasts.
On the flip side, a reasonable percentage, specifically 37%, of funds without crypto exposure, cite immaturity of the asset class as a reason for their institutional aloofness – up from 30% a year ago. However, this could be seen as latent potential. Who wouldn’t want to be there when the fruit is ripest?
The more stark figure talks about the majority. A hefty 54% said they’re unlikely to invest in the next three years, a rise from 41% in the last report. Which brings us to the ominous “regulatory uncertainty”, fervently cited for the caution on show. Almost a quarter of hedge funds are reassessing strategies due to the murky regulatory environment in the U.S., with some even mulling over hightailing away from U.S. to more crypto-friendly jurisdictions.
Yet, according to Jon Garvey, PwC United States’ global financial services leader, 2023 is quite promising. Despite market volatility, falling digital asset prices, and crumbling of several crypto enterprises, investment in crypto assets is expected to hold strong.
Garvey underscores that traditional hedge funds, committed to the market in the long-term, are not just increasing their crypto-assets under management but also maintaining, if not boosting, the amount of capital deployed in the ecosystem.
So, the sentiment could be summarised as thus: There’s a pullback, but it’s underlined by patience and strategic planning rather than an all-out retreat. Future of crypto-investment, much like the cryptocurrencies themselves, appears volatile yet dynamic as ever.
Source: Coindesk
