Based on a recent study, traditional hedge funds have started to dip their toe into the water of cryptocurrencies. However, they’re keeping their investments small for the time being despite the crypto surge that’s been sweeping the market.

PricewaterhouseCoopers partnered with the Alternative Investment Management Association and Elwood Asset Management to survey traditional hedge funds on what they plan to do about cryptocurrencies.

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Statistics on crypto hedge funds

The firms estimate that global crypto hedge funds had about $3.8 billion in assets under management last year, up from $2 billion in 2019. The percentage of crypto hedge funds with more than $20 million in assets under management rose from 35% to 46%. The average assets under management this year rose to $42.8 million from $12.8 million.

The median crypto hedge fund was up 128% last year and 30% in 2019. The median best-performing strategy among crypto hedge funds last year was discretionary long-only with a 294% return, followed by discretionary long/ short at 129% and multi-strategy at 114%.

“This growth in the crypto space is consistent with the growth we are seeing across the hedge fund world,” Linsey Lebowitz Hughes of Duke University pointed out via email when asked to weigh in on the study. “We are still in a bull market, with substantial momentum coming from ’20, where hedge funds posted the best three consecutive Qs in history, +26.2%, and thus far for 2021, hedge funds are up ~11% on average. So clearly the opportunity set is rich, despite an ongoing pandemic. Growth in AUM for HFs comes from two sources: new allocations and performance, and we are currently seeing both.” SOURCE