Global cryptocurrency hedge funds have experienced three-fold increases in their average assets under management (AUM) over the past year, says a new study.
A new joint report published by consultancy firm PwC and investment firm Elwood Asset Management reveals that the median crypto hedge fund AUM had grown from $1.2 million at fund launch in January 2018 to $4.3 million in Q1 2019.
The report, which uses data collected from 100 of the largest global crypto hedge funds according to AUM, notes that the growth indicates relatively successful fundraising efforts despite difficult market conditions.
The report also found that the average fund AUM as of Q1 019 was $21.9 million. Around 60 percent of funds have less than $10 million in assets while less than 10 percent were handling assets worth over $50 million.
Bitcoin’s 72 percent plunge in 201 made it a challenging year for crypto markets. Investors similarly suffered, with the median crypto fund showing returns of -46 percent.
The report does note, however, that since most of the study’s respondents used Bitcoin as their benchmark, it can be argued that they “did manage to outperform their benchmark and add some alpha.”
Digital assets becoming viable asset classes
“The crypto hedge fund industry today is probably where the traditional hedge fund industry was in the early 1990s,” Henri Arslanian, who oversees cryptocurrencies at PwC, said.
“We expect the industry to go through a rapid period of institutionalisation and implementation of sound practices over the coming years.”
Bin Ren, CEO of Elwood, echoed Arslanian’s positive outlook, noting that digital assets are taking the first steps towards becoming recognized as viable asset classes.
“The crypto hedge fund space is just one part of a much broader ecosystem of digital assets, around which there is increasing evidence of institutionalisation,” he said.
“This broader interest from investors and regulators is undoubtedly a positive step towards digital assets being recognised as an asset class with true viability and longevity.”
”However, in order for that progress to continue it needs to be accompanied by greater transparency and education, and this report is a step towards achieving that.”