A survey of 100 hedge fund Chief Financial Officers (CFOs) forecasts that hedge funds all around the world will be holding 7.2% of their assets in crypto within 5 years.
The results reflect an increasing vote of confidence in cryptocurrencies despite the increasing regulatory pressure and volatility the industry has experienced over the past months.
Hedge Funds are Going for Crypto
The survey estimates that the equivalent value of 7.2% of the assets would represent around $312 billion across the industry.
17% of the CFO’s surveyed said they expect to have more than 10% of their assets in cryptocurrency, which experts estimate could result in other hedge funds increasing their crypto holdings.
While the number of hedge funds actively investing in cryptocurrency at this time is limited to those with high-risk tolerance, the increasing long-term potential has proven to be too attractive for hedge funds to ignore.
The survey, which was conducted by Intertrust, showed that all of the executives interviewed hold cryptocurrency accounting for at least 1% of their portfolios’ worth.
Those executives worked for hedge funds with an average of $7.2 billion in assets across North America, Europe, and the United Kingdom.
A surprising finding was that while North American funds expect an exposure of 10.6% on average by 2026, funds in the UK and Europe expect an average of 6.8%.
This is despite the uncertainty the crypto industry has experienced over its future regulation in the world’s biggest economy.
Bitwise Raises $70 Million in Funding
With Institutional Investors continuing to show an interest in crypto, projects involved with crypto continue to find new sources of funding to launch and maintain their platforms.
This was the case of the crypto asset management company Bitwise, which raised $70 million in Series B funding.
With more than 30 investors from Wall Street and Silicon Valley participating in the funding round, this news shows that institutional investors are not backing down on crypto but instead looking for projects that allow them to capitalize on its growing popularity
Bitwise’s CEO, Hunter Horsley, referred to the success of the Series by stating:
“People thought we (and crypto) were crazy. You may have, too. Indeed, it’s been a wild ride. […] We envision a future—five, ten years from now—where the vast majority of investors in America own crypto because of the powerful things it can do to help them protect and grow their capital and savings. A 1-10% allocation for most investors, I’d guess.”
The crypto index fund has grown to become the dominant force in the industry, managing more than $1 billion for clients all around the world despite having only 30 members in its team.
Institutional Investors Want Crypto
Sygnum, a crypto-bank based in Switzerland, has recently announced the launch of a custody and trading service for DeFi tokens. This service is specially designed to cater to the needs of institutional clients looking to invest in the cryptocurrency market.
The bank will be supporting the leading tokens in the DeFi ecosystem, including Aave, Aragon, Curve, Maker, Synthetix, Uniswap, and 1inch Network, as well as offering banking services for USDC.
Aave’s CEO; Stani Kulechov, said:
“Sygnum’s institutional-grade custody solution makes it easier for clients to onboard to the digital asset ecosystem. We look forward to continued collaboration with the aim of bridging the traditional banking world with decentralized finance.”
The evolution and growing popularity of Decentralized Finance has become the driving force behind the adoption of crypto by many institutions that are trying to bridge the gap between centralized and decentralized finance to create a better financial ecosystem.
Many DeFi platforms offer double digit annual returns for staking, and many DeFi tokens have also gone up in value. With Central Banks holding interest rates near record lows, we may see more large investors looking for the kind of returns that are on offer in the DeFi space.