Bitcoin Bullish on Crypto Hedge Funds

• Since intra-period Bitcoin returns peaked at 131% last year.
• 70 crypto hedge funds used a market-neutral investing strategy.

According to PwC’s 2022 Global Crypto Hedge Fund Report, hedge funds are investing in cryptocurrencies at an all-time high despite the volatility.

According to the report, the market currently has around 300 hedge funds focused on cryptocurrencies. Data from the survey reveals that the establishment of new crypto hedge funds appears to be associated with the price of Bitcoin.

All-time High on Huge Fund 

Cryptocurrencies traded by crypto hedge funds

Data revealed that many other funds were launched in 2018, 2020, and 2021 all very bull years for bitcoin. However, the majority of brand-new cryptocurrency hedge funds typically use investment strategies that don’t depend on market growth. 

PwC discovered that over a third of the more than 70 crypto hedge funds it surveyed used a market-neutral investing strategy. These funds often use derivatives to reduce risk and obtain more focused exposure to the underlying asset because they aim to benefit regardless of market direction.

According to the report, these funds had a median return of 199% in 2021, and the discretionary long-term funds with returns of 420% in 2021 are the best-performing ones, according to the average return. 

With an average return of only 37%, market-neutral funds significantly underperformed funds using other strategies, and since intra-period Bitcoin returns peaked at 131% last year. Over $500 million in net inflows have been quietly made this year to bitcoin investment funds.