A growing number of traditional hedge funds are entering the cryptocurrency market, with 47% now having exposure to digital assets, according to the latest Global Crypto Hedge Fund Report by the Alternative Investment Management Association and PwC. This marks a significant increase from 29% in 2023 and 37% in 2022.
The report highlights that improved regulatory clarity and the launch of cryptocurrency exchange-traded funds (ETFs) in the U.S. and Asia have driven more hedge funds to explore the crypto space. Among those already invested, 67% plan to maintain their current capital allocation, while the remainder intend to increase their exposure by the end of 2024.
Hedge funds initially approached crypto through spot market trading but are now adopting more sophisticated strategies. In 2024, 58% of crypto-invested funds traded derivatives, up from 38% in 2023, while the share trading spot markets declined to 25% from a high of 69% the previous year.
Despite this growing momentum, many hedge funds remain hesitant. The survey found that 76% of funds without crypto exposure do not plan to invest in digital assets within the next three years, citing restrictive investment mandates as a primary barrier. Similarly, two-thirds of traditional hedge funds do not intend to integrate Bitcoin ETFs into their strategies, reflecting a cautious stance toward digital assets.
The survey, conducted in Q2 2024, included 100 hedge funds, 42% of which focus on traditional markets while the rest primarily invest in crypto. The findings were published shortly after Bitcoin reached an all-time high in March, underscoring the increasing—but still uneven—adoption of cryptocurrencies in the hedge fund industry.
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