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Crypto Hedge Funds Grew by 150% in 2021 With More Capital Deployment Expected

2 mins
Updated by Geraint Price
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In Brief

  • PwC surveyed crypto hedge funds and traditional hedge funds that are branching out into crypto.
  • Individual hedge funds grew by an average of 150% in 2021.
  • 35% of crypto hedge funds believe that bitcoin will reach a price between $50,000 and $75,000 this year.
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More hedge funds are beginning to actively invest in the crypto market in anticipation of a bump in bitcoin’s price, says a new report.

The report released by PwC shows that one-third of hedge funds are now moving into the cryptocurrency market. The professional services firm revealed the findings in its Fourth Annual Global Crypto Hedge Fund Report 2022. 

The report focuses primarily on crypto hedge funds and divides its analysis into two types: hedges focused exclusively on crypto and traditional hedge funds that are moving into the crypto market.

PwC used data collected from CoinShares for the first group and collaborated with the Alternative Investment Management Association (AIMA) to prepare the second. 

The forecast for the crypto market looks good, as far as hedge funds go, and this is substantiated by a number of figures in the report.

For specialist crypto hedge funds, individual funds grew by an average of 150% over 2021, from $23.4 million to $58.6 million. 

But perhaps more significantly, with traditional hedge funds, 67% of those surveyed said that they planned to deploy more capital into the crypto market by the end of the year.

The choice of investments also seems to be evolving, with a greater number of hedge funds taking an active approach. These entities are now looking to invest in the non-fungible token (NFT) markets, decentralized exchanges (DEXs), and assets other than bitcoin and Ethereum.

There are also some optimistic opinions about the price of bitcoin from these hedge funds. 42% of fund managers said that they expect bitcoin to have a price of $75,000 to $100,000. And 35% predicted that the price would reach between $50,000 and $75,000 by the end of 2022.

The signs of greater crypto adoption are clear

PwC’s report is another sign that the crypto market is finding broader appeal among the mainstream public, as well as established financial institutions. 

This has been the case for well over a year, and sub-sectors like DeFi and NFTs have done a lot to establish their appeal. Crypto has made progress with respect to global adoption, despite the bearish trends that have affected the market this year.

A report published last month showed that institutions were accumulating bitcoin, as indicated by some major movements on exchanges. The dip in bitcoin’s price may appear as a real bargain, and with targets close to $100,000 set, it would be a significant windfall should it happen.

Another report said that institutions were responsible for 99% of large bitcoin transactions. If these trends hold true and remain as they are, it could see bitcoin find support among big financial players, which would add weight to its bid to establish global adoption.

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Rahul Nambiampurath
Rahul Nambiampurath's cryptocurrency journey first began in 2014 when he stumbled upon Satoshi's Bitcoin whitepaper. With a bachelor's degree in Commerce and an MBA in Finance from Sikkim Manipal University, he was among the few that first recognized the sheer untapped potential of decentralized technologies. Since then, he has helped DeFi platforms like Balancer and Sidus Heroes — a web3 metaverse — as well as CEXs like Bitso (Mexico's biggest) and Overbit to reach new heights with his...