Report: Average Crypto Hedge Fund Returns Tripled in 2020, 31% of Funds Use DEX

47% of traditional hedge fund managers have invested or are considering investing in cryptocurrencies

Report: Average Crypto Hedge Fund Returns Tripled in 2020, 31% of Funds Use DEX

A new report from PricewaterhouseCoopers (PwC) and the Alternative Investment Management Association (AIMA) on May 24 shows that crypto hedge funds manage nearly $3.8 billion in assets in 2020, up from $2 billion in 2019, and that crypto hedge funds are showing interest in decentralized finance (DeFi).

The third annual Global Crypto Hedge Fund Report, published by Elwood Asset Management, shows that 31 percent of crypto hedge funds use decentralized trading platforms (DEX), with Uniswap being the most widely used (16 percent), followed by 1inch (8 percent) and SushiSwap (4 percent).

According to DeFi Pulse, the DeFi space has seen explosive growth in recent months, with the total value of ethereum-based DeFi platforms now reaching $60 billion. There are reports that some large traditional hedge funds, such as Steven Cohen’s Point72, are taking an interest in DeFi as part of a strategy to build a crypto fund.

Henri Arslanian, head of PwC’s crypto practice, said in an email that interest in DeFi has also increased from some of the more traditional financial institutions.

Arslanian wrote: “While they are still a long way from using decentralized applications, many financial institutions are working to improve their education and trying to understand the potential impact DeFi could have on the future of financial services.

The average crypto hedge fund will return 128% in 2020 (30% in 2019). The vast majority of investors in this category are either high-net-worth individuals (54%) or family finance rooms (30%). the proportion of crypto hedge funds with more than $20 million in assets under management rises from 35% to 46% in 2020.

Meanwhile, 47% of traditional hedge fund managers (with $180 billion in AUM) have invested or are considering investing in cryptocurrencies, the report said.

The fact that we worked with AIMA and included traditional hedge funds in this year’s report shows that cryptocurrencies are rapidly becoming mainstream among institutional investors,” Arslanian said. This would have been unthinkable 12 months ago.

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