- According to Marc P. Bernegger, there is a new trend where people are effectively using cryptocurrencies as hedge funds
- Survey by PwC–Elwood Crypto Hedge Fund Report suggests that the most common among the crypto fund strategy is quantitative
- Last year, the crypto hedge funds with assets under management amounted to $20 million
A hedge fund is essentially an investment that protects the funds from economic instability. . For many years, the classic hedge fund has been Gold. The yellow metal has been preferred by many investors as the superior hedge fund. However, according to Marc P. Bernegger, there is a new trend where people are effectively using cryptocurrencies as hedge funds. Bernegger is an early BTC investor and is the board member at Crypto Finance AG and the Swiss Blockchain Federation.
Why Cryptocurrency Hedge Funds Are Gaining Popularity?
In his entire article, he explained the emergence of crypto hedge funds. During these unprecedented times, the economic condition of many nations is not stable. Some of them are on the verge of inflation or money printing as what the US citizens call it. Cryptocurrencies have globally risen as hedge funds particularly because of their certain features. Firstly, they are decentralised hence their prices are not influenced by any sort of inflation or economic stability. The sole factors that determine the price are the demand of the crypto in the market and the supply of the crypto. Secondly, cryptocurrencies have high portability.
The Most Common Crypto Strategy is Quantitative
A recent survey by PwC–Elwood Crypto Hedge Fund Report suggests that the most common among the crypto fund strategy is quantitative (almost 48%). The next on the list is discretionary long (19%), discretionary long/short (17%) and lastly is multi-strategy (17%). However, it has been noticed that when it comes to crypto funds, systematic crypto funds have gained much more appreciation compared to passive strategies, discretionary long/short and lastly multi strategies.
Cryptocurrencies Like Bitcoin a Safe Haven
In short, the sector of crypto hedge funds is rapidly changing. The most number of people who tend to invest in crypto hedge funds are either people with a very high net worth or family offices. Last year, the crypto hedge funds with assets under management amounted to $20 million. However, this year it has doubled to almost $44 million. Wall Street influencers like George Ball have suggested that cryptos like Bitcoin can become a safe haven in the future.