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- Crypto Hedge Funds manage $3.8 billion in the backdrop of the growing fame of cryptos.
- DeFi-specific tokens are grabbing the attention of traditional funds and financial institutions.
- Bitcoin continues to be the most popular asset among CHFs.
- Enormous returns reported on average by CHFs at 128%.
Crypto Hedge Funds taking an interest in DEXs
The 3rd Annual Global Crypto Hedge Fund Report released this week was Elwood Asset Management co-authored.
The report showed that the crypto hedge funds managed nearly $3.8 billion in 2020, up by almost 90% from 2019 when it managed around $2 billion. The report also showed that an increasing number of crypto hedge funds were showing interest in decentralized exchanges (DEXs), with the number growing to 31%.
Uniswap was the most popular DEXs, with 16% of the crypto hedge funds using it, followed by 1inch (8%) and SushiSwap (4%).
DeFi grabbing the attention of Crypto Hedge Funds
DeFi-specific tokens are on an upward trajectory, with Oracle Service Chainlink’s LINK being included in 30% of the crypto investments while Interoperability Protocol Polkadot’s DOT and the lending platform Aave’s AAVE being included in 28% and 27% of the investments, respectively.
Even the large traditional funds like that of Steven Cohen’s Point72 are reported to be appealed in DeFi.
According to DeFi Pulse, the total value of Ethereum based DeFi is sitting at $60 billion as various funds are including a strategy of crypto-focused funds.
According to Henri Arslanian, DeFi captures the attention of many traditional financial institutions even though they are far from using it because they want to educate themselves and understand the potential impact of DeFi on the future of financial services.
Popular Cryptocurrencies among Crypto Hedge Funds
Bitcoin continues to be the most popular asset among CHFs, while Ethereum’s Eth received an investment from 67% of the funds.
Crypto hedge Funds were also involved in stalking, lending and borrowing of cryptocurrencies in a proportion of 42%, 33% and 24%, respectively.
Returns and Investors of Crypto Hedge Funds
The number of CHF, which have over $20 million in its AUM, increased from 35% in 2019 and 46% in 2020. In comparison, 47% of the traditional hedge fund managers are invested or looking to invest in crypto worth $180 billion.
With many investments, CHFs showed staggering returns, which increased from 30% to 128%.
The majority of the investors in these funds are high net worth individuals making up 54% of the investors, followed by family offices with 30%.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
