Hedge funds expect to hold $310 billion in cryptocurrencies within 5 years - more than 7% of their assets

Hedge funds expect to hold $310 billion in cryptocurrencies within 5 years - more than 7% of their assets
Institutional interest in cryptocurrencies like bitcoin has jumped in 2020.Eric Gaillard/Reuters
  • Hedge funds plan to ramp up their crypto holdings to more than 7% of assets by 2026, a survey showed.
  • That would equate to around $313 billion of cryptocurrency holdings, Intertrust Group said.
  • Hedge funds have been drawn to the volatility and huge price rises in cryptocurrencies such as bitcoin.
Hedge fund bosses are planning to ramp up their holdings of cryptocurrencies, predicting that an average of 7.2% of their assets under management will be held in digital tokens by 2026, a survey has found.

That would equate to around $313 billion of cryptocurrency holdings, based on an estimate of the future size of the hedge fund industry, according to Intertrust Group, which carried out the research.

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The finding is a sign that many potential institutional buyers are not being put off by bitcoin's recent plunge, but see cryptocurrencies as a long-term strategy.

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"Certain cryptocurrencies, such as bitcoin and ethereum, have delivered incredible - albeit volatile - performance in recent years," said Jonathan White, global head of fund sales at Intertrust, a Netherlands-based professional services group.

"Inevitably, they have drawn growing interest from hedge funds as well as institutional and retail investors."

Intertrust's survey, first reported by the Financial Times, found that one in six respondents expect their funds to have more than 10% in cryptocurrencies in five years' time. Just shy of all respondents said they expect to have at least some crypto investments by then.

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The company polled 100 chief financial officers at hedge funds around the world, with average assets under management of $7.2 billion.

North American hedge funds were the most bullish on crypto, predicting that they would hold around 11% of their assets in digital tokens by 2026.

Given the secretive nature of the hedge fund industry, it's unclear how much crypto exposure these institutions currently have. Yet most hedge funds that have moved into the space have only committed a small amount. For example, Brevan Howard plans to invest up to 1.5% of its main $5.6 billion fund in cryptocurrencies, it said in April.

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For a more in-depth discussion, come on over to Business Insider Cryptosphere — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve.

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There’s a new Indian crypto lobby in the making and Zebpay has confirmed its participation

Investments in crypto hit a new record of $17 billion, but Indian funds are yet to jump on the bandwagon

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