PricewaterhouseCoopers (PwC) has released a report showing that the number of assets under management (AUM) of hedge funds of cryptocurrencies is on the rise, from $2 billion in 2019 to more than $3.8 billion this year.
The PwC report revealed a clear top five for cryptocurrency hedge funds. After bitcoin (BTC), which appears in more than 90% of funds, and Ethereum (ETH) with 67%, Litecoin (LTC) with 34%, Chainlink (LINK) with 30%, and Polkadot (DOT) with 28%, complete the top five in this year’s results.
Of the cryptocurrency hedge funds surveyed, more than half of these are engaged in derivatives trading, although the report indicates that short selling has declined somewhat, from 48% to 28%.
Cryptocurrency hedge funds are also actively involved in staking and lending, just like traditional funds. The majority set their domicile in the Cayman Islands. The United States and Gibraltar follow in second and third place, with 33% and 9% of crypto hedge funds.
According to PwC, the growth of crypto hedge funds in 2018 was closely correlated with the price of Bitcoin. “The price rally in 2018 appears to have been a catalyst for the launch of more cryptocurrency funds, while the decline in prices caused fewer funds to be launched in 2019″ the report notes, adding that 18% of cryptocurrency respondents were launched in 2020, when prices rose again.