Within 5 years, up to 7% of hedge funds’ assets will be in cryptocurrencies

Despite the roller coaster of quotes and regulatory uncertainties, hedge funds expect to significantly increase their exposure to cryptocurrencies over the next 5 years. This confidence is photographed by an Intertrust Group survey conducted among 100 financial directors globally which finds that the expectations are for a growth in cryptocurrency assets with an average in 2026 equal to 7.2% of the total. Relating this value to total assets, explains the Financial Times, the ‘weight’ of these instruments could reach 312 billion dollars. Moreover, the average figure ‘hides’ a very high level of confidence on the part of hedge fund managers: in fact, 17% of respondents – especially in North America – expect to hold a share of assets in cryptocurrencies higher than 10%. active funds in the sector, with operations already concluded and others only announced, with strong benefits for those who bet on these instruments before the umpteenth boom of 2021. As the FT recalls, the largest share of SkyBridge Capital’s profits is linked to Bitcoin, founded by former White House communications director Anthony Scaramucci, who, however, after the strong purchases at the end of 2020 has already reduced its exposure just on the eve of the April collapse. Despite the interest of some hedge funds confirmed by the survey, not all in the sector are convinced of the prospects of these instruments: the more traditional asset managers maintain a cautious attitude, in light of the strong volatility of the prices and the uncertainty about the regulatory framework, while in a letter to investors Elliott Management expressed the fear that cryptocurrencies could become “the biggest financial scam in history”. However, hedge funds have recently increased investments in bitcoin such as hedging against the decline in real yields and share dividends: this type of ‘bet’, however, remains – according to a recent report by Morgan Stanley and Oliver Wyman – limited to customers with a high tolerance to risk and in any case they are conducted on a reduced percentage of available resources. Among the critical elements remains the extreme sensitivity of cryptocurrencies to single events, even to simple tweets such as those of Elon Musk (capable of increasing or destroying the capitalization of the sector even for hundreds of billions of dollars). with today’s valuation back to $ 40,000, Bitcoin has made a recovery of 20% compared to $ 33,000 seven days ago. Or a 33% drop compared to 63,000 two months ago. Profitable but risky bets: for many – judging by the Intergroup survey – but not for everyone.