With cryptocurrency’s surge in popularity as an asset class, a survey done by Intertrust predicts that hedge funds throughout the world would devote 7% of their portfolio to cryptocurrencies within the next five years.
The results of the survey were addressed in a Financial Times of London story. Intertrust, a fund administrator, polled 100 hedge funds throughout the world. According to the chief financial officers of hedge funds who responded to the poll, 7.2 percent of crypto assets are estimated to be kept in portfolios within five years on average.
If that figure were repeated across all hedge funds, it was estimated that $312 billion in crypto assets would be held by hedge funds worldwide. Seventeen percent of those polled predicted a 10-percentage-point increase.
Hedge funds have already begun to dip their toes into crypto. Despite the lack of accurate figures, numerous significant and well-known investors have begun to add small amounts of crypto to their portfolios.
After taking a shot at the Federal Reserve for saying that increased inflation is just temporary, Paul Tudor Jones has just urged that investors add 5% of their portfolios to Bitcoin.
“I say, ‘OK, listen. The only thing that I know for certain is I want to have 5% in gold, 5% in Bitcoin, 5% in cash, 5% in commodities at this point in time,”
Another billionaire, Alan Howard, joined Jones in his enthusiasm for Bitcoin. Howard is a well-known supporter and investor in the cryptocurrency field. Late last year, Anthony Scaramucci’s SkyBridge Capital, a US hedge fund, began to invest.
According to the Financial Times piece, hedge funds were apprehensive, and those who did participate only put a modest fraction of their assets into it. According to a recent analysis by Morgan Stanley and Oliver Wyman,
“For the moment, crypto investments remain limited to clients that have a high-risk tolerance and, even then, investments are typically a low proportion of investable assets”
Additionally, there is still skepticism among individuals in the traditional banking sector. They are concerned about cryptocurrency’s extreme volatility as well as regulatory issues.
“they should carry the toughest bank capital rules of any asset.”the Basel Committee on Banking Supervision warned.