Growing Enthusiasm On Cryptocurrency By Hedge Funds

14 Jul 2021 — Although the recent see-saw in prices on cryptocurrencies may have sent jitters across the market, this has not stopped the growing enthusiasm on cryptocurrency by hedge funds and the latest Spezialfonds “Special Funds” in Germany.

The latest research surveying 100 hedge fund CFOs globally by the Intertrust Group found that executives expect to hold an average of 7.2% of their assets in cryptocurrencies in five years’ time. If replicated across the sector, that could equate to a total of about $312bn of assets in cryptos, based on data group Preqin’s forecast for the total size of the hedge fund industry. 17% of respondents expected to have more than 10% in crypto.

In Germany, the new Fund Location Act (Fondsstandortgesetz) allows 4,000 existing spezialfonds – as well as new special funds – to invest up to 20% on Bitcoin and Eth came into effect on 1 July. According to Trustnodes, as much as €350 billion can start entering the crypto market in Germany where previously such funds were prohibited from allocating any percentage to cryptos.

They’re free to choose how much to invest in Bitcoin, up to 20% from an estimated €1.87 trillion under their control, with this law being an implementation of a European Union directive, suggesting this new permissibility is coming Europe wide.

The crypto market sentiment across institutional investors and wealth managers from a recent study by Nickel Digital Asset Management too has been very positive. Accordingly, 82% of institutional investors and wealth managers from the US, UK, France, Germany, and the UAE who currently have exposure to cryptocurrencies and digital assets, expect to increase their exposure between now and 2023.

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