A survey from the Hedge Fund Association has revealed that crypto strategies are the second most demanded from investors and clients behind only equity hedge.
The research, which surveyed over 60 hedge funds, family offices and institutional investors found that 15% said crypto strategies were the most demanded.
Equity hedge strategies were the highest in demand with 23% placing it as their primary.
Cryptocurrency is increasingly becoming popular among hedge funds and family offices, despite a lack of regulation and market infrastructure.
According to research from Morgan Stanley, there is now around $3.5 billion in estimated assets under management from over 250 crypto-dedicated funds, while traditional funds are doing work behind the scenes according to multiple experts.
“Hedge funds are interested in more active strategies and trading crypto for arbitrage opportunities,” said Ed Gouldstone, head of product management for Linedata’s asset management business.
“There’s no shortage of ideas of how to use crypto as part of an investment strategy.”
The trend is becoming global with funds all over the world taking interest. As a result, infrastructure is being set up for these funds with firms scrambling to offering auditing services, fund administration and prime brokerage.
“We have seen just as much crypto fund formation and investing activity outside the US as we have seen in the US,” Alex Mascioli, CEO, North Street Global, which established the world’s first crypto fund-only administrator earlier this month.
“We anticipate the greatest initial take-up for new launches will be from those jurisdictions whose regulations are currently either the most lenient or organised.”