PWC have just released their 3rd annual Crypto hedge fund report (released May 2021)
It’s a meaty one at 52 pages, and not something I assume a lot of us will spend great detail reading. So, I’m going to cover the key insights in a couple of short posts over the next month.
First off, we’re going to look at the coins that these hedge funds are investing in. The reason this is useful information is that it allows us to understand where some of the big players see potential in the crypto space.
Before we continue…
Not sure what a hedge fund is? No problem, here’s a simple overview from our friends at investopedia
“A hedge fund is just a fancy name for an investment partnership that has freer rein to invest aggressively and in a wider variety of financial products than most mutual funds. It’s the marriage of a professional fund manager, who is often known as the general partner, and the investors, sometimes known as the limited partners. Together, they pool their money into the fund”
Ok, let’s get back to it.
What’s hot with the funds
We can see here that BTC is the most popular choice with funds and that’s not surprising. The longest living cryptocurrency has a good brand (in the overall crypto space anyway) so it makes a natural choice for the bulk of investors.
According to PWC’s data, 56% of the funds that responded to their survey said that half of their daily trading activity was in BTC. And, 15% of funds only trade in Bitcoin.
Going beyond Bitcoin
We can see that the most popular Altcoins across funds are ETH, LTC, LINK, DOT and AAVE.
This is interesting has a lot of people will raise eyebrows on LTC at number #3 for sure, and one of the current most popular coins in the crypto community, ADA actually sits outside the top 5.
To put this into context, Litecoin and ChainLink are the second and third most traded altcoins with funds. But, both of their market caps are much lower than Polkadot and Cardano who feature on this list too.
Perhaps this shows some resistance to newer and less understood projects. It’s good to see a diversification of trading across a variety of alts that will no doubt give added confidence to those of you who hold these coins too.
Nonetheless, it’s intriguing to see how funds are choosing to invest their money in the crypto space.
This is a useful set of data for any investor to get a view on what some of the big players are taking a closer look at.
No surprises with BTC but LTC might catch a few off guard.
Let me know what you think about this data and if you want to see more bite-sized breakdowns like this in the comments below ⬇️
I’m not an financial advisor, this is not financial advice and I’m not qualified or licensed to provide anything like this. This content is a bunch of thoughts from a fellow human for educational purposes only — that is all.
The crypto that hedge funds are buying in 2021 was originally published in DataDrivenInvestor on Medium, where people are continuing the conversation by highlighting and responding to this story.