Hedge Funds will Allocate 7% of Portfolios in Cryptocurrency by 2026: FT Survey

16 June 2021 | Updated: 16 June 2021

According to a recent survey carried out by the Financial Times, hedge funds are likely to increase their cryptocurrency exposure to 7% by the next five years. This report comes after prominent hedge fund names like Stan Druckenmiller, Paul Tudor Jones III, SkyBridge Capital, and more increased their involvement in the crypto industry.

Based on reports, 2020 was Bitcoin’s breakout year in terms of institutional involvement. The COVID-19 outbreak and global economic slump it aroused ultimately emphasized Bitcoin’s advantage over other traditional assets, which attracted corporate and institutional investments and adoption.

According to the Financial Times study, this influx of institutional adoption will only increase over the next five years. The survey, conducted among officers from more than 100 hedge funds, concluded that “executives expect to hold an average of 7.2 percent of their assets in cryptocurrencies in five years’ time.”

The publication added that such an allocation would “represent a large increase” in investments put in various digital assets.

According to David Miller, the Executive Director at Quilter Cheviot Investment Management, hedge funds are “well aware not only of the risks but also the long-term potential” of BTC and other digital assets.

That said, analysts from Oliver Wyman, a multinational management consulting firm, argued that cryptocurrency purchases still “remain limited to clients that have a high-risk tolerance, and, even then, investments are typically a low proportion of investable assets.”

Some Hedge Funds that Bought In

While some institutions debate buying or increasing their crypto holdings, others have intensified their crypto acquisition campaigns.

One of the earliest institutional investors in Bitcoin is veteran hedge funder, Paul Tudor Jones. Tudor was one of the first prominent investors to openly endorse Bitcoin and cryptocurrency investment, following the COVID-19 pandemic. He belies that BTC is a proper safe-haven asset against rising inflation in the United States.

That said, Tudor allocated roughly 3% of his portfolio into Bitcoin last year and has asserted just recently that he wants to bring that number to 5%.

Other early Bitcoin institutional investors include Stan Druckenmiller and Anthony Scaramucci of SkyBridge Capital. Meanwhile, some prominent US banks, including BNY Mellom and Morgan Stanley, came aboard later on.

 

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.