Traditional hedge funds are set to increase their exposure to bitcoin and other cryptocurrency markets over the next five years. New survey found.
Intertrust Global – an international trust and corporate management company – selected the chief financial officers of 100 hedge funds globally regarding their intention to purchase crypto-assets. About 98% of them responded that they expect their hedge funds to invest 7.2% of their assets in cryptocurrencies by 2026.
The survey found that 7.2% of investments in the cryptocurrency sector would be worth roughly $312 billion if replicated across the sector. Meanwhile, about 17% of CFOs surveyed admitted that 10% of their assets in their hedge funds could be allocated to cryptocurrencies like bitcoin (B T c)
After rising from $3,858 in March 2020 to nearly $65,000 in April 2021, bitcoin corrected more than 50%, leading to speculation that it would crash further due to higher valuations.
Nevertheless, the major cryptocurrency held through technical support around $30,000 and, earlier this week, $40,000. flip over.
Bitcoin price bounce recap
Much of Bitcoin’s gains came on the back of anti-inflationary narratives that became popular following the coronavirus pandemic caused by the March 2020 global market crash.
Global central banks responded with unprecedented monetary support, with the US Federal Reserve launching a $120B monthly asset purchase program as well as a near-zero lending rate policy.
The central bank’s decision dropped the yield on US government bonds to record levels. Meanwhile, liquidity injections into the economy, further accelerated by the White House-led trillions of dollars worthy of encouragement, lowered the value of the dollar against its top rival fiat currencies.
Many investors turned to riskier safe-haven assets which benefited US stocks, gold, silver and bitcoin. Bitcoin gave the best bull run as the Fed’s money-printing policies continued.
Several mainstream fund managers appeared to be at the forefront of bitcoin’s 2020 price rally. For example, billionaire investors Paul Tudor Jones — of the hedge fund Tudor Investment Corporation — said last year that he owned a small percentage of bitcoins. Later, another veteran investor Stan Druckenmiller It was also revealed that they have been invested in the benchmark cryptocurrency to offset inflation risk.
European hedge fund management company Braven Howard, American fund firm Skybridge Capital, Fidelity Investments, and ARK Invest also became some of the biggest Bitcoin supporters in the traditional finance sector.
Intertrust’s survey also revealed that all surveyed executives in Europe, North America and the UK have at least 1% exposure to bitcoin and similar cryptocurrencies. It further noted that North American hedge funds will have an average exposure of 10.6% in cryptocurrencies, compared to those in the UK and Europe that assume 6.8% risk.
The Intertrust survey also came as inflation in the US reached 5% in May for the first time since 1992, the US Department of Labor reported in its monthly report. consumer price Index (CPI) report.
Several analysts, including Randall Kraussner, a professor at the University of Chicago Business School and a former Fed governor, famous That high inflation will to some extent prompt the Fed to roll back its expansionary policies. Speculation of “taping” also intensified as the Federal Open Market Committee (FOMC) began a two-day meeting on Tuesday.
But so far, most FOMC officials, including Fed Chairman Jerome Powell, have considered the recent CPI spike to be “transient.” ANZ Economist Tom Kenny famous Therefore, the US central bank will keep its policies unchanged at least until it sees an improvement in labor data.
Meanwhile, Paul Tudor Jones said: His recent interview with CNBC, that he recently increased his bitcoin holdings from 1%-2% to 5% in 2020 in keeping with the Fed’s disapproval of inflation. He mentioned:
“I like bitcoin as a portfolio diversifier. Say 5% in gold, 5% in bitcoin, 5% in cash, 5% in commodities at times. I don’t know what I will do with the other 80%. I will wait And want to see what the Fed will do.”