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EY's Survey Shows Hedge Fund Managers are Making Allocations for Cryptos

Whilst regulators and banks are still screaming caution, industry players are deciding that crypto assets are here to stay

Institutional Crypto Fears are Fading

EY, one of the largest professional services networks in the world recently published its 2021 Global Alternative Fund Survey discloses increasing acceptance by fund managers towards crypto assets. The report is based on conversation with 210 managers and 54 investors on today’s alternative fund landscape and emerging trends. 

In the survey, EY states, “When describing their expectations for exposure to crypto-related assets in the next one to two years, more than 20% of institutional investors and 25% of hedge fund managers stated that they expect to increase their exposure.”
Source

Describing early days challenges of self custody and a limited market as fading, institutions are now more willing to look at digital assets for investment purposes or for treasury management. The survey reports that 36% of hedge fund managers with over $10 billion in Assets Under Management (AUM) and 32% of managers with $2 billion to $10 billion of AUM will likely increase their crypto allocation. 

With better risk mitigation in place, crypto has become a viable alternative investment. 


Mainstream Crypto Interest

Cryptocurrencies and the digital asset ecosystem are fast gaining acceptance and 2021 appears to be a turning point. Institutions are acknowledging that crypto assets and the ecosystem is becoming mainstream. 

EY reports that in 2021 fund managers are embracing new investment opportunities and themes leading to alternative fund space. 

“Cryptocurrencies and the digital asset ecosystem perhaps garnered the most mainstream public interest during 2021.  Alternative fund managers have become more active participants, drawn by uncorrelated return profiles and continued investment in institutional-grade infrastructure to support this evolving asset class.”

The shift in perception is contrary to the general stance taken by some regulators and banks. 


Follow the Smart Money

Source: Crypto assets are gaining an increasing appeal in 2021 amongst institutions 

Hedge funds are institutions that constantly seek out investment opportunities. This is balanced with proper risk management. If institutions are already identifying crypto assets as investment opportunities and are part of treasury management, it naturally implies that this is a growth sector. It also implies that crypto assets can perform the function as a store of value. 

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