Crypto hedge funds' doubled their assets under management in 2019 according to a PwC report

In their second annual report on crypto hedge funds, PwC estimates that the assets under management increased to $2 billion in 2019, doubling from the year prior. The average fund size has increased considerably with the median AuM increasing from $4.3 to $8.2 million. Further, the percentage of funds owning over $20 million also increased from 19% to 35%. These investors are also more actively engaging with protocols with 42% of them staking which has been enabled by the increasing prevalence of crypto native custodians adding support for these features.

Why it matters

• As the crypto fund space continues to grow, the market should begin to behave more rationally as these investors are more sophisticated than the typical retail investor. This should, in theory, decrease the prevalence of wild price swings and price appreciation in lower-quality assets.
• Since funds charge a percentage of AUM, the increasing size means more revenue for these firms. As their budget increases, there will be more demand for services catering to these funds allowing them to outsource activities such as research and due diligence.