Hedge Funds Plan to Allocate 7% of Portfolios in Cryptocurrencies by 2026: FT Survey
Large hedge funds expect to increase their cryptocurrency holdings to 7% in five years, a recent survey conducted by the Financial Times concluded. This comes after the increased involvement from prominent names like Stan Druckenmiller, Paul Tudor Jones III, SkyBridge Capital, and more.
Hedge Funds to Increase Crypto Holdings
It’s safe to say that 2020 was Bitcoin’s breakout year in terms of institutional adoption. The COVID-19 pandemic and the financial catastrophe it caused ultimately highlighted BTC’s merits over most traditional investment tools, which attracted corporations and institutions that steered clear of it up until that moment.
According to a survey by the FT, this will only increase in the next five years. Following a survey among officers from over 100 global hedge funds, the paper concluded that “executives expect to hold an average of 7.2 percent of their assets in cryptocurrencies in five years’ time.”
Although the current holding numbers are unknown, the publication concluded that such an allocation would “represent a large increase” in funds put in various digital assets.
Per David Miller, executive director at Quilter Cheviot Investment Management, hedge funds are “well aware not only of the risks but also the long-term potential” of bitcoin and other cryptocurrencies.
However, analysts from the consulting company Oliver Wyman argued that digital asset purchases still “remain limited to clients that have a high-risk tolerance, and, even then, investments are typically a low proportion of investable assets.”
Who Bought In?
While some institutions contemplate on whether or not they should buy or increase their crypto holdings now, others have already done so.
Perhaps it all started with the billionaire hedge fund manager – Paul Tudor Jones III. He was among the first to openly praise BTC after the COVID-19 pandemic because he considered it a proper safe haven instrument against the rising inflation in the US.
He allocated up to 3% of his portfolio in BTC at the time but said he wants to have 5% in the primary cryptocurrency just recently. Stan Druckenmiller, another legend of the legacy financial markets, echoed his words shortly after.
Anthony Scaramucci, the founder and CEO of SkyBridge Capital, was next. He and his organization came on board in late 2020 through a Bitcoin Fund with an initial multi-million dollar investment.
It’s also worth highlighting that US banks, some of the biggest critiques until recently, have also expressed interest in entering the space. Some, like BNY Mellon, have revealed plans to launch cryptocurrency custodians. Others, like Morgan Stanley, will enable their institutional clients to receive BTC exposure through several funds.
Goldman Sachs filed for a Bitcoin ETF, while JPMorgan is reportedly developing an actively managed BTC fund.
