Overview of the Development of the Encryption Hedging Fund Market and Investor Analysis

A recent survey report reveals the development status and investor composition of the cryptocurrency hedging fund market. The data shows that in 2019, the asset management scale of cryptocurrency hedging funds reached (AUM), growing from $1 billion at the end of 2018 to $2 billion, indicating significant growth momentum.

In terms of investment strategies, fully delegated long-only funds performed the best in 2019, with an average return of 42%. From the perspective of funding sources, family offices and high-net-worth individuals are the main investors, accounting for 48% and 42% respectively.

The investigation found that there are approximately 150 active encryption hedging funds, of which 63% were established in 2018 or 2019. The activity level of fund establishment is highly correlated with Bitcoin price trends. Based on investment strategies, these funds can be divided into four categories: discretionary long, discretionary long-short, quantitative funds, and multi-strategy funds. Among them, quantitative funds are the most popular, accounting for nearly half.

In terms of investor composition, family offices and high-net-worth individuals account for as much as 90%. In contrast, the participation of institutional investors such as pension funds and foundations is very low. The median number of investors in a single fund is 27.5, with a median average investment size of $300,000.

In terms of performance, cryptocurrency hedge funds performed well overall in 2019, with a median return of 74%. Among different strategies, fully discretionary long funds performed the best, with a median return of 40%. However, this is still below Bitcoin's increase of 92%.

It is worth noting that the use of derivatives and leveraged trading is on the rise. In 2019, 56% of funds used derivatives, while 36% engaged in leveraged trading. As the market develops, the application of these tools is expected to become more widespread.

Overall, the encryption hedging fund market is rapidly developing, but still primarily consists of small to medium-sized funds. In the future, with the improvement of systems and the abundance of tools, it is expected to attract more institutional investors, driving the industry towards a more mature and professional direction.