Recent advancements in regulatory clarity, coupled with the successful launch of exchange-traded funds in the United States and Asia, have catalyzed a pronounced shift toward cryptocurrency investment among institutional players.

According to a Bloomberg report, a recent survey by the Alternative Investment Management Association and PwC shows that about 47% of traditional hedge funds now hold cryptocurrencies, a significant increase of 29% in 2023 and 37% in 2022.

The 6th Annual Global Crypto Hedge Fund Report 2024 survey added that among the existing crypto investors, about 67% intend to sustain their current allocation, while the remaining 33% plan to increase their investment by year-end 2024.

In addition, traditional hedge funds are increasingly shifting to digital asset derivatives, with adoption increasing from 38% in 2023 to 58% in 2024, while spot trading dropped from 69% to 25%.

Big Money Bets on Crypto

Although institutions are betting on crypto, several traditional hedge funds (about 76%) remain cautious and unwilling to enter the digital asset space within three years.

Commenting on institutional investors’ influx into crypto, James Delaney, Managing Director, Asset Management Regulation, AIMA, said,

“The findings from this year’s report indicate a steady recovery in confidence over the past year. Institutional investors are showing renewed interest, driven by several key factors including increased regulatory clarity, such as the European Union’s MiCA [Markets in Crypto-Assets] regulation, advancements in infrastructure, and the approval of new products like spot bitcoin and ether ETFs by the US Securities and Exchange Commission”

He also mentioned the growing interest in blockchain technology and tokenization for improving efficiencies in asset management. Delaney emphasized that AIMA remains committed to supporting the institutionalization of the asset class through advocacy, operational guidance, and educational efforts.

Last month, DBS, Singapore’s top bank, became the first Asian bank to unveil plans to introduce bitcoin and cryptocurrency options trading on its platform, bridging the gap between traditional finance and crypto assets.

Another traditional institution, Commerzbank, a major player in German banking, joined forces with Crypto Finance to introduce cryptocurrency services, enabling its corporate clients to trade Bitcoin (BTC) and Ether (ETH) and tap into the digital asset market.