7% Of Crypto Asset Could Be Held In Hedge Funds In The Next Five Years And Here's Why

By Rebecca Barnatt-Smith

A recent survey conducted by Intertrust has indicated that hedge funds will increase their cryptocurrency holding to 7% in the next five years. Moreover, by 2026, hedge funds plan to increase their crypto exposure significantly, producing new digital assets and currency confidence. 

The increasing involvement of prominent figures and names in the hedge funding world has led to this outlook. For example, a survey of 100 hedge fund chief financial officers worldwide expects that, on average, 7.2% of their assets will be held in cryptocurrencies in the next five years. Most of whom expect to see their assets exceed by a generous 10%. 

(Image Source: Bitcoin News)

If this is to be the case in five years, and this figure is copied across to the entire hedge fund industry, the total amount of assets invested in crypto in five years could be shy of $312 billion. 

If this happens and expectations are exceeded, then there will be a significant increase in the collection of crypto held worldwide, making it a prominent feature in the financial industry. Although $312 billion only scratches the surface of Bitcoin's BTC/USD market capitalization today, it paints a vivid picture of the future.

However, some analysts argue that purchasing digital assets remain at large still quite limited to clients, especially for those who have a high-risk tolerance. Even with this in mind, investments are still typically low portions of inevitable assets compared to more traditional assets. 

Crypto asset and hedge funds 

Currently, the amount of crypto assets held in hedge funds is unknown as only a few owners have declared their figures. However, those who have made their figures known are still respectively very small compared to crypto and hedge funds as a whole.  

Some big names in the hedge fund market have been one of the reasons there has been an uplift in crypto in hedge funds. For example, Paul Tudor Jones, a billionaire hedge fund manager, has so far invested 1% of his assets with the potential to increase it to 5%. 

(Image Source: Yahoo Finance)

Anthony Scaramucci, an American financier of SkyBridge Capital, has too declared some support for Bitcoin, but he reduced his holdings with fears of the price dropping. With this being said, some hedge fund managers are claiming that crypto is one of the biggest scams in history, holding little or no fiat in the future of the digital currency market.

One of the biggest threats to cryptocurrencies is their future if regulations get put into place. How will crypto be regulated, and what will this mean for investors are some of the most significant and more dominant questions asked by investors today. Its rocky future also prevents many investors from taking the plunge into the currency, but on the flip side, today, we have more cryptocurrencies than ever before.

The future of crypto 

Although there is a bright side to crypto, there is also a dark side. The nature of crypto and how they work means they sit on a decentralized ledger, which is not controlled by an entity. Unfortunately, transaction anonymity has also made crypto an attractive form of currency for those on the dark web conducting illegal activities. This has, in turn, attracted government agencies' attention, which could result in centralization and regulations for the entire system. 

Another limitation provided by crypto is the fact that they can be hacked and erased. However, this issue may be overcome by advanced technology breakthroughs to come in the near future. For crypto to really take off and behave like a digital currency, we need it to behave like fiat currency. 

As more merchants are transitioning to accepting crypto payments, the more popular crypto will become. Ist widespread acceptance amount consumers will allow it to increase steadily. However, the complexity of using crypto may deter many from using it. Crypto does add some promise to the future of technology as a whole with the possibilities of newer tech at lower prices backed by cryptocurrencies. 

For this reason, a cryptocurrency that aspires to become a part of the mainstream financial system and the world will need to be able to satisfy vast and divergent criteria to enable it to work. However, this may seem challenging in today's world. But, tomorrow's world will be very different. As the world becomes more advanced and crypto debit cards become a part of our everyday lives, there is potential in the next 15-20 years, if not sooner, we will begin to see the rise of digital currency flourish in all its glory.