Key findings
- Digital asset investments rise as regulatory clarity and ETFs boost confidence: Nearly half (47%) of traditional hedge funds surveyed this year have exposure to digital assets, up from 29% in 2023 and 37% in 2022, driven by increased regulatory clarity and the launch of spot cryptocurrency ETFs in Asia and the U.S. Among those already invested, 67% plan to maintain the same level of capital employed while the remaining 33% plan to invest more capital by the end of 2024.
- More sophisticated investment strategies, shifting to derivatives: There has been a notable shift towards derivative trading in digital assets by traditional hedge funds, with its use rising to 58% in 2024 (up from 38% in 2023), while spot trading dropped to 25% this year after peaking at 69% last year. This signals growing sophistication in hedge fund strategies.
- Growing interest in tokenization despite regulatory challenges: Interest in fund tokenization is also growing, with 33% of hedge fund respondents either committed to or exploring tokenization, compared to around a quarter of traditional hedge funds last year. Among digital asset focused hedge funds, 12% are already investing in tokenized assets, although regulatory challenges remain the biggest hurdle to wider adoption.
- Rising institutional client demand: 43% of traditional hedge funds—whether invested or not in digital assets—are seeing increased interest from institutional clients. Currently, family offices and high-net-worth individuals (HNWIs) remain the largest investor categories in digital asset focused hedge funds, followed by fund of funds.
- Hedge fund sector remains cautious: Despite the industry’s growth, many traditional hedge fund managers remain hesitant, with 76% of those not currently invested in digital assets unlikely to enter the space within the next three years, up from 54% in 2023. The top barrier, cited by 38% of funds, is the exclusion of digital assets from investment mandates, rising from fourth place last year. While regulatory uncertainty remains a key concern, it has eased somewhat due to the adoption of clearer regulatory frameworks like the EU’s MiCA.
About the research
The 6th Annual Global Crypto Hedge Fund Report examines the current state and evolution of the digital assets hedge fund market over the past year. The data contained in this report comes from a survey conducted by AIMA and PwC in Q2 2024 across a sample of close to 100 hedge funds from both traditional and digital asset focused hedge funds from over six geographical regions with an estimated aggregate of US$124.5 billion in asset under management (AUM). For this survey, we define digital asset focused hedge funds as those that have at least 50% of AUM invested in digital assets. It excludes data from crypto index funds and crypto venture capital funds. Specifically, the survey questions were designed to understand the impact that the past year had on fund managers and highlight key themes and trends.
AIMA DAWG
The AIMA survey was put together with the assistance of the AIMA Digital Assets Working Group (AIMA DAWG) – a cross-section of senior industry experts including institutional investors, custodians, exchanges and other service providers. It is tasked with driving AIMA’s regulatory engagement, thought-leadership initiatives and operational guidance in the area of digital assets.
We would like to thank everyone that participated in the survey and shared their insights. If you would like to learn more about AIMA DAWG, please contact Michelle Noyes ([email protected]) or James Delaney ([email protected]).
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