BTC ://Notes on Annual HEDGE FUND CRYPTO report/survey
THESE R NOTES FROM THE (side note/ need to finish an update Wyckoffian theory... looking good besides lower rejection then planned (rejected off 40k not low 40ks))
_3rd ANNUAL GLOBAL CRYPTO HEDGE FUND REPORT 2021 (WE will have further analysis as well as breakdowns and thoughts regarding this report and the current market "n were we goin... all input at these early stages is incredibly valuable for us and the community as a whole, _these r the facts we need to be discussing, not what Elon did this weekend or what rapper or celeb is putting out an NFT collection (4 da record not hating here _main stream adoption brings everyone to the party _ even the, at least for m3 n min3, the annoying stuff_ u all welcome _shoot it _crypto does not discriminate _ $ is $ ... enjoy n please comment)
The estimate of total assets under management (AuM) of crypto hedge funds globally increased
_ US$3.8 billion in 2020 from US$2 billion the previous year.
The percentage of crypto hedge funds with AuM over US$20 million increased in 2020
_from 35% to 46%.
The average AuM for this year increased
_from US$12.8 million to US$42.8 million, _the median AuM increased from US$3.8 m to US$15.0 m
(The median AuM at fund launch is US$1 million, indicating that funds have generally seen an impressive 15X increase in AuM._keep in mind these overall` total amounts are nothing to 100s of billions on the sideline)
The median crypto hedge fund returned
_+128% in 2020 (vs +30% in 2019).
The median best performance strategy in 2020 was
_discretionary long only (+294%)
_followed by discretionary long-short (+129%), multi-strategy (+114%)
_and quant (+72%).
The vast majority of investors in crypto hedge funds are either high-net worth individuals (54%) or family offices (30%).
Amount of “Funds” under management
_median US$0.4 million, _ average is US$1.1 million. (Over half of crypto hedge funds have average ticket sizes of US$0.5 million and below.)
Crypto hedge funds have a median of 23 separate investors. 3 Investor types (this is relatively small and indicates huge oceans of capital waiting to enter this space in some form)
The most common crypto hedge fund strategy
_is quantitative (37% of funds)
_Then discretionary long/short (28%),
_discretionary long-only (20%),
_and multi-strategy (11%).
(the launch of actively managed crypto funds is highly correlated with the price of Bitcoin (BTC). The price spike in 2018 appears to have been a catalyst for further crypto funds to launch, while the decrease in 2018 led to fewer funds being launched in 2019. 18% of the survey respondents were launched in 2020).
classified crypto hedge funds according to four broad fund strategies:
• Discretionary Long Only: Funds which are long only and whose investors have a longer investment horizon. These funds tend to invest in early stage token/coin projects, and they also buy and hold more liquid cryptocurrencies. These funds tend to have the longest lock-up periods for investors.
• Discretionary Long/Short: Funds which cover a broad range of strategies including: long/short, relative value, event driven, technical analysis and some strategies which are crypto specific, such as mining. Discretionary funds often have hybrid strategies which can include investing in early stage projects. They tend to have a similar lock-up period to the Discretionary long only group. Strategy insights 2012 2013 2014 2015 2016 2017 2018 2019 2020 3rd Annual Global Crypto Hedge Fund Report 2021 9
• Quantitative: Funds taking a quantitative approach to the market in either a directional or a market neutral manner. Indicative strategies include: marketmaking, arbitrage and low latency trading. Liquidity is key for these strategies and restricts these funds to only trading more liquid cryptocurrencies. As a result, these funds typically have the shortest lock-up periods for investors.
• Multi-strategy: Funds adopting a combination of the above strategies. For instance, within the limitations set in the prospectus of a particular fund, traders may manage discretionary long/short and quantitative sub-accounts.
Most crypto hedge funds trade Bitcoin
_‘BTC’ (92%)
_Ethereum ‘ETH’ (67%),
_Litecoin ‘LTC’ (34%),
_Chainlink ‘LINK’ (30%),
_Polkadot ‘DOT’ (28%)
_and Aave ‘AAVE’ (27%).
About half of crypto hedge funds trade derivatives
_at (56%), (but short-selling has drastically reduced, from 48% to 28% in 2020).
Crypto hedge funds are also involved in cryptocurrency staking
_(42%),
_lending (33%)
_and borrowing (24%). 4 Fund strategies, activities and trading The percentage of crypto hedge funds using an independent custodian decreased in 2020 from 81% to 76%. The percentage with at least one independent director on their board decreased from 43% to 38% in 2020. The percentage of crypto hedge funds using third party research increased from 38% to 47% in 2020. 88% were using an independent fund administrator in 2020, up from 86% in 2019. 5
Governance Funds tend to be domiciled in the same jurisdictions as traditional hedge funds, with the top three being the
_Cayman Islands (34%),
_the United States (33%)
_and Gibraltar (9%).
The most common location for crypto hedge fund managers is the United States
_(43%), followed by the United Kingdom
_(19%)
_and Hong Kong (11%).
Around a fifth of hedge funds are investing in digital assets
_(21%); the average percentage of their total hedge fund AuM invested in digital assets is 3%. AND More than 85% of those hedge funds intend to deploy more capital into the asset class by the end of 2021. (Around a quarter of hedge fund managers who are not yet investing in digital assets confirmed that they are in late-stage planning to invest or looking to invest _(26%).
the main obstacles to investing,
_regulatory uncertainty is by far the greatest barrier at (82%). (Even those who do invest in digital assets cite it as a major challenge (50%).)
_Client reaction/reputational risk is high at (77%) (as well as digital assets being outside the scope of current investment mandates (68%).)
_Over half of the respondents said that they don’t have enough knowledge of digital assets (64%). 64% of respondents said that if the main barriers were to be removed, they would definitely start/accelerate their involvement/investment or potentially change their approach and become more involved.
2020 year-end crypto hedge fund performance by strategies
Quantitative Long / Short +87% +72%
Discretionary Long / Short +202% +129%
Discretionary Long Only +231% +294%
Multi-strategy +108% +114%
2020 vs 2019 crypto hedge fund median performance comparison
Quantitative Long / Short +72% +17%
Discretionary Long / Short +129% +23%
Discretionary Long Only +294% +10%
Multi-strategy +114% +12%
_It is interesting to note that overall, the crypto hedge funds in this sample had a median performance of 184% last year, vastly higher than 2019 (17%) and, while different strategies have yielded different levels of performance, neither was able to outperform BTC itself, which went up 305% during 2020. A similar picture can be drawn from 2019 data, when our sample had a median performance of 17%, against the BTC rally of 95% in that year./ keep in mind these funds need to answer to hi net worth types who don’t play so carving out short term returns is probably a priority/
_these funds need to answer to investors, if not monthly then quarterly. They need to show, at least short term-profits at or above BTC etc or why would these rich people need these funds.
“This data also suggests that, while discretionary long-only funds were not able to capitalize on the 2019 cryptocurrency market recovery, lagging behind other strategies, they performed exceptionally well in the 2020 bull market. On the other hand, long-short underperformed, which is to be somewhat expected in a bull market, even if in some cases the idea was to mix in shorts as a defense to aggressive farming etc moves.
_we are not able to tell whether they were able to offer higher or lower volatility in relation to cryptocurrencies, which could make crypto hedge funds more attractive investment propositions, despite the lower returns. “
Among the top 15 traded altcoins, some of them are considerably more popular than their market capitalisation would suggest. Litecoin and Chainlink are the second and third most traded altcoins, but their market capitalisations are far lower than Polkadot and Cardano, which fare lower in the trading ranks. Aave, the fifth most traded altcoin by hedge funds, has a market capitalisation of US$5 billion, compared to Cardano’s US$48 billion, which ranks one position below it
Looking at daily trading activity attributed to BTC, 56% of the funds in our survey reported that at least half of their daily cryptocurrency trading volume is BTC, while 15% of funds are pure Bitcoin funds and trade only BTC. We also asked funds to name their top traded altcoins by daily volume (stablecoins were excluded). We found that the top five were: Ethereum (ETH, 67%), Litecoin (LTC, 34%), Chainlink (LINK, 30%), Polkadot (DOT, 28%) and Aave (AAVE, 27%).
¬_Derivatives can either be used as hedging or alpha-enhancing instruments. 2020 was a very busy year in this space. Bitcoin futures open interest saw a substantial rise, indicating increasing institutional interest in cryptocurrencies. As a result, existing derivatives exchanges sought to enrich their offerings, while a number of new players entered this space, leading to a decrease in the concentration of trading volume distribution between exchanges. Towards the end of the year, Bitcoin futures notional trading volumes exploded and trading currently includes billions of US dollars per day, up from hundreds of millions a year ago. The increased number of players and liquidity is rapidly transforming the cryptocurrency derivatives market, enabling widespread institutional adoption, which will, in turn, allow exchanges to offer more sophisticated products, further allowing crypto hedge funds to take advantage of mispricing and arbitrage opportunities.
_Derivatives and leverage Crypto hedge funds and derivatives Prospectus/PPM permits the fund to take short positions
2020 data shows that more than half of the surveyed funds use derivatives, with options being the most commonly used tool _(31%).
However, funds are taking less short positions, with only _28% stating they actively short cryptocurrencies. (This is consistent with the extremely bullish views in this market, especially from Q4 2020 and into Q1 2021, when the survey was conducted.)
¬_In March 2020, Bitcoin crashed to US$4,904, 53% below its intra-year peak of US$10,344 in February. The drop was particularly abrupt on the week of 9th of March, when prices collapsed by 27% in a single day. In light of this event, we asked the crypto hedge funds whether they put new risk management policies in place. Most funds (61%) stated that no changes had been made, with some funds mentioning that they already had risk management systems in place. Among the funds that did implement new policies, the most common was establishing counterparty or exchange due diligence so as to not be exposed to events such as the one described above. Others implemented a formal counterparty risk management policy and changes in management techniques.
_HGM T3Am
_3rd ANNUAL GLOBAL CRYPTO HEDGE FUND REPORT 2021 (WE will have further analysis as well as breakdowns and thoughts regarding this report and the current market "n were we goin... all input at these early stages is incredibly valuable for us and the community as a whole, _these r the facts we need to be discussing, not what Elon did this weekend or what rapper or celeb is putting out an NFT collection (4 da record not hating here _main stream adoption brings everyone to the party _ even the, at least for m3 n min3, the annoying stuff_ u all welcome _shoot it _crypto does not discriminate _ $ is $ ... enjoy n please comment)
The estimate of total assets under management (AuM) of crypto hedge funds globally increased
_ US$3.8 billion in 2020 from US$2 billion the previous year.
The percentage of crypto hedge funds with AuM over US$20 million increased in 2020
_from 35% to 46%.
The average AuM for this year increased
_from US$12.8 million to US$42.8 million, _the median AuM increased from US$3.8 m to US$15.0 m
(The median AuM at fund launch is US$1 million, indicating that funds have generally seen an impressive 15X increase in AuM._keep in mind these overall` total amounts are nothing to 100s of billions on the sideline)
The median crypto hedge fund returned
_+128% in 2020 (vs +30% in 2019).
The median best performance strategy in 2020 was
_discretionary long only (+294%)
_followed by discretionary long-short (+129%), multi-strategy (+114%)
_and quant (+72%).
The vast majority of investors in crypto hedge funds are either high-net worth individuals (54%) or family offices (30%).
Amount of “Funds” under management
_median US$0.4 million, _ average is US$1.1 million. (Over half of crypto hedge funds have average ticket sizes of US$0.5 million and below.)
Crypto hedge funds have a median of 23 separate investors. 3 Investor types (this is relatively small and indicates huge oceans of capital waiting to enter this space in some form)
The most common crypto hedge fund strategy
_is quantitative (37% of funds)
_Then discretionary long/short (28%),
_discretionary long-only (20%),
_and multi-strategy (11%).
(the launch of actively managed crypto funds is highly correlated with the price of Bitcoin (BTC). The price spike in 2018 appears to have been a catalyst for further crypto funds to launch, while the decrease in 2018 led to fewer funds being launched in 2019. 18% of the survey respondents were launched in 2020).
classified crypto hedge funds according to four broad fund strategies:
• Discretionary Long Only: Funds which are long only and whose investors have a longer investment horizon. These funds tend to invest in early stage token/coin projects, and they also buy and hold more liquid cryptocurrencies. These funds tend to have the longest lock-up periods for investors.
• Discretionary Long/Short: Funds which cover a broad range of strategies including: long/short, relative value, event driven, technical analysis and some strategies which are crypto specific, such as mining. Discretionary funds often have hybrid strategies which can include investing in early stage projects. They tend to have a similar lock-up period to the Discretionary long only group. Strategy insights 2012 2013 2014 2015 2016 2017 2018 2019 2020 3rd Annual Global Crypto Hedge Fund Report 2021 9
• Quantitative: Funds taking a quantitative approach to the market in either a directional or a market neutral manner. Indicative strategies include: marketmaking, arbitrage and low latency trading. Liquidity is key for these strategies and restricts these funds to only trading more liquid cryptocurrencies. As a result, these funds typically have the shortest lock-up periods for investors.
• Multi-strategy: Funds adopting a combination of the above strategies. For instance, within the limitations set in the prospectus of a particular fund, traders may manage discretionary long/short and quantitative sub-accounts.
Most crypto hedge funds trade Bitcoin
_‘BTC’ (92%)
_Ethereum ‘ETH’ (67%),
_Litecoin ‘LTC’ (34%),
_Chainlink ‘LINK’ (30%),
_Polkadot ‘DOT’ (28%)
_and Aave ‘AAVE’ (27%).
About half of crypto hedge funds trade derivatives
_at (56%), (but short-selling has drastically reduced, from 48% to 28% in 2020).
Crypto hedge funds are also involved in cryptocurrency staking
_(42%),
_lending (33%)
_and borrowing (24%). 4 Fund strategies, activities and trading The percentage of crypto hedge funds using an independent custodian decreased in 2020 from 81% to 76%. The percentage with at least one independent director on their board decreased from 43% to 38% in 2020. The percentage of crypto hedge funds using third party research increased from 38% to 47% in 2020. 88% were using an independent fund administrator in 2020, up from 86% in 2019. 5
Governance Funds tend to be domiciled in the same jurisdictions as traditional hedge funds, with the top three being the
_Cayman Islands (34%),
_the United States (33%)
_and Gibraltar (9%).
The most common location for crypto hedge fund managers is the United States
_(43%), followed by the United Kingdom
_(19%)
_and Hong Kong (11%).
Around a fifth of hedge funds are investing in digital assets
_(21%); the average percentage of their total hedge fund AuM invested in digital assets is 3%. AND More than 85% of those hedge funds intend to deploy more capital into the asset class by the end of 2021. (Around a quarter of hedge fund managers who are not yet investing in digital assets confirmed that they are in late-stage planning to invest or looking to invest _(26%).
the main obstacles to investing,
_regulatory uncertainty is by far the greatest barrier at (82%). (Even those who do invest in digital assets cite it as a major challenge (50%).)
_Client reaction/reputational risk is high at (77%) (as well as digital assets being outside the scope of current investment mandates (68%).)
_Over half of the respondents said that they don’t have enough knowledge of digital assets (64%). 64% of respondents said that if the main barriers were to be removed, they would definitely start/accelerate their involvement/investment or potentially change their approach and become more involved.
2020 year-end crypto hedge fund performance by strategies
Quantitative Long / Short +87% +72%
Discretionary Long / Short +202% +129%
Discretionary Long Only +231% +294%
Multi-strategy +108% +114%
2020 vs 2019 crypto hedge fund median performance comparison
Quantitative Long / Short +72% +17%
Discretionary Long / Short +129% +23%
Discretionary Long Only +294% +10%
Multi-strategy +114% +12%
_It is interesting to note that overall, the crypto hedge funds in this sample had a median performance of 184% last year, vastly higher than 2019 (17%) and, while different strategies have yielded different levels of performance, neither was able to outperform BTC itself, which went up 305% during 2020. A similar picture can be drawn from 2019 data, when our sample had a median performance of 17%, against the BTC rally of 95% in that year./ keep in mind these funds need to answer to hi net worth types who don’t play so carving out short term returns is probably a priority/
_these funds need to answer to investors, if not monthly then quarterly. They need to show, at least short term-profits at or above BTC etc or why would these rich people need these funds.
“This data also suggests that, while discretionary long-only funds were not able to capitalize on the 2019 cryptocurrency market recovery, lagging behind other strategies, they performed exceptionally well in the 2020 bull market. On the other hand, long-short underperformed, which is to be somewhat expected in a bull market, even if in some cases the idea was to mix in shorts as a defense to aggressive farming etc moves.
_we are not able to tell whether they were able to offer higher or lower volatility in relation to cryptocurrencies, which could make crypto hedge funds more attractive investment propositions, despite the lower returns. “
Among the top 15 traded altcoins, some of them are considerably more popular than their market capitalisation would suggest. Litecoin and Chainlink are the second and third most traded altcoins, but their market capitalisations are far lower than Polkadot and Cardano, which fare lower in the trading ranks. Aave, the fifth most traded altcoin by hedge funds, has a market capitalisation of US$5 billion, compared to Cardano’s US$48 billion, which ranks one position below it
Looking at daily trading activity attributed to BTC, 56% of the funds in our survey reported that at least half of their daily cryptocurrency trading volume is BTC, while 15% of funds are pure Bitcoin funds and trade only BTC. We also asked funds to name their top traded altcoins by daily volume (stablecoins were excluded). We found that the top five were: Ethereum (ETH, 67%), Litecoin (LTC, 34%), Chainlink (LINK, 30%), Polkadot (DOT, 28%) and Aave (AAVE, 27%).
¬_Derivatives can either be used as hedging or alpha-enhancing instruments. 2020 was a very busy year in this space. Bitcoin futures open interest saw a substantial rise, indicating increasing institutional interest in cryptocurrencies. As a result, existing derivatives exchanges sought to enrich their offerings, while a number of new players entered this space, leading to a decrease in the concentration of trading volume distribution between exchanges. Towards the end of the year, Bitcoin futures notional trading volumes exploded and trading currently includes billions of US dollars per day, up from hundreds of millions a year ago. The increased number of players and liquidity is rapidly transforming the cryptocurrency derivatives market, enabling widespread institutional adoption, which will, in turn, allow exchanges to offer more sophisticated products, further allowing crypto hedge funds to take advantage of mispricing and arbitrage opportunities.
_Derivatives and leverage Crypto hedge funds and derivatives Prospectus/PPM permits the fund to take short positions
2020 data shows that more than half of the surveyed funds use derivatives, with options being the most commonly used tool _(31%).
However, funds are taking less short positions, with only _28% stating they actively short cryptocurrencies. (This is consistent with the extremely bullish views in this market, especially from Q4 2020 and into Q1 2021, when the survey was conducted.)
¬_In March 2020, Bitcoin crashed to US$4,904, 53% below its intra-year peak of US$10,344 in February. The drop was particularly abrupt on the week of 9th of March, when prices collapsed by 27% in a single day. In light of this event, we asked the crypto hedge funds whether they put new risk management policies in place. Most funds (61%) stated that no changes had been made, with some funds mentioning that they already had risk management systems in place. Among the funds that did implement new policies, the most common was establishing counterparty or exchange due diligence so as to not be exposed to events such as the one described above. Others implemented a formal counterparty risk management policy and changes in management techniques.
_HGM T3Am
Just get in where u fight in. Remember> :// the name of the game is taking profits whenever however u can via BTC n stable coins _buying dips on solid HODLs is paramount!!! esp if deep in the metamask woods operating with no stop loss etc u need to buy dips and pick or try to ID sell target zones for profit.
_Institutional funds, despite what the media projects, is very much testing the waters and getting ready to take a major position via their rich family n private money portion of these Funds.
In this 40page _basically survey _ of top institutional views worries etc for crypto market investments only one group/person thought BTC would be under 100k by the end of the year.(the under said around 50k at end of year)
something else that jumped out was the main concern for these fund managers was not volitivity... (funds that have not traded crypto yet still in the top 3 or 4 concerns BUT for funds active in crypto markets volatility dropped to one of least concerns n in some cases, a short term asset)
_The 2 main concerns that came up over n over for these big institutional money monsters was
1. NEGATIVE CLIENT PERCEPTION FOR TRADING IN CRYPTO MARKETS n
2. UNCLEAR/UNCEARTAIN REGULATORY GUIDLINES ESP IN US BUT>>>>>>>>not volatility or the number of other "issues" that are brought up in the media.
there r lists of other crazy interesting stuff here _so if deep in crypto_ or n just want that inside track view_ this report is a must read or at least skim. COIN BUREAU made one of his best videos in a long time on this report_ which is what i think his strongest skill set_ dissecting this type of information www.youtube.com/watch?v=qZmfPIby...
or the survey it self
www.pwc.com/gx/en/financial-serv...(may-2021).pdf
if ur not the study type due to time restrictions or whatever _if u read anything this year this is one of those must reads or at least watch that video
13 hours ago
Comment: These funds r getting ready to jump further into to set up their own pools etc or their own DeFi Funds
Hedge fund Giants _ Millennium at 52 billion _ Matrix wit 10 Billion & _ Point72 with 22 billion
www.coindesk.com/hedge-fund-mill...
www.coindesk.com/crypto-hedge-fu...
they eye ball'n AAVE DOT among others while swapping mostly on UNISWAP 1INCH n SUSH