The proportion of traditional hedge funds investing in crypto assets declined in the past 12 months though the long-term outlook remains positive, according to a new report by Big Four accounting firm PricewaterhouseCoopers (PwC).

Global Crypto Hedge Fund Report states that the percentage of funds with crypto-exposure has fallen to 29%, from 37% in 2020. The report said that traditional hedge funds do not plan to reduce their crypto exposure in 2018.

More than a quarter (37%) said that they were curious about crypto, but are awaiting the maturation of this asset class. This is up from 30% a year earlier. Over half (54%) said that they were unlikely to invest within the next three-year period, up from 41%.

The report shows that traditional financial institutions have mixed feelings about crypto, and “regulatory uncertainties” are the key words. This is not uncommon. PwC discovered that nearly a quarter (25%) of hedge funds have reassessed their strategies due the regulatory environment in U.S.. 12% are considering moving from the U.S.

Jon Garvey said that despite market volatility, the fall in digital assets prices, and the failure of many crypto businesses, investments in crypto-assets are expected to continue in 2023. “Traditional hedge fund, committed to the long-term, are not only increasing the crypto-assets they manage, but maintaining, if not even increasing, the amount of money deployed in the ecosystem.”

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Sheldon Reback is the editor.