Cryptocurrency wealth management start-up BlockFi has released a report in which it has claimed that institutional investors are taking more interest in digital currency, and their exposure to cryptocurrencies has increased.
To prepare this report, BlockFi went through public filings as well as to disclosures made by investors to their clients and looked for keywords like “Bitcoin,” “Ethereum,” “digital currency,” “crypto” and other related to digital money.
The report states that there are 40,000 institutional investors in the US, out of which 10,500 manage a total of 60,000 private funds. The nature of private funds varies from hedge funds, venture funds, and private equity funds.
Out of these, a total of 201 private funds have investments in cryptocurrencies. This list includes 51 hedge funds. Percentage-wise only 1.3% of total private funds have invested in cryptocurrencies.
These 201 private funds are classified into the following:
- Hedge funds that have invested in and/or trade-in cryptocurrencies.
- Cryptocurrency centric funds raised money at the end of 2017 and to invest directly into cryptocurrencies and Initial Coin Offerings (ICOs.)
- Venture funds that invest in companies that offer various services related to cryptocurrency.
Out of these 201 private funds, 18 hedge funds have over $1 billion in assets. Their combined Assets Under Management (AUM) equals $286 billion. Though details of investments made by individual hedge funds in cryptocurrency are not made public; if we assume that 1% of their combined AUM is invested in digital currency, we can deduce that approximately $2.5 billion has been parked by hedge funds which don’t cater exclusively to cryptocurrencies.
Additionally, funds that invest exclusively in cryptocurrencies also have a combined AUM of approximately $2.5 billion.
Thus, approximately $3-$5 billion of private fund money is already invested in cryptocurrency. This study excludes investments in digital currency made by venture funds, ultra-high net worth individuals, sovereign wealth funds, sovereigns, etc.
Cryptocurrency firms have also been taking steps to attract more users to cryptocurrency. BlockFi, for example, has eliminated the minimum amount required to earn interest on deposits.
The BlockFi report shows growing confidence among the institutional investor community regarding cryptocurrency.
