65% of crypto hedge funds are confident that Bitcoin will be between $50k-$100k by December 31, 2021, a report has shown.
In a research on the number 1 crypto asset and crypto market capitalization predictions conducted in Q1 2021 by Elwood Asset Management and PWC’s crypto team and released in Q2 2021, out of the 55 crypto hedge funds that participated in the survey, a majority expressed positive sentiments in the asset’s price overshadowing April’s $65k peak.
Bullish sentiments for Bitcoin in Q2 2021
A majority of predictions on where Bitcoin was headed by 31 December 2021 hovered in the $50,000-$100,000 range while 21% of the group predicted that price would surpass the $100,000 mark to cap at just below $150,000.
4% of the respondents believed that price would go beyond $200,000 while less than 1% asserted that Bitcoin would end up below $50,000 by year-end.
56% of funds reported having traded the least half of their daily cryptocurrency trading volume in BTC while 15% accounted for pure Bitcoin funds. Other top cryptocurrencies in the list included Ehereum (67%), Litecoin (34%), Chainlink (30%), Polkadot (28%), and AAVE (27%).
A majority of crypto fund managers were also positive on the overall direction of the cryptocurrency market cap with most funds predicting that the market cap would range between $2-$5 trillion by December 31st.
At press time the global crypto market cap is $2.08T according to CoinMarketCap.
Growing Institutional Interest
Despite 67% of the managers citing reputational risks as the major challenge of investing in digital assets, 50% concerned about regulatory uncertainty, and 33% frowning upon the lack of infrastructure, the team recorded outstanding growth in interest by institutional investors.
This growth was mainly sparked in 2020 spilling into 2021 as exchanges seeking to enrich their offerings attracted liquidity leading to an impressive explosion of Bitcoin trading volumes from hundreds of millions to billions of dollars a day. Hedge funds are thus poised to take advantage of “misprising and arbitrage opportunities” as exchanges offer more sophisticated products in an attempt to meet rising demand.
General diversification among key magnets for Hedge funds to invest
According to the report, two-thirds of the hedge funds who responded were exposed to digital assets having invested either through futures or options trading.
57% of the respondents were happy and confident that Digital assets offered them a platform to diversify their portfolios. A third (29%) asserted that ‘exposure to a new value creation ecosystem’ was their main attraction to invest while 14% believed that investing in digital assets made a good hedge against inflation.
The team expressed its opinions on the report citing that it expected continued exponential growth in crypto hedge funds.
“We expect this number to grow as individuals continue to gain more experience in this niche field and as funds increasingly seek to hire individuals with deep crypto and blockchain experience. This is likely to give funds competitive edge, a better understanding of a fast-changing and complex market.”