Size of the Market and AuM:

  • We estimate that the total AuM of crypto hedge funds globally increased to over US$40 billion in 2021 from US$1 billion the previous year.
  • The percentage of crypto hedge funds with an AuM of over US$20 million increased in 2019 from 19% to 45%.
  • The average AuM increased from US$21.9 million to US$44 million,  while median AuM increased from US$4.3 million to US$20 million.
  • The median AuM at fund launch is US$20 million, indicating that funds have generally seen a 10X increase in AuM in 2020.

Performance and Fees:

  • The median crypto hedge fund returned +100% in 2020 (vs – 46% in 2018).
  • The median of the best performing by strategy in 2019 was discretionary long only (+40%) followed by discretionary long-short (+33%), quantitative (+30%) and multi-strategy (+15%).
  • Median management and performance fees remained unchanged at 2% and 20% respectively, although the average management fee increased from 1.7% to 2.3% and the performance fee decreased from 23.5% to 21.1%.
  • 65% of crypto hedge funds have either a hard or soft lock and 63% have either an investor level or fund level gate.

Investor Type and Average Ticket Size:

  • The vast majority of investors in crypto hedge funds (90%) are either family offices (48%) or high-net worth individuals (42%).
  • The median ticket size is US$0.3 million, while the average ticket size is US$3.1 million.
  • Almost tw o thirds of crypto hedge funds have average ticket sizes below US$0.5 million.
  • Crypto hedge funds have a median of 28 investors.

Fund Strategies, Activities and Trading:

  • The most common crypto hedge fund strategy is quantitative (48% of funds), followed by discretionary long only (19%), discretionary long/short (17%), and multi-strategy (17%).
  • Most crypto hedge funds trade Bitcoin (97%) followed by Ethereum (67%), XRP (38%), Litecoin (38%), Bitcoin Cash (31%) and EOS (25%).
  • About half of crypto hedge funds trade derivatives (56%) or are active short sellers (48%).
  • Crypto hedge funds are also involved in cryptocurrency staking (42%), lending (38%) and borrow ing (27%).

Governance:

  • The percentage of crypto hedge funds using an independent custodian increased in 2019 from 52% to 81%.
  • The percentage with at least one independent director on their board increased from 25% to 43% in 2019.
  • The percentage of crypto hedge funds using third party research increased from 7% to 38% in 2019.
  • 86% were using an independent fund administrator in 2019.

Location:

  • Funds tend to be domiciled in the same jurisdictions as traditional hedge funds, with the top three being the Cayman Islands (42%), the United States (38%) and the British Virgin Islands (BVI) (8%).
  • Over half of crypto hedge fund managers are based in the United States (52%), followed by the United Kingdom (15%).