PwC, in conjunction with the Alternative Investment Management Association (AIMA), have published the findings of their recent survey which finds that hedge funds’ exposure to crypto assets has grown with 55 per cent of funds now invested in 2025, up from 47 per cent in 2024.
The study says that the increasing routes of exposure vary, ranging from spot and derivatives trading to ETFs, crypto bankruptcy claims, and, increasingly, equities and tokenised assets.
“Equities and regulated crypto ETFs have also played a pivotal role in facilitating larger institutional investors’ access to digital assets,” the report says.
The hedge fund database and analytics firm, HFR, has also revealed the extent to which spot crypto ETFs are being held by hedge funds.
The firm has reported that the hedge fund share of total crypto ETF AUM is 42.73 per cent, up over three times since June 2024, with a 63 per cent increase in participation since June 2024. Net new hedge fund entrants since that date total 142.
Ken Heinz, HFR, president, explains that the firm has recently expanded its scope with a strategic partnership with RADiENT Analytics which allows the firm to compile data on ETFs used by hedge funds.
The move was driven by growing interest in ETFs. Heinz says: “We have the ability to find any position to get an aggregate view of the holdings across the entire industry, which we feel is a powerful tool for us and our clients.”
Heinz says that the total aggregate hedge fund poolings of spot crypto ETFs show ‘a big change in two years,’ and the data reveals iShares Bitcoin Trust ETF IBIT to be way out in front.
“I think there is a lot going on here,” Heinz says. “Obviously we have seen the gains in the way that these ETFs have re-engineered how people can access digital assets and eliminated some of the structural risks regarding the holding of bitcoin or any cryptocurrency.
“You realise that you can expect a lower volatility profile in the ETF space and that is an important development.”
Heinz comments that it’s not so much cryptocurrencies as a group are going up as that the fiat currencies are going down, relative to crypto currencies – “which is a line of thinking that merits some consideration.”
He believes that it’s unlikely that the larger hedge funds are engaged in significant market timing on crypto through ETFs.
“It’s more fundamental trading with a group of funds engaged in trading the divergence between the value of bitcoin versus the treasury companies’ premium. That is a shorter-term trade.”
HFR has offered a cryptocurrency index since December 2017. “It was ahead of its time with bitcoin at around BTC20,000 and the CME launching its futures contract on bitcoin. The currency then went to BTC3,500 and no one want to talk about it for a couple of years. Then 2020 came along and things changed back again.”
April this year saw HFR expand their crypto indices bringing in 11 specialised sub-strategies.
“The response has been great and there is a ton of interest,” Heinz says. “We are planning to do more with ETFs as they become a bigger and bigger part in the way that all investors are using them. It makes it a more exciting area for hedge funds and retail investors. We have the index level, the fund level and now this introspection into position level aggregated and I think it’s powerful and allows us to tell an insightful story of what is truly going on.”
