Global hedge funds not specialising in crypto assets have grown skittish from recent industry turmoil and this has lead to an exit from the sector, a survey showed on Tuesday.
The proportion of traditional hedge funds investing in crypto-assets has dropped to 29% this year from 37% in 2022, the report by PWC and the Alternative Investment Management Association (AIMA) said.
A quarter of those currently invested said increased uncertainty over U.S. regulation of the sector may lead them to reconsider the asset class altogether, it added.
Last year’s market events affected investing decisions for over 70% of the 59 hedge funds surveyed, which oversaw a combined $280 billion in assets, the report said.
The crypto industry was rocked last year by a series of bankruptcies at major crypto companies, including top U.S. exchange FTX. Investors were left with large losses as token prices slumped and various firms froze customer withdrawals.
While the price of bitcoin has steadily recovered this year, investors remain cautious as U.S. regulators have stepped up action against what they say is an industry-wide culture of not complying with the law.