Exploring the Impact of Trump’s Cryptocurrency Policies on Market Adoption
In recent times, President Donald Trump’s cryptocurrency policies have played a pivotal role in boosting the adoption of digital assets. This surge is evident across various platforms, including the rise of exchange-traded funds (ETFs) and treasuries focusing on cryptocurrencies. A comprehensive survey by the Alternative Investment Management Association (AIMA) and PwC has highlighted a progressive trend: traditional hedge funds holding cryptocurrencies have increased to 55%, a significant rise from 47% in 2024.
Hedge Funds Increasingly Invest in Cryptocurrencies
Despite the inherent volatility of cryptocurrency markets, a substantial 47% of institutional investors have acknowledged that the current regulatory framework—shaped by Trump’s strategic appointments of pro-crypto agency leaders and the enactment of the GENIUS Act—has encouraged them to bolster their investments in digital assets.
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James Delaney, the Managing Director of Asset Management Regulation at AIMA, shared insights on these developments:
“Historically, regulatory ambiguity has posed significant challenges for these funds. However, this year marks a shift towards clearer regulations, potentially overcoming these obstacles and encouraging more investments in digital assets.”
While regulatory clarity is a significant factor, it is not the only driver of institutional interest in cryptocurrencies. The phenomenon of ‘Fear of Missing Out’ (FOMO) on potentially substantial market gains also acts as a powerful motivator. Alongside traditional hedge funds, there is a noticeable emergence of specialized fund managers who now allocate at least 50% of their assets to cryptocurrencies, with several new funds being launched this year.
Bitcoin Leads, While Solana Gains Popularity
Within the realm of crypto-centric funds, Bitcoin (BTC) continues to be the most widely held asset, closely followed by Ethereum (ETH) and Solana (SOL). Interestingly, Solana has witnessed a remarkable surge in popularity over the year, with its adoption rising to 73% among funds, up from 45% in 2024.
On average, hedge funds have increased their cryptocurrency allocation to about 7% of their assets, compared to 6% the previous year. Despite this increment, over half of the respondents maintain less than 2% of their assets in crypto. Encouragingly, a significant 71% of those surveyed plan to further increase their crypto exposure over the next year.
Major industry players are also venturing into the crypto space. Brevan Howard Asset Management has reportedly appointed a former executive from Peter Thiel’s family office to spearhead a crypto-focused investment division. Additionally, renowned asset managers like Steven Cohen’s Point72 Asset Management and Elliott Investment Management have disclosed stakes in Bitcoin and Ethereum-linked ETFs. The AIMA survey reveals that the use of ETFs among respondents has grown to 33%, a leap from 25% last year.
Moreover, the survey indicates that derivatives are the most favored method of accessing the digital asset market, with 67% of respondents utilizing them, up from 58% in 2024. Spot trading has also seen growth, now at 40%, compared to 25% previously. Furthermore, some asset managers are exploring the tokenization of their funds, drawing parallels with initiatives by firms like BlackRock, with over half of the survey participants expressing interest in this innovative approach.
Lastly, 43% of traditional hedge funds investing in cryptocurrencies plan to enhance or initiate their engagement with decentralized finance (DeFi) over the next three years. Nearly one-third of these respondents believe that DeFi has the potential to disrupt their existing business models.
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