Up to 80% of all hedge funds could disappear in the coming year, while proprietary trading desks will all-but disappear, according to Barclays Capital in one of the bleakest assessments yet for the financial markets.

"We expect a substantial reduction in the size of the hedge fund industry, in the order of 70% to 80%. We believe only those funds with models that operate on near zero leverage will be those left standing," the UK bank said in its report, Global Credit Market Strategic Outlook 2009.