A “BIG Deal:” Stone Ridge Files to Add Bitcoin to its Diversified Alternatives Fund

It “opens the door for every mutual fund to add BTC,” says excited Anthony Scaramucci of SkyBridge on asset manager becoming the open-ended mutual fund to buy Bitcoin.

Stone Ridge, the New York-based asset manager, is adding Bitcoin to its diversified alternatives fund as the seventh investment strategy. The addition of Bitcoin will become effective on April 26, as per the SEC filing.

As it filed to become the open-ended mutual fund to buy Bitcoin, Anthony Scaramucci of SkyBridge, which is also invested in Bitcoin, called this a “BIG deal.” “Stone Ridge filing opens the door for every mutual fund to add Bitcoin (if they want to),” he said.

This fund seeks to generate total returns from diverse investment strategies that “we believe have the potential for attractive returns and are diversifying from stocks and bonds,” reads the document.

The Fund intends to gain exposure to the price of Bitcoin by selling put options on bitcoin futures contracts. It will be selling at-the-money or out-of-the-money exchange-traded cash-settled put options on bitcoin futures contracts.

Investing in pooled investment vehicles, such as registered or private funds, that themselves invest in bitcoin is another way to gain exposure to the leading digital currency, the filing states. Through the options market,

“The Fund seeks to generate positive returns but with less participation in market declines relative to what an investor might experience by holding the underlying bitcoin futures contracts, or bitcoin itself, directly.”

The filing mentions a series of usual risks to the exposure to Bitcoin, which includes high price volatility relative to more traditional asset classes, which means the value of bitcoin could decline rapidly, “including to zero.”

Besides the market risk, adoption, limited use in the marketplace, obstacles to scaling cybersecurity, forks and airdrops, exploitation of source code, 51% attack, double-spending, miner collusion, stablecoins, competition from other digital assets, and government oversight, among others are also listed under the risks.

Stone Ridge’s subsidiary New York Digital Investment Group (NYDIG), is already involved in the crypto space, which has raised $100 million over the past two years.

With 280 institutional customers, NYDIG stores $6 billion worth of Bitcoin and 10,000 BTC of its parent company.

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