This Hedge Fund Quietly Bought $600M in Crypto; Buying $400M in BTC & ETH in 2021
One River Asset Management that oversees about $1.6 billion bought more than $600 million in cryptocurrencies quietly. The company plans to increase Bitcoin and Ether's holdings to about $1 billion as of early 2021.
CEO Eric Peters said they invested in cryptocurrencies to seize the growing interest in them among institutional investors. He bought Bitcoin in November before it hit $16,000.
“There is going to be a generational allocation to this new asset class,” he said. “The flows have only just begun.”
Peters aims to build a “blue-chip fiduciary” for institutional clients looking to get exposure to digital assets.
Yesterday, in a wild move, Bitcoin broke through its all-time high of $20,000 and surged to well above $23k.
The company has also joined forces with Alan Howard, the co-founder of Brevan Howard Asset Management. Besides investing in One River Digitals funds, Howard has also bought a 25% stake in the business in October.
Howard’s Elwood Asset Management is the one providing One River Digital with trading services.
Just this week, One River Digital’s Ruffer disclosed its 2.5% position in Bitcoin, describing it as a “defensive” move and a “potent insurance policy against the continuing devaluation of the world’s major currencies.”
According to Peters, financial markets will see more volatility in the backdrop of interest rates at or below zero and governments' fiscal spending. This increase in the money supply will result in currency debasement and, potentially, inflation. He said,
“Covid-19 provided the ultimate catalyst for that transition.”
“This is the most interesting macro trade I’ve seen in my career.”
And while in such a world, gold stands to appreciate, Peters believes Bitcoin and Ether will outperform the precious metal. He said,
“There definitely are more risks to this than gold, which has been around for thousands of years, but there’s also way more convexity.”
“There are very few convex bets that’ll help your portfolio when these macro forces start playing out.”