Two Hedge Funds Beat Microstrategy with Massive Bitcoin Allocations
Money management firm reveals $600 million Bitcoin holdings, bought secretly in November.
Key Takeaways
- One River Asset Management bought Bitcoin below $16,000 in November as inconspicuous as possible, in an attempt to avoid price spikes.
- The CEO of One River said that “the flows have only just begun.”
- Institutional interest in Bitcoin is not concentrated among a few asset managers but pans globally.
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Until today, Bitcoin and cryptocurrency enthusiasts believed that Microstrategy Inc. had made the largest Bitcoin investment this year of $475 million.
New reports, however, now indicate that two asset management companies bested Michael Saylor’s firm with even larger allocations.
Bitcoin Bulls Standoff
New reports have revealed that One River Asset Management invested $600 million in November at prices below $16,000. This is a whopping $175 million larger investment than the pioneer investment from Microstrategy Inc. in September.
Microstrategy does hold more Bitcoin as the firm bought at an average price of $11,635. And as both CEOs have mentioned, the buying spree has only just begun.
One River intends to increase its Bitcoin and Ethereum holdings to $1 billion in 2021. The CEO of One River, Eric Peters, told Bloomberg:
“There is going to be a generational allocation to this new asset class. The flows have only just begun,” he said. “This is the most interesting macro trade I’ve seen in my career.”
One River’s innovative investment strategies based on volatility and trend saw their Long Volatility Fund and Dynamic Convexity Fund surge by 33% and 40%, respectively, during the COVID-19 crash. The firm oversees about $1.6 billion in total.
Further, Microstrategy has also raised $650 million from senior convertible notes to invest in Bitcoins. After the total purchase, the business intelligence firm is expected to regain the top position again.
A British asset management firm Ruffer Investment currently leads the market with 45,000 Bitcoin worth $744 million of shareholder’s money.
Ruffer notified its shareholders about the allocation in the weekly performance update memo.
Guggenheim De-risks Crypto Trade
The pandemic and subsequent quantitative easing response from governments have raised inflationary fears, acting as the perfect catalyst for Bitcoin. Muneeb Ali, the founder of Blockstack, shared with Crypto Briefing:
“There is a possibility that currencies could start collapsing into Bitcoin. More people are starting to take notice of Bitcoin, and it has been interesting to see traditional institutions start to make large investments in cryptocurrency.”
A potential $530 million Guggenheim investment also joins Microstrategy, Ruffer, and One River into the top cryptocurrency. This is of particular note as it helps de-risk the asset class to other investors. The $5.3 billion investment firm filed an SEC application to formalize intentions of adding up to 10% of its assets in Grayscale’s Bitcoin Trust.
The CIO of Guggenheim, Scott Minerd, told the media yesterday that:
“Our fundamental work shows that Bitcoin should be worth about $400,000. It’s based on the scarcity and relative valuation such as things like gold as a percentage of GDP. ”
In many ways, we‘re in uncharted waters past the previous ATH. The Guggenheims of the world don‘t go on TV with a 400k price target to sell at 22k. From now on, you‘re getting paid to sit on your hands. Go pick up a new videogame or TV epic. https://t.co/5tpDGOj2Ka
— Hasu⚡️🤖 (@hasufl) December 17, 2020
Asset managers are putting money where their mouths are. A phenomenon not seen last time Bitcoin touched $20,000 in 2017.
As such, Bitcoin has responded in turn by blowing past its record all-time high of $20,000, reaching the peak value of $23,777 on Bitstamp.
BTC is currently trading hands at $23,200.
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