One River Asset Management, a hedge fund specializing in volatility bets, has invested over $600 million into bitcoin, and committed to holding over $1 billion in both BTC and ETH by early 2021.
According to Bloomberg Eric Peters, the CEO of One River Asset Management, said in an interview the firm is looking to seize on the growing interest in crypto among institutional investors, The firm also joined forces with Alan Howard, the co-founder of Brevan Howard Asset Management.
Peter revealed the One River was wary of triggering a surge in the price of both BTC and ETH, and as such executed its traders “as inconspicuously as possible.” It finished building up its $600 million position in November, before the price of the flagship cryptocurrency hit $16,000.
He was quoted as saying:
There is going to be a generational allocation to this new asset class. The flows have only just begun.
Bitcoin is currently trading at a new all-time high above $23,000 as institutions start gaining exposure to the cryptocurrency amid unprecedented monetary policy moves that some fear could lead to currency debasement and inflation.
Ruffer Investment, a firm known for its bets on volatility, has also entered the cryptocurrency space amid these unprecedented monetary policy moves, disclosing a 2.5% position in BTC that is estimated to be worth over $700 million. The move was described as a “small but potent insurance policy against the continuing devaluation of the world’s major currencies.”
One River was founded in 2013 by Peters and employs volatility and trend-following strategies, Bloomberg reports. Its Long Volatility Fund and Dynamic Convexity Fund have managed to surge during the coronavirus selloff in March, and are up 33% and 40% year-to-date.
As fiscal spending by governments has been combined with debt monetization as a way to spur growth, Peters believes this is “the most interest macro trade I’ve seen in my career.” He is now building a “blue-chip fiduciary” for institutional clients looking to enter the crypto space.
The fund won’t be trading aggressively or make venture-capital investments, he said. It will charge 1% fees and allow investors to sell in a day, and has hired Northern Trust as an administrator and Coinbase as a partner for asset custody and trade execution.
Betting on bitcoin, he said, is riskier than betting on gold, but there “are very few convex bets that’ll help your portfolio when these macro forces start playing out.”
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