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Stone Ridge’s recent announcement is a work in progress that started in 2017 when it came up with New York Digital Investment Group (NYDIG), its first independent subsidiary.
As a surprise to many in the cryptocurrency space, Stone Ridge Asset Management has become the latest firm to reveal huge Bitcoin investments. The firm announced that it has been able to accumulate BTC worth $115 million.
On October 13th, Forbes confirmed this news about Asset Management’s purchase of these coins but didn’t disclose when the deployment of the funds took place.
Through its spin-off New York Digital Investment Group (NYDIG), Stone Ridge Holdings Group has been able to hold 10,000 bitcoin, whose valuation is nearly $115 million.
Reasons for a Sudden Interest from Institutions in BTC
Stone Ridge joins other firms such as Square and MicroStrategy, that have revealed their substantial exposure to BTC. Square, a payments giant, made bitcoin investments worth almost $50 million while MicroStrategy, a business intelligence firm, converted assets worth a whopping $425 million into bitcoin.
Today, @Square announced that it has purchased $50M in bitcoin. Square believes cryptocurrency is an instrument of economic empowerment and provides a way to participate in a global monetary system, which aligns with the company’s purpose. For more, visit https://t.co/HPhSMfVgac.
— Block Investor Relations (@BlockIR) October 8, 2020
Macroeconomic backdrop – where central banks have been using trillions to revamp struggling economies following the COVID-19 pandemic – is the main factor fueling the ever-growing interest in the cryptos. New York-based Ark Invest’s institutional investor Cathie Wood told Forbes that ‘she sees bitcoin as an “insurance policy” against inflation.’
Over recent years, institutions’ appetites for Bitcoin have been growing exponentially as Fidelity Investments, a $2 trillion asset manager, notes. In the coming years, the drive will be even higher due to deglobalization influenced inflationary trends, wealth seeking investors, millennials’ inheritance worth trillions transferred to Bitcoin, and central banks’ ongoing monetary stimulus. From the 800 institutions, Fidelity surveyed across Europe and the U.S., nearly 60% of investors said cryptocurrencies are a worthwhile investment.
More Holdings via NYDIG
Stone Ridge’s recent announcement is a work in progress that started in 2017 when it came up with New York Digital Investment Group (NYDIG), its first independent subsidiary. During that year, it raised $50 million as a move to build a spin-off that would cater to the requirements of the new breed of institutional investors. The synergy continued up to last Friday when it raised an additional $50 million in a funding round led by Ribbit Capital, Bessemer Venture and Fintech Collective.
NYDIG offers its custody services to institutional clients through a BitLicense and a New York trust charter – a trend that has been going on for the past three years. According to Forbes, in 2017, internal auditors had to investigate its cryptocurrency holding since a Stone Ridge staff had personally accumulated substantial bitcoin amounts.
However, the pandemic accelerated the firm’s involvement in cryptocurrency made the asset manager’s co-founder Robert Gutmann, to tell Forbes that:
“The long term growth of an open-source monetary system – in assets like bitcoin. Macro backdrop against the public health backdrop has caused a lot of people to rethink their portfolio composition.”
Institutional Bitcoin Fund LP and Bitcoin Yield Enhancement Fund LP are the two largest funds currently that NYDIG manages, amounting to $190 and $140 million, respectively. Amongst what Gutmann refers to as “several” smaller funds are the NYDIG Basket Fund, which includes BTC, XRP, LTC, ETH, and BCH, amounting to $2.4 million. The firm has also seen clients quadruple in numbers in just ten months and total assets to more than $1 billion, besides having holdings via NYDIG.