Under the nose of many in the cryptocurrency space, Stone Ridge Asset Management has accumulated $115 million worth of bitcoin. The $10 billion asset manager confirmed this news to Forbes on October 13th, but did not disclose when exactly the funds were deployed to purchase these coins.
Through partially-owned subsidiary New York Digital Investment Group (NYDIG), Stone Ridge Holdings Group has accumulated 10,000 bitcoin, valued at approximately $115 million at today's prices.
NYDIG has been developing custody and trade execution solutions since 2017. The company and its subsidiaries have a BitLicense and a New York trust charter that allow NYDIG to offer its custody services to institutional clients. It claims to service clients with bigger cryptocurrency investments than Stone Ridge Asset Management, but could not tip its hand as to who these clients are.
This investment has purportedly been in the works for over three years. Forbes reports that in 2017, staff at Stone Ridge were personally accumulating so much bitcoin that internal auditors had to look into the cryptocurrency. Once word got out about this, "the firm's clients increasingly wanted to express the same thesis." The company's co-founder, Robert Gutmann, said himself to Forbes that "the long term growth of an open-source monetary system - in assets like bitcoin.”
However, it seems that the COVID-19 pandemic has accelerated the company's involvement in the space. Gutmann explained that the "macro backdrop against the public health backdrop has caused a lot of people to rethink their portfolio composition," referencing potential inflationary trends and societal chaos.
Of note, this news comes shortly after a series of other prominent institutional investors have entered the space.
Over the past two months, business services company MicroStrategy has accumulated $425 million worth of bitcoin while just last week, Square, led by Jack Dorsey, deployed one percent of its assets into bitcoin. Months prior to these news events, billionaire hedge fund investor Paul Tudor Jones said he had allocated 2% of his net worth to bitcoin futures.
Stone Ridge, Square, MicroStrategy, and other firms starting to expose themselves to Bitcoin comes as the case to own the cryptocurrency has grown dramatically.
$2 trillion asset manager Fidelity Investments recently noted that the institutional case to own Bitcoin has grown to new heights over recent years.
The firm named four to five catalysts that should drive investment in bitcoin vastly higher in the years ahead. These include the ongoing monetary stimulus by central banks, deglobalization fomenting inflationary trends, investors looking to preserve wealth over time, and millennials obtaining trillions in inheritance that may be deployed into Bitcoin.
While these companies and investors have already absorbed tens of thousands of coins, the trend of institutional involvement is seemingly set to continue.
Fidelity found earlier this year that out of 800 institutions it surveyed across the U.S. and Europe, "almost 80% of investors find something appealing about digital assets." Further, 60% of investors say they see digital assets, be that Bitcoin or otherwise, have a place in investment portfolios today.