- One River Digital Asset Management will increase its Bitcoin and Ethereum funds from $600 million to $1 billion by 2021.
- Institutions hold 4.47% of the total Bitcoin supply or 938,098 BTC.
The participation of institutional investors in the crypto market is probably the main catalyst of the bull run that has caused the rise in the price of Bitcoin into uncharted territory. However, the institutional money flow could be only at its initial phase, as almost weekly new institutional investors surface.
The newest Bitcoin whale has emerged with the support of Alan Howard and Eric Peters, two big names in the investment world. Peters is CEO of One Rivers Asset Management, which, according to a Bloomberg report, has created a subsidiary for investment in cryptocurrencies called One River Digital Asset Management. Howard is one of the initial investors in the digital investment firm that manages $600 million in cryptocurrencies.
By 2021, One River Digital Asset Management plans to increase its funds in Bitcoin and Ethereum to $1 billion. The firm has also received support from Ruffer Investment Management, a UK-based giant that recently revealed an initial exposure of $745 million in Bitcoin.
Trading services will be handled by Elwood Asset Management, controlled by Howard, in conjunction with Coinbase. The latter will serve as custodian of the funds which will have a 1% fee and will allow the sales of the funds within 24 hours.
One River Digital aims to capitalize on the growing institutional interest in this asset class. The interest has originated from a series of policies promoted by the U.S. Federal Reserve that has caused institutional investors to seek new assets to protect their wealth, as One River Digital partner Ruffer LLP said:
[Bitcoin is] a small but powerful insurance policy against the continuous devaluation of the world’s major currencies.
Gold and Bitcoin have benefited from the worldwide currency devaluation. However, the cryptocurrency seems to have an advantage because of its intrinsic characteristics (portability, uncersorship, transparency). New generations seem to have a preference for this new asset class.
Therefore, it is possible that the flow of investment will increase as the millennials and later generations gain more control over the world’s wealth. In that sense, One River’s CEO is predicting a “generational allocation to this new asset class”.
A Bitcoin liquidity crisis is brewing
Data from the BitcoinTreasuries.org indicates that a total of 938,098 BTC or 4.47% of the total Bitcoin supply is in the hands of institutional investors. Ruffer LLC is number one on the list with an investment of $932 million (45,000 BTC), followed by MicroStrategy (40,824 BTC) and Galaxy Digital Holdings (16,651 BTC).
Furthermore, the data from the exchange CryptoQuant indicates that there has been a significant outflow of funds in Bitcoin from crypto exchanges. Based on the above, several experts indicated that BTC could suffer a liquidity crisis that will have a direct impact on the price of the cryptocurrency. Expert Willy Woo has said:
This feels like the moment Bitcoin won the game against all the other asset classes. With this breakout fueled by institutional folk, no way it can be regulated away; Sovereign Wealth next. Then it gets to change the world for real. Exciting times!