Stone Ridge Follows Microstrategy & Square With $115M BTC Investment

Stone Ridge joins the likes of Square, MicroStrategy, and others in revealing significant bitcoin holdings recently. Fuelling the surging interest in the cryptocurrency is the macroeconomic backdrop, which has seen central banks inject trillions into struggling economies.

Stone Ridge Reveals $115 Million Bitcoin Allocation

The Stone Ridge announcement had its origins in 2017. As Forbes reports, founding members and senior employees increasingly took positions in the digital currency. Word spread among clients, who also wanted exposure to bitcoin. This prompted the company to create the New York Digital Investment Group (NYDIG) later that year. NYDIG quietly raised $50 million in 2017. Fast forward to the first week of October 2020, and it announced it had raised a further $50 million in a funding round led by Fintech Collective, Bessemer Venture, and Ribbit Capital. As part of the announcement, NYDIG revealed its parent company’s own bitcoin allocation – 10,000 BTC ($115 million at today’s prices).

Institutional Interest in Crypto Heating Up

Stone Ridge’s BTC allocation isn’t even the largest fund NYDIG has under management. That goes to the $190 million Institutional Bitcoin Fund LP, which was disclosed in June. In second place is the $140 million Bitcoin Yield Enhancement Fund LP, revealed in May. Stone Ridge co-founder, Robert Guttman, also refers to multiple smaller funds. Among them is the NYDIG Basket Fund. Totaling $2.4 million, it’s comprised of BTC, ETH, XRP, LTC, and BCH. In September, BeInCrypto reported on Ripple chairman Chris Larsen’s dealings with NYDIG. He disclosed the transfer of $115 million worth of XRP to the firm’s custody service amid renewed allegations of market dumping. Guttman reasons that the growing institutional interest in bitcoin and other crypto-assets is due to the worsening global economic outlook. The creation of excessive fiat currency appears to be worrying those with substantial cash reserves. Essentially, large holders of dollars are financing increased government spending. Guttman explains that interest in NYDIG’s services really began to pick up around the widespread market crashes that took place in March:

“We’ve seen a pretty dramatic acceleration in the count of institutional investors who want to participate in the market since March of this year.”

Following the Institutional Stampede

Illustrating this growing fear of holding cash are recent high profile stories involving MicroStrategy, Square, and others. This year has seen several companies and high net worth individuals disclose significant bitcoin purchases. In May, legendary billionaire hedge fund manager Paul Tudor Jones announced that he was holding between one and two percent of his net worth in the leading digital currency. Echoing the sentiment of diehard Bitcoiners, Jones reasoned that Bitcoin was emerging as this generation’s gold and a worthy hedge against a rapidly inflating dollar. In August, a Canadian chain of restaurants called Tahini’s announced that it had converted its entire cash holdings to bitcoin. In a Twitter thread explaining the move, the restaurant’s owner called BTC a “true savings technology” and that cash was losing its appeal as “excess cash” circulates in the economy. Then there’s the so-called ‘Giga-Chad,’ Michael Saylor. The CEO of publicly-listed business analytics firm MicroStrategy recently converted a whopping $425 million of the firm’s cash reserves into bitcoin. Subsequently, Saylor appeared on numerous Bitcoin podcasts where he demonstrated that he was fully “down the BTC rabbit hole” after referencing MicroStrategy’s corporate Bitcoin research. Following Saylor’s announcement was the more recent declaration of Twitter CEO Jack Dorsey’s payments company, Square. The firm announced at the beginning of October that it too had converted $50 million of its cash holdings 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.

— Square IR (@SquareIR) October 8, 2020

Square’s Crash Course in Big BTC Buys

With Dorsey’s history of advocating Bitcoin, few were surprised by the news. However, the story not only represents growing mainstream belief in Bitcoin’s future but also an invitation for others to follow the firm’s lead. The above Twitter thread features a link to an extensive whitepaper. In it, Square details exactly how it executed its $50 million purchase. Any firms also wanting to reduce their exposure to cash now effectively have a blueprint.