Views from the Hehmeyer Trading Desk — Week of October 12, 2020
This week, institutional support of digital assets continued to strengthen. Stone Ridge Holdings Group (SRHG), parent company of New York Digital Investment Group LLC (NYDIG) and also of a $10B+ AUM asset management firm, announced it had purchased more than $100M in Bitcoin (around 10,000 BTC) as part of its treasury reserve strategy. The purchase was executed by and custodied at NYDIG.
In the October 13th press release, Ross Stevens, Founder of SRHG and Founder/Executive Chairman of NYDIG, stated: “We started NYDIG in 2017 because Bitcoin is an accelerant to the Stone Ridge mission of Financial Security for All. I view Bitcoin as a border-agnostic, uniting force for good. Bitcoin can propel global citizens that opt in towards a brighter, and fairer, financial future. From an investment perspective, we’ve long viewed Bitcoin as superior to cash. And now with unchecked — and unbacked — global paper money printing and real yields increasingly negative, SRHG’s more than 10,000 BTC are the principal component of our treasury reserve strategy. NYDIG’s corporate treasury solutions will be invaluable to other companies as they follow suit adopting the Bitcoin Standard for part or most of their treasury strategy. As the Fed’s balance sheet has increased $3 trillion since the beginning of 2019, the U.S. dollar has depreciated 70% against BTC.”
Meanwhile, in the latest report by Fidelity Digital Assets, the cryptocurrency subsidiary of mutual fund giant Fidelity Investments, the fund manager estimates that if just 1% of the $50 trillion bond market entered into Bitcoin, it could boost the market capitalization of the cryptocurrency by $500 billion, boosting prices up by 250%. Despite the growing interest of institutional investors, Fidelity is convinced that the role of retail in the Bitcoin market remains significant.
Their report further claims that Bitcoin’s correlation to other assets from January 2015 to September 2020 was an average of 0.11, indicating almost no relationship between the returns of Bitcoin to other assets, thus strengthening the argument for institutional portfolio managers to add Bitcoin in a diversified portfolio.
Key Crypto Headlines
“The price of bitcoin could hit $1 million in five years, up from about $11,000 now, thanks to an ‘enormous wall of money,’ a former Goldman Sachs hedge-fund chief said in a recent interview.”
“The price of Bitcoin dropped 3% in just 30 minutes after the major cryptocurrency exchange OKEx suspended withdrawals.”
“Uniswap may seem like just another cryptocurrency buzzword, but for those in the know, it’s the latest gateway to quick riches.”
“OKEx has suspended all cryptocurrency withdrawals indefinitely, saying one of the exchange’s key holders has ‘been out of touch’ with the exchange because they are ‘currently cooperating with a public security bureau in investigations.’ OKEx’ CEO later said the investigation is due to the key holder’s ‘personal issue.’”
“Coinbase Global Marketing Head John Russ is leaving the US cryptocurrency exchange, the latest in a host of departures over recent weeks.”
“Tether accounts for a huge percentage of transactions and is taking on Bitcoin and Ethereum in a variety of ways.”
This week, Hehmeyer CEO Chris Hehmeyer participated in the John Lothian News’ Open Outcry Series, a project collecting the history of the open outcry era and traders’ personal stories. In the video interview, Chris reflects on how he got started in the industry in 1977, how he moved up to starting his own clearing firm, the highs and lows of working on the trading floor, and more.