Giant "Bitcoin Whale" Emerges With Transformational $1 Billion Stake, Backing From Legendary Traders

It's oddly fitting that on the day bitcoin finally breaks out above $20,000 - a critical psychological level first established during the Dec 2017 meltup - we learn that a new and formerly unknown massive bitcoin whale, who just happens to be one of the most respected hedge funds currently operating, has backing from legendary traders and is a frequent guest on these pages - has been quietly accumulating a lot of bitcoin... some $1 billion worth.

According to Bloomberg's Erik Shatzker, a hedge fund specializing in volatility bets - one which is very familiar to regular Zero Hedge readers - has emerged as one of the largest investors in Bitcoin after quietly buying more than $600 million in cryptocurrencies and joining forces with legendary trader Alan Howard, co-founder of Brevan Howard Asset Management.

Echoing what we have said repeatedly in recent months, namely that the next leg higher in bitcoin will come on the back of insitutional rotation into the cryptocurrency, Eric Peters, CEO of One River Asset Management, told Bloomberg he set up a new company to seize on the growing interest in cryptocurrencies among institutional investors. In addition to its initial purchases, One River Digital Asset Management has commitments that will bring its holdings of Bitcoin and Ether to about $1 billion as of early 2021.

“There is going to be a generational allocation to this new asset class,” he said. “The flows have only just begun.”

Peters said he was wary of triggering a spike in the prices of Bitcoin or Ether as he was quietly building up his initial position. He described executing his trades as inconspicuously as possible and finishing all the buying in November before Bitcoin hit $16,000.

The investment in bitcoin is a departure for the vol-specialist: the company, which was founded by Peters in 2013, One River employs volatility and trend-following strategies in an effort to make money whether asset prices are rising or falling. As reported earlier this year, its Long Volatility Fund and Dynamic Convexity Fund surged during the coronavirus selloff in March and are up 33% and 40% this year, respectively. The firm's total AUM is about $1.6 billion; we assume that its bitcoin holdings are not included in this number.

Peters, 54, whose market insights appear weekly on its website, said that he was drawn to digital assets for the same reasons he anticipates more volatility in financial markets: Now that interest rates in the developed world are at or below zero, fiscal spending by governments combined with debt monetization by central banks has emerged as the primary way to spur growth. The consequence of that increase in the money supply, he thinks, will be currency debasement and, potentially, inflation. Ultimately, all those trillions in newly created liquidity are making their way into alternative currencies such as cryptos.

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