Stone Ridge Closes Bitcoin Futures Fund, Returns Money to Investors
Stone Ridge Asset Management, a global asset management firm based in New York, announced plans on Monday to liquidate and dissolve the Stone Ridge Bitcoin Strategy Fund with the Securities and Exchange Commission (SEC).
According to an SEC filing, Stone Ridge said it expects to liquidate the Bitcoin Futures Fund next month, on October 21, and as of November 3, shares of the funds will not be available for purchase.
“The adviser will reduce the fund to cash in preparation for the liquidation date. The proceeds from the liquidation of the fund are expected to be distributed to shareholders in cash. The liquidation proceeds are expected to be distributed immediately after the liquidation date in full redemption of each shareholder’s shares in the fund,” the filing states.
The closure comes as the fund launched in late 2019 with a strategy to invest in Bitcoin (BTC) via futures contracts, without finding interest from investors. Currently, the fund only has about $2.3 million in assets under management.
The fund likely faced obstacles not only from the Bitcoin bear market, but also SEC approval of several competing Bitcoin Futures ETFs, at least some of which charged fees less than the Stone Ridge product.
Stone Ridge was founded in 2012 by current CEO Ross Stevens. In 2017, the founder launched the Bitcoin-powered New York Digital Investment Group (NYDIG), where he serves as executive chairman.
Stone Ridge Asset Management and NYDIG are both subsidiaries of Stone Ridge Holdings Group. NYDIG is a full-service, vertically integrated, Bitcoin-only financial services company.
Market battles to recover
This year, Bitcoin ETFs have not been as good investments as expected. And the same scenario is seen in stocks in the S&P 500 (such as Netflix (NFLX), Under Armor (UAA), Ceridian HCM (CDAY), Caesars Entertainment (CZR), Epam Systems (EPAM), among others) whose performance has also been worse this year.
This year, inflationary crises have affected the economy and the stock market enormously globally. The $822.9 million ProShares Bitcoin Strategy ETF is one of the main ways most investors use ETFs to gain exposure to cryptocurrency.
As of June, the largest Bitcoin ETF, the ProShares Bitcoin Strategy, was down 53.6% this year. Such disappointing results show the underestimated risk of the new asset class because most investors were not prepared to face difficult questions such as What would happen during a market crash? Or what would happen if a crypto exchange company went bankrupt?’
And it makes sense, since it tracks the price of Bitcoin. The Bitcoin price itself is down more than 50% this year.
ProShares Bitcoin Strategy isn’t the only major Bitcoin ETF to suffer. The entire crypto ETF universe is not doing well this year.
And the ETFs that own large positions in Bitcoin-based companies are underperforming. The First Trust SkyBridge Crypto Industry and Digital Economy ETF, which puts a larger portion of its portfolio in Coinbase than any other ETF, is down 69% this year.
Despite the low performance of ETFs, the industry is still pushing for the launch of more Bitcoin ETFs. Several firms have applied to the SEC for approval to launch their spot Bitcoin ETFs.
Grayscale has been pushing for the SEC to approve their request to convert their Bitcoin trust into a spot ETF.
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