- Anthony Scaramucci's SkyBridge Capital's first crypto fund — the SkyBridge Bitcoin Fund LP — is officially open for business on Monday for retail and institutional investors, with Fidelity serving as the fund's custodian and Ernst & Young as its auditor.
- In an interview, Scaramucci laid out the three catalysts that led him and the firm to enter the bitcoin market after a year that saw the digital asset rally over 300%.
- He also shared why bitcoin could reach $100,000 by the end of 2021 and why he and SkyBridge partners have plowed $25.3 million of their personal assets into the fund.
- Visit Business Insider's homepage for more stories.
Anthony Scaramucci has been busy this holiday season.
While many other hedge funders chose to take the last week of the year off, he was putting the finishing touches on his first-ever cryptocurrency fund — the SkyBridge Bitcoin Fund LP.
"My kids think I'm the Grinch because I'm sitting in my office all day," said Scaramucci, founder of the $9.3 billion hedge fund SkyBridge Capital, in an interview.
The fund, which is officially open for retail and institutional business on Monday, requires a minimum investment of $50,000 for accredited investors. It charges a 75-basis point management fee and no incentive fee.
As a sign of his bullishness on the digital asset, Scaramucci and his hedge fund partners have already plowed $25.3 million of their personal assets into the fund, which has Fidelity and Ernst & Young as the custodian and auditor of the fund, respectively.
Entering the market after a 300% bitcoin rally in 2020, Scaramucci's fund launch is a culmination of two years of research into the cryptocurrency space.
"I see the coins going to $100,000 by December 31 next year," he said during the final week of 2020. "It's not to say that they won't be volatile, it's not to say that you're not going to have some choppiness."
Three catalysts and a lot of conviction
Despite the almost inevitable volatility ahead for bitcoin, Scaramucci explains that three catalysts have cemented his high conviction in the asset.
First off, bitcoin has evolved to take the dominant position in the still-emerging cryptocurrency asset class, much like how the tech giants have taken disproportionately large market shares of their industry,
"This coin has become the industry leader, it has a $500 billion market cap," he said on Dec. 29. Bitcoin had a $604 billion market cap as of Monday.
He added: "It's effectively now in our minds like any of these other networks such as Google, Facebook, and Apple. And so Bitcoin now, in our opinion, is the industry leader in digital currencies."
The second reason is how much the ecosystem of bitcoin has de-risked over the last three years, allowing bitcoin itself to play an increasingly important role in an ultra-low-interest-rate and mass money-printing environment.
"In 2020, the United States, a 244-year-old country, has increased its money supply by 25%," Scaramucci said. "What Bitcoin did appropriately is it capped itself at 21 million, so there are 19 million or so coins in circulation and two-ish million coins left to mine."
He continued: "What we also know about human beings is when something is scarce or finite, it becomes collectible and it becomes valuable."
The last piece of the puzzle is filled by the growing institutional support of bitcoin. High-profile hedge fund managers such as Paul Tudor Jones and Stanley Druckenmiller have allocated to bitcoin. Corporations like MicroStrategy and Square have invested in bitcoin on their balance sheets. Even insurance firm MassMutual scooped up $100 million of the digital token.
"This year was a crossover situation for Bitcoin where hedge funders like Paul Tudor Jones and Stan Druckenmiller started accepting it as an idea to be effectively digital gold," he said. "And once Fidelity made the decision to go into the cold storage business to hold the coin at Fidelity, that's when we decided to move and to create the fund."
Bitcoin, gold, and other cryptos
Bitcoin has already surpassed $30,000 for the first time ever at the start of 2021, that's after it crossed the milestone of topping $20,000 for the first time in December.
The eye-popping rally will continue if the digital asset were to seriously be considered as a replacement of gold, in Scaramucci's view.
"I think we are still in very early innings," he said. "If we're right that this is a gold replacement or digital gold, it should trade to at least less-than-half as valuable as gold at a $5 trillion market capitalization. And it's starting to have that meteoric exponential hockey stick lift."
Gold currently has a $10 trillion market cap, which would make a single bitcoin worth $535,000 if it were to be valued the same way, according to SkyBridge's estimates.
The firm will focus on bitcoin despite some other cryptocurrencies' outperformance last year. For example, Ethereum, the second-largest crypto after bitcoin, returned 450% in 2020.
"SkyBridge is going to be committed to being singularly focused on Bitcoin primarily because we see it as the industry leader and we do see it maturing into what I would call a store-of-value asset class," he said. "You've got anywhere from a 10x to 20x move in Bitcoin but I don't see that to be the case in those other cryptos. They may have greater price appreciation but I also think they come with more volatility to Bitcoin."
For Scaramucci, the fund marks his first investment in bitcoin.
"I was never fully comfortable with the security associated with buying and storing Bitcoin. Back in the wild west days of Bitcoin, you were storing it on a USB," he said. "I'd much rather wait to get the risk out of it, which we did."
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