Scaramucci’s SkyBridge sticks with crypto despite heavy losses and redemptions
The selloff in crypto, as well as the broader market decline, has seen Anthony Scaramucci’s SkyBridge Capital’s flagship fund down 25 percent for the year to the end of July.
As markets began to recover, the multi-advisor hedge fund portfolio, called Series G, pared some of those losses and was down 22 percent at the end of last week, Scaramucci said Institutional investor in an interview. The market selloff’s effect on the portfolio has led to redemptions for nearly half of the assets at the $2 billion fund, which Scaramucci said was a result of wirehouses selling fund of funds “at the worst possible moment.”
Scaramucci has been an outspoken proponent of crypto, steering SkyBridge into several new crypto offerings since late 2020. However, this strategy accounted for just 22 percent of SkyBridge’s Series G registered fund of funds at the end of June, according to a recent letter. to investors.
Skybridge’s second largest position was Dan Loeb’s Third Point, which fell 20 percent through July and accounted for 11.3 percent of SkyBridge’s portfolio at the end of June. The fund of funds had also been an investor in Melvin Capital, which folded this year after it failed to recover from the GameStop short squeeze that saw it lose about 40 percent in 2021. The other hedge fund investments included Point72, Millennium and Coatue .
The fund of funds’ largest single crypto investment was NYDIG, a bitcoin trading platform which made up 10 percent of the fund followed by BH Digital Asset, the dedicated crypto fund of Brevan Howard, at 8 percent.
The Skybridge Fund of Funds did not have direct exposure to the major explosions of Terra Luna, Celsius and Three Arrows Capital, according to a letter to investors, but “a contagion effect affected all digital assets including Bitcoin and Ethereum,” which it said “are often used as security in the digital asset ecosystem, and they were adversely affected by foreclosures.”
“We expected a bear market, but the scale of the recent selloff was more severe than we expected given the maturity of the asset class,” Skybridge added. The price of both Bitcoin and Ethereum has fallen more than 50 percent this year.
Scaramucci and his partners are now looking for regulation to help crypto assets recover.
“Bipartisan legislation has been introduced in the US Senate to establish a clear regulatory framework for digital assets in general and Bitcoin in particular,” the letter said. “This legislation will entrench digital assets in our financial regulatory system.” It also noted the fact that Bitcoin is now “square in the hands of the crypto-friendly CFTC.”
“Clarity on regulation will open the Bitcoin door to the largest financial firms in the world,” it said. SkyBridge predicted that “banks and brokerages are increasingly faced with the choice of backing Bitcoin or watching assets walk out the door.”
Previously have New York Times reported that SkyBridge’s flagship fund faces nearly $900 million in redemptions. Skybridge also suspended withdrawals from its smaller $230 million Legion Strategies fund, according to Bloomberg, which noted that nearly 20 percent of the fund’s investments are in private crypto offerings that are illiquid.
Scaramucci told II that the firm still has an overall gain on its investments in Bitcon and Ethereum, which it started buying in November and December 2020.
“Even though they’re down for the year, they’re up from where we bought them,” he said. “Our average cost is around between $18,000 and $19,000 on Bitcoin, around $900 on Ethereum.”
Bitcoin traded below $22,000 on Monday, while SkyBridge’s investment in Ethereum has fared better. It was worth more than $1,500 per coin on Monday morning.
