SKYBRIDGE BITCOIN FUND L.P.

Why Bitcoin?

Why Bitcoin Now?

"The Bitcoin story is very easy, it's supply and demand. Bitcoin's supply is growing at around 2.5% a year, and the demand is growing faster than that and there's going to be a fixed number of them.”

- Bill Miller

Mutual Fund Legend
November 11, 2020

+ An Emerging Asset Class

Bitcoin is an emerging asset class that has been de-risked over the last three years with attractive supply/demand dynamics.

+ Digital Gold

Bitcoin is digital gold. It is better at being gold than gold.

+ Increased Adoption

Increasing retail and institutional adoption across the globe produces value via the network effect.

+ A Scarce Asset

Near zero interest rates and unprecedented money printing represent an existential risk to the 60/40 portfolio and place a premium on scarce assets like gold, real estate, art and Bitcoin.

Wall Street Embraces Bitcoin

BITCOIN RESPECTABILITY: WALL STREET EMBRACES BITCOIN

Major financial institutions and investors are increasingly bullish on Bitcoin

“The adoption of Bitcoin by institutional investors has only begun.”

- Nikolaos Panigirtzoglou

J.P.Morgan, December 2020

“Do I think it’s a durable mechanism that could take the place of gold to a large extent? Yeah, I do, because it’s so much more functional than passing a bar of gold around.”

- Rick Rieder

BlackRock, November 2020

“I have changed my mind about Bitcoin’s role in asset allocation. In January 2018, we declared that it has no such role…. we have to admit that it does.”

- Inigo Fraser Jenkins

Alliance Bernstein, November 2020

“There are reasons to think this Bitcoin rush has deeper roots… Bitcoin will gain from widening distrust in the traditional alternatives.”

- Ruchir Sharma

Morgan Stanley, December 2020

Bitcoin vs. Gold

BITCOIN: A Vast Improvement Over Gold

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Bitcoin’s supply is fixed at 21 million. Presently there are approximately 18.5 million in circulation, or 88.5% of the total. The remaining 2.5 million will be mined over the next one hundred and twenty years according to a known and unchangeable schedule.

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Gold is a scarce commodity with an elastic supply. The supply of gold increased by a factor of ten over the last century.

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Bitcoin is the first store of value in the world where supply is entirely unaffected by increased demand. Thus, increases in demand have a pronounced impact on the price of Bitcoin.

Gold Supply1 (1835-2020)

Gold Supply
TONNES
YEAR

Bitcoin Supply (2009-2060)

Bitcoin Supply
BITCOIN
YEAR
1 Cumulative Annual Global Production. Source: goldchartsrus.com

BITCOIN vs. Gold: Market Capitalization

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The total market capitalization for gold is $10 trillion vs $500 billion for Bitcoin

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If Bitcoin achieves the same market capitalization of gold, the price per Bitcoin will be $535,000

Exponential Growth

BITCOIN: Exponential Growth

“The acceptance of Bitcoin as a digital asset, a quasi-gold, has been accelerated by the pandemic”

Niall Ferguson
Stanford Professor of Economic History
December 6, 2020

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Bitcoin has gone from a white paper in 2008 to the dominant digital asset with a market capitalization of over $500 billion

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Bitcoin’s growth and adoption rate has been significantly faster than mobile phones, the Internet, and “virtual banking” (i.e. PayPal)

Adoption Curves1

Adoption Curves
YEAR

S-Curve Analysis of Potential Adoption2

2009

0% owned Bitcoin

2020

10% of Americans own Bitcoin

2029

90% projected to own Bitcoin

1 Source: charts.woobull.com / @woonomic
2 Source: Off the Chain Capital
Macroeconomic Backdrop

BITCOIN: Ideal Macroeconomic Backdrop

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Unprecedented levels of fiscal and monetary stimulus have been unleashed globally in response to the Covid-19 pandemic

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The Federal Reserve has flooded the markets with dollars. 35% of all U.S. dollars in existence have been printed since March 2020.

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U.S. federal government is running a deficit of approximately 25% of GDP, by far the largest deficit since World War II.

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Massive money printing inflates asset values, particularly limited supply assets like art, real estate, gold, and Bitcoin.

M2 MONEY STOCK1

M2 Money Stock
YEAR

FEDERAL DEBT2
Total Public Debt As Percent Of Gross Domestic Product

Federal Debt
YEAR
1 Source: Board of Governors of the Federal Reserve System (US)
2 Source: St. Louis Fed, OMB
WHAT NOW?

The Fed Killed the 60/40 Portfolio: What now?

"We think that the economy is going to need low interest rates, which support economic activity, for an extended period of time... it will be measured in years”

- Jerome Powell

Chairman of the Federal Reserve
September 15, 2020

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The global supply of bonds with negative yields exceeds $18 trillion: 20% of the world’s investment grade debt is sub-zero

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Negative interest rates present substantial challenges for individual investors, particularly people in retirement or approaching retirement

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Negative interest rates represent an existential risk to pension funds, insurance companies, and endowments that need to achieve targeted rates of return to meet financial obligations

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A small re-allocation of capital from the $128 trillion fixed income market to Bitcoin, a $500 billion market, would produce a substantial increase in the price of Bitcoin

More Buyers than Sellers

BitCOIN: More Buyers than Sellers

SUPPLY

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Bitcoin mining generates 900 new Bitcoin daily (or 27,000 monthly and 82,800 quarterly)

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Bitcoin miners are natural sellers as they have substantial operating expenses, particularly energy costs, to pay

“MassMutual’s Bitcoin purchases represent another milestone in the Bitcoin adoption by institutional investors. One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.”


Nikolaos Panigirtzoglou
J.P.Morgan
December 11, 2020

DEMAND

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Square is buying over $300 million Bitcoin monthly on behalf of its users

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Grayscale bought over $1 billion Bitcoin in the month of November 2020

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PayPal acquired over $600 million Bitcoin in the four weeks following the roll-out of Bitcoin trading services on November 10, 2020

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MicroStrategy (MSTR: Nasdaq) and its CEO, Michael Saylor, acquired $1.3 billion Bitcoin between August and December 2020

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Mass Mutual Life Insurance acquired $100 million Bitcoin in December 2020

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Ruffer Investment Company, a U.K. asset manager, acquired $744 million Bitcoin, or 2.7% of assets under management, in December 2020

How and Where to Buy

BitCOIN: How and Where to Buy

“Yes, Bitcoin is hard to buy. But, there is a truism in life… anything that is slightly hard to do usually has better rewards.”


Raoul Pal,
Chief Executive Officer of Real Vision
November 2020
SkyBridge Bitcoin Fund

Skybridge BitCOIN FUND: an institutional grade fund to invest in Bitcoin

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The Fund is 100% invested in Bitcoin at all times

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The Fund is designed for buy and hold investors to capitalize on the adoption of Bitcoin which SkyBridge believes will be the best performing asset class of the next five and ten years

Fund
Manager

SkyBridge, an SEC registered investment advisor with over $7 billion assets under management and advisement

Bitcoin
Custodian

Bitcoin is held in custody at Fidelity Digital Assets, a division of Fidelity Investments

Fund
Auditor

Ernst & Young

Fund
Administrator

Fund is administered by M.G. Stover, the leading administrator in the crypto-currency sector

U.S. Dollar
Custodian

U.S. dollars are held in custody at Silvergate Bank (NYSE: SI), the leading bank in the cryptocurrency sector

SkyBridge and affiliates invested $25.3 million in the fund for its December 22, 2020 launch

Risk Considerations

BitCOIN: Risk Considerations

Regulatory
Regulatory

A coordinated state attack on Bitcoin

Protocol
Protocol

A bug in Bitcoin’s Core software could undermine confidence

Concentration Risk
Concentration Risk

Miners could hypothetically collude and manipulate network transactions

Adoption Risk
Adoption Risk

Bitcoin could remain a niche asset class and not achieve mainstream adoption