$166B Asset Manager Renaissance Eyes Bitcoin Futures for Flagship Fund

Renaissance Technologies’ market-crushing Medallion fund is considering jumping into bitcoin futures, recent regulatory filings show.

The quantitative analysis-heavy firm has “permitted” the Medallion fund to enter the Chicago Mercantile Exchange’s (CME) cash-settled bitcoin futures market, according to the March 30-dated Form ADV investor brochure. 

Renaissance, which had nearly $166 billion in regulatory assets under management at the end of 2019 according to that filing, has effectively signaled that bitcoin could or already is a factor for its flagship Medallion fund, whose 66 percent average pre-fee annual return since 1988 is unmatched on Wall Street.

The Wall Street Journal reported Friday that the $10 billion Medallion fund had through April 14 returned 24 percent after fees in 2020, trouncing traditional market indices like the S&P 500 and DJIA, which had both shaved more than 8 percent of their value over the same period.

Medallion has the go-ahead to transact in a financial instrument widely considered to be a proxy for institutional interest in bitcoin. CME’s cash-settled contracts provide exposure to price movements without the possibility of taking actual ownership, a far more popular scheme of late than other physically-settled alternatives.

The green light preceded last week’s surge in open interest positions. On Wednesday, CME reported $181 million in outstanding bitcoin futures contracts, a 70 percent rise from March’s lows but still well below 2020’s peak, near $338 million.

Whether Medallion is participating in that market is unknown. The disclosure did not state if Medallion had begun buying bitcoin futures contracts or planned to in the future, and Renaissance, notoriously tight-lipped about its best-performing fund, did not respond to requests for comment. 

The disclosure also acknowledged that this “relatively new and highly speculative asset” carries, in the view of the New York-based fund, myriad risks.

Among those stated: bitcoin’s short track-record but proven volatility, the absence of a governing authority and its universal lack of legal tender status, “susceptibility to manipulation” on exchanges and by botnets, “increased regulatory scrutiny,” and even its history of forking, among others.

“Any of these factors could materially and adversely affect the value of the Fund’s investments,” the disclosure said.