One River CEO Eric Peters: Crypto is Most Interesting Macro Opportunity and Investment

People and institutions that have built their careers around identifying emerging trends and good investment opportunities are puzzled by crypto, but are increasingly being drawn to it, Eric Peters, founder, CEO and CIO of One River Digital Asset Management said. 

“I think it is a transformation and definitely is the most interesting macro opportunity and macro investment thesis I’ve seen in my career,” Peters said during the Bankless podcast Episode 89 on Monday. “The connection to legacy financial systems — let’s call it Wall Street with new technologies — is going to first happen in the pools of capital directed by a limited number of people as opposed to some big investment committee,” he added. 

The power of crypto is creating a transformation like nothing he’s ever seen before in his career, Peters said. 

One River Digital Asset Management is a US SEC registered investment advisor that manages over $2 billion in institutional assets as of September. The firm was founded in 2013 but entered the crypto space in November 2020 when it bought over $600 million in bitcoin and ethereum, with the purchase “weighted more heavily toward bitcoin,” Peters said. “We felt that all our clients should be allocated to these assets,” he said. 

Since November 2020, clients have gained over $1.2 billion from that purchase, according to a statement by the firm. Peters said he encourages everyone at his firm and its clients to think about the resistance crypto is facing as an opportunity. 

“The power of these [crypto] technologies hold the potential to lead to dystopia or renaissance,” Peters said during the podcast. “The path toward renaissance is consistent with the development of bitcoin,” he added. 

In late September, the firm closed a Series A investment round for an undisclosed amount, but plans to use the money toward its mission of being the lead institutional investment manager in digital assets. 

“There’s no lost sleep”

While traditional financial institutions begin to dip their toes into digital assets, Peters said it’s natural for some institutions to not fully embrace crypto because of regulatory concerns and constraints. “If they could all do it right now, Coinbase wouldn’t exist if legacy financial institutions were able to take the risk that those guys took,” Peters said. “Look at the value they created,” he added. 

But even though legacy institutions aren’t embracing opportunities in this space, it’s not worth “getting hung up on,” he said. “In some cases, they can’t (get involved) because the regulatory environment doesn’t allow them to and in other cases maybe they could but the risk reward isn’t high enough relative to their perceived opportunity,” Peters said. “[But] it doesn’t matter because we are a better country and economy to have creative disruption define the future,” he added. 

The companies involved getting involved and being built on crypto and blockchain infrastructure will lead to a much more innovative future, he said. “There’s no lost sleep” over why legacy institutions aren’t getting involved and unfortunately they don’t want to tear down what they built for a new opportunity, he added. 

Generational divide

While there are a lot of lines that divide society, whether it’s rich vs. poor, young vs. old, there’s also intersections within those lines, Peters said. 

But, when people think about the macro level, it’s important to try to figure out how to distribute the spoils of the economic output across these lines to prevent upheaval, while also creating incentive structures that propel it forward, he added. 

“What we have now, ironically, we have the youth that is revolutionary and it’s through blockchain technology,” Peters said. 

Unlike the time between 1960s to the 1980s, when younger professionals had no power, the multi billionaire people in their 20s to 30s right now are in control, Peters said. 

Digital assets are providing younger generations the opportunity to gain control to toppel the quasi-corrupt edifice that was built to not favor the younger generations but older people who have profited off other asset classes, Peters said. “We have this huge imbalance and all of a sudden this new technology magically appears and could provide the lever to rebalance the system,” he said. 

“There’s always a risk that people lose faith in fiat, and that is a risk that has existed throughout the history of mankind,” Peters later said. 

The gold cross-over level

In the future, Peters expects that bitcoin will eventually become “way more valuable than gold.”

“People currently look at bitcoin as digital gold and I think that it’s helpful for people to have a mental model or framework to think about anything brand new because otherwise they’re just lost. I think it’s a reasonable mental model to have,” he said. “As we approach that level, or surpass that gold cross-over level, people will start seeing that it wasn’t the right framework…We’ll end up seeing that gold is a metal. It hasn’t changed in billions of years and bitcoin will evolve over the next couple of years. So I think that’s one thing which makes me really positive on this whole space,” he added. 

After seeing macro inputs, the technological changes and paradigm shifts in the crypto space, the digital asset industry is unlike things Peters said he’s ever seen historically.  

“I think we can have the largest speculative boom in history,” Peters said. “I think we could be in the early stages of just remarkable moves,” he added.