This move signals a resurgence of interest in digital currencies among major Silicon Valley investors after 2022’s crypto crash severely damaged the industry’s reputation.
Founders Fund, the prestigious venture capital firm co-founded by billionaire investor Peter Thiel, has quietly made a substantial $200 million investment in major crypto assets over the past year. According to the cited insider sources, the firm reentered the crypto markets in a major way in 2023, snapping up significant amounts of Bitcoin (BTC) and Ether (ETH) starting in late summer 2022.
This move signals a resurgence of interest in digital currencies among major Silicon Valley investors after 2022’s crypto crash severely damaged the industry’s reputation. However, cryptocurrency prices have been steadily recovering since 2023, tempting major institutional players to reestablish positions.
Half of Founders Fund’s recent crypto investment went to Bitcoin, while the other half went to purchases of the Ethereum token. Specific details were not provided, but the purchases are estimated to have occurred with BTC prices below $30,000 and ether prices near their 2022 lows. This allowed the firm to acquire the tokens at substantial discounts compared to the 2021 peak.
Founders Fund has a long history with cryptocurrency investment, having initially purchased Bitcoin back in 2014. They sold off those holdings for an estimated $1.8 billion profit prior to 2022’s decline. However, Fund co-founder Peter Thiel has been publicly bullish on BTC for years, praising it as an inflation hedge and store of value.
Belief in Crypto Recovery after a Long Winter
Thiel’s strong libertarian views mesh well with the decentralized, government-resistant ethos of cryptocurrencies. Now, his firm is backing up that confidence with its checkbook in 2024. The recent buys could indicate Founders Fund believes the bottom is in for crypto prices after a brutal bear market.
Bitcoin, the largest cryptocurrency, lost over 78% of its value in 2022. Several major industry players collapsed, most notably the FTX exchange, amid fraud allegations. This liquidity crisis and loss of trust devastated crypto prices. Both BTC and ETH had plunged below $16,000 and $900, respectively, by November 2022.
However, investor appetite for digital assets appears to be returning in 2024. Bitcoin regained the psychological $50,000 mark this week, while ether is trading above $2,600. The total crypto market capitalization is also going up. While volatility persists, the current run could indicate a sustained recovery is underway.
Founders Fund seems to agree if its purchases are any indication. The firm’s $200 million investment dwarfs its earlier crypto allocation. Its timing in acquiring tokens near the bottom could generate massive returns if the crypto bull market resumes in earnest this year.
In addition, the firm recently hired a dedicated crypto specialist, Joey Krug, to lead digital asset investments. This suggests an ongoing strategic focus in the space even after 2022’s setbacks. While the company is not disclosing details publicly, its actions speak loudly.
Other venture capital and investment firms may follow Founders Fund’s lead in returning to the crypto markets after shying away in 2022. However, risks certainly remain. Bitcoin and ether prices are still below their all-time highs. Government regulation also looms as a major uncertainty affecting institutional investment plans.
If prices continue rebounding this year, more big money may flow back into the digital asset space. For now, the bulls appear to be tentatively regaining control, enticing prominent funds to build positions. All eyes are on whether this rally has true longevity or if crypto investors are headed for another letdown.