Founders Fund, the venture capital firm founded by billionaire Peter Thiel, is reportedly reinvesting in Bitcoin and Ether.
The move by the San Francisco-based venture capital firm, which has approximately $12 billion in total assets under management as of 2023, marks a resurgence of Silicon Valley interest in the crypto market.
Silicon Valley’s virtual currency revival
Sources familiar with Reuters told Reuters that Founders Fund has spent $200 million on crypto purchases over the past year, splitting the amount evenly between its two largest assets, Bitcoin and Ether. The latest move highlights the resurgence of institutional investors into crypto investment strategies that were severely hit during the 2022 market downturn.
Founders Fund is one of the early institutional investors in crypto assets. In fact, the company bought Bitcoin nearly a decade ago when it was worth less than $1,000. He expanded his Bitcoin holdings over the next few years.
In his speech at the Bitcoin 2022 conference in Miami, Thiel reiterated his support for Bitcoin and called for broader acceptance. He boldly declared the end of fiat gaming, emphasizing that Bitcoin remains undervalued but has the potential to replace gold. Furthermore, Thiel predicted that Bitcoin's price would rise 100 times from its then-current valuation of $44,000.
Despite expressing optimism about Bitcoin's future, Thiel's fund remains in the midst of a market downturn in the wake of major challenges such as the collapse of major players such as FTX and increased regulatory scrutiny. I strategically liquidated most of my cryptocurrency positions just before that.
This resulted in a $1.8 billion gain for Founders Fund. This was perfect timing as Bitcoin subsequently experienced a dramatic sell-off, briefly falling below $16,000 later that year. Interestingly, Thiel also expressed that he felt “underinvested” in Bitcoin months before Founders Fund exited its digital asset investments.
Meanwhile, the resurgence comes amid accelerating inflows from the recently launched Spot Bitcoin ETF, triggering Bitcoin to record highs not seen in the past two years.
Bitcoin remains the top choice for institutional investors
A recent survey conducted by Bybit shows that while institutional investors are cautious towards altcoins, they show a pronounced trend towards Bitcoin and mixed feelings towards Ether. Bitcoin holdings among this demographic have increased significantly, doubling in the first three quarters of 2023.
September was a pivotal month, with half of institutional traders' portfolios allocated to Bitcoin. This is in line with upbeat market sentiment towards the leading cryptocurrencies, driven by regulatory developments and expectations for a possible green light for a Bitcoin ETF.
