Venture capital firm Founders Fund, founded by billionaire Peter Thiel and known for its early investments in companies like PayPal Holdings Inc (PYPL) and Facebook Inc (FB), has made a big bet in cryptocurrency markets. The company has invested $200 million to acquire crypto tokens, half in bitcoin and the other half in ether, the two largest cryptocurrencies. The investment, whose average purchase price was not disclosed, signals a resurgence of interest in the sector among major institutional investors following a market crash 2022 that tarnished the industry’s reputation and led to regulatory scrutiny.
The fund started investing in cryptocurrencies in 2014 and later liquidated its holdings before the 2022 market crash, earning a profit of about $1.8 billion. However, it has since re-entered the crypto market last summer. The firm invested about $200 million from late summer to early fall to purchase crypto tokens, roughly dividing the amount equally between Bitcoin and ether. The average purchase prices of both cryptocurrencies remained below $30,000.
While Founders Fund’s big move shows renewed confidence in the crypto space, many investors remain hesitant to take positions directly in these risky markets. Much of the caution stems from the potential for volatile price movements that have characterized Bitcoin and other digital currencies for years. In addition, many fear that the market’s current boom has been overheated and will eventually cool down.
Thiel, a prominent advocate of cryptocurrencies and an outspoken critic of traditional fiat money, has long praised Bitcoin for its ability to exist outside the purview of central banks, making it a store of value akin to gold and a hedge against monetary policy. He has also argued that the technology behind blockchain enables the creation of new types of assets and services that could transform industries and society.
This new investment from Founders Fund, which manages over $12 billion in assets, shows Silicon Valley’s revived fascination with crypto. The fund oversees an impressive roster of early-stage startups worth more than $10 billion combined, including Airbnb and SpaceX.
In the past, Thiel has been a vocal supporter of Bitcoin and has linked its price rise to his critiques of central bank policies and fiat money. The move by Founders Fund is one of the most significant bets yet by an established institution in the crypto space, indicating a growing conviction that the market has the potential to become a global asset class. The cryptocurrency market has gradually recovered this year, bolstered by investors’ belief in the future potential of blockchain-based technologies. This is a trend that is likely to continue as the industry matures. The cryptocurrency market has a long way to go before it becomes widely accepted as a legitimate investment vehicle. However, if the price of bitcoin and ether continue to climb, more investors may follow suit. It is still a niche investment for large, risk-averse institutions.
