Peter Thiel’s Founders Fund appears to be back at the game after offloading $1.8 billion worth of crypto assets.
Founders Fund, the venture capital enterprise founded by billionaire Peter Thiel, is reportedly reinvesting in Bitcoin and Ether, as per reports.
This move by the San Francisco-based venture capital firm, which has roughly $12 billion in total assets under management as of 2023, marks a resurgence of Silicon Valley’s interest in the crypto market.
Silicon Valley’s Crypto Comeback
According to sources familiar to Reuters, Founders Fund dedicated $200 million in the past year to purchase crypto assets, dividing the amount equally between the two largest ones – Bitcoin and Ether. The latest move highlighted the comeback of institutional investors in crypto investments, a strategy that took a severe hit during the downturn in the market in 2022.
Founders Fund was one of the earliest institutional backers of crypto assets. In fact, the company purchased Bitcoin nearly a decade ago when it was valued under $1,000. It expanded its Bitcoin holdings over the next few years.
Thiel’s speech at the Bitcoin 2022 conference in Miami reiterated his support for Bitcoin, urging for its broader acceptance. He boldly declared the end of the fiat game regime while emphasizing that Bitcoin was still undervalued but possessed the potential to supplant gold. Additionally, Thiel anticipated a 100-fold increase in Bitcoin’s price from its then valuation of $44,000.
Despite expressing optimism about Bitcoin’s future, Thiel’s fund strategically exited most of its crypto positions just before the market downturn, prompted by significant challenges such as the collapse of major players like FTX and increased regulatory scrutiny.
In doing so, Founders Fund reaped a profit of $1.8 billion, timed perfectly as Bitcoin would go on to experience a dramatic plunge, briefly dropping below $16,000 later that year. Interestingly, Thiel also expressed feeling “underinvested” in Bitcoin just months before Founders Fund divested from its investments in digital assets.
The comeback, on the other hand, comes amidst increasing accelerating inflows from the recently launched spot Bitcoin ETFs, which prompted Bitcoin to climb highs not seen in the last two years.
Bitcoin Remains Top Pick for Institutional Traders
A recent study conducted by Bybit indicated that institutional traders have shown notable inclination towards Bitcoin and mixed sentiments regarding Ether while being cautious towards altcoins. Holdings in Bitcoin among this demographic significantly surged, doubling in the initial three quarters of 2023.
September emerged as a pivotal moment, with half of institutional traders’ portfolios allocated to Bitcoin. This corresponds with the upbeat market sentiment towards the leading cryptocurrency, driven by anticipations of regulatory progress and the potential green light for a Bitcoin ETF.