Founders Fund, a venture capital (VC) firm established by Peter Thiel, has once again shown interest in the crypto market, investing in ether and Bitcoin, sources report, suggesting a resurgence of attention toward cryptocurrencies in Silicon Valley. The company set aside $200 million to purchase cryptocurrency tokens in the late summer/early fall of last year. The investment was evenly split between ether and Bitcoin, the two leading cryptos, according to sources familiar with the matter.
The previously undisclosed investment by the renowned Silicon Valley VC company highlights the return of institutional investors to digital assets and token investments, a strategy that was highly favored before the cryptocurrency market downturn in 2022. The substantial investment signals a rebound for the cryptocurrency markets, which faced difficulties in 2022 after the fall of major companies such as the FTX crypto exchange, leading to price drops, a tarnished sector and regulatory scrutiny.
Bitcoin’s price crashed to around $15,000 in 2022, its lowest level since 2020. However, both ether and Bitcoin prices have steadily risen over the last 12 months. Bitcoin recently hit $50,000, its highest level since more than two years ago, though it is still behind its November 2021 record of $69,000.
Founders Fund, an early institutional investor in crypto, initially began accumulating cryptocurrency in 2014, particularly Bitcoin. However, it liquidated its holdings before the 2022 market crash, securing approximately $1.8 billion in profits. The company started buying Bitcoin again last summer when the price was under $30,000, and it has been purchasing more ether and Bitcoin in the last few months. The average purchase price is, however, still unknown.
The company reportedly has more than $12 billion in assets, with a portfolio including prominent companies such as OpenAI, Facebook and SpaceX. Last year, Joey Krug was appointed as a partner to concentrate on cryptocurrency investing.
Beyond direct cryptocurrency purchases, the company has also invested in companies related to blockchain technology and digital assets. For instance, in September 2023, Founders Fund, alongside dao5, spearheaded the financing for “Layer N”—the ethereum-based L2 network.
The company’s affinity for cryptocurrencies reflects Thiel’s interests in liberty, small government and technical advancement. Thiel, who is also a cofounder of Palantir and Paypal, has openly endorsed Bitcoin, a decentralized digital currency that runs on blockchain technology and is not regulated by central banks. He views crypto as a hedge against the monetary policies of central banks and a store of value comparable to gold.
With crypto prices rebounding, there is likely to be an uptick in the earnings of crypto mining companies such as Bit Mining Ltd. (NYSE: BTCM), which largely depend on the income they receive from mining crypto coins and selling them.
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