Founders fund backs bitcoin, ether investments, reflecting renewed silicon valley interest in crypto

In a move signalling a resurgence of interest in cryptocurrency markets, Founders Fund, the venture capital firm founded by billionaire Peter Thiel, has reportedly reinvested in bitcoin and ether.

Sources, familiar with the matter told Reuters, that the firm allocated $200 million last year to acquire crypto tokens, evenly split between bitcoin and ether. This decision underscores the return of institutional investors to token investments, a strategy that was once highly favoured before the crypto market downturn in 2022.

Founders Fund's re-entry into the crypto space represents a notable comeback for the industry, which faced significant challenges following the collapse of major players like FTX and subsequent regulatory scrutiny.

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The market turmoil in 2022 saw the price of bitcoin plummet to nearly $15,000, its lowest level since 2020. However, both bitcoin and ether have experienced a gradual recovery over the past year, with bitcoin recently surpassing the $50,000 mark for the first time in over two years.

As one of the earliest institutional backers of cryptocurrencies, Founders Fund initially began accumulating bitcoin in 2014, a move that proved profitable when they liquidated their holdings before the 2022 crash, yielding approximately $1.8 billion in returns.

Last summer, the firm resumed its crypto acquisitions, buying bitcoin when it was trading below $30,000 and subsequently expanding its portfolio with additional purchases of both bitcoin and ether over the following months.

While the specific details regarding the average purchase price remain undisclosed, Founders Fund's investment strategy aligns with Peter Thiel's public endorsement of bitcoin.

Thiel, known for his co-founding roles at PayPal and Palantir, has often lauded bitcoin as a store of value comparable to gold and a hedge against central banks' monetary policies.

Founded in Silicon Valley, Founders Fund has gained importance for its early-stage investments in companies like SpaceX and Meta.

With over $12 billion in assets under management, the firm's decision to allocate significant resources to cryptocurrency underscores its confidence in the long-term potential of digital assets.

In April 2023, Founders Fund further bolstered its crypto expertise by appointing Joey Krug as a partner dedicated to crypto investing.

(With inputs from Reuters)