Founders Fund's $200M Crypto Investment Fuels Bitcoin Surge as Institutional Interest Grows
Summary:
Institutional investments in Bitcoin (BTC) and cryptocurrencies are increasing, with Peter Thiel's Founders Fund investing $200 million in BTC and Ether (ETH) in 2023. The surge in Bitcoin past the $50,000 mark has been substantially prompted by the introduction of Bitcoin ETFs, which have drawn $2.8 billion since their approval in January 2024. Bitcoin ETFs, now holding over 192,000 BTC, have become a key player in the crypto market, with MicroStrategy's CEO Michael Saylor emphasizing the high demand for Bitcoin from institutional investors.
Bitcoin (BTC) and other cryptocurrencies continue to draw substantial investment from institutional sources, notably with Founders Fund, led by Peter Thiel, reportedly investing $200 million in BTC and Ether (ETH) in 2023. As per Reuters, the venture capitalist's firm invested equal amounts in BTC and ETH during the anticipation of Bitcoin exchange-trade fund (ETF) approval in the U.S in 2023.
Since 2014, Founders Fund has consistently invested in Bitcoin, cashing in a whopping $1.8 billion as it sold its BTC assets during the market surge of 2022. Until the approval of Bitcoin ETFs, venture capitalists like Founders Fund could directly purchase BTC in the open market, whereas larger financial establishments had to await Bitcoin ETFs to gain access to this new asset bracket.
On February 12, the BTC price crossed the $50,000 mark, a feat last seen in December 2021. Bitcoin ETFs have substantially contributed to this surge, drawing over $1.1 billion of early February inflows while withdrawals from Grayscale Bitcoin Trust diminished. Since their January 12 approval, Bitcoin ETFs have seen capital inflows amounting to $2.8 billion, as reported by CoinShares on February 12.
Bitfinex analysts note that Bitcoin ETFs, along with MicroStrategy holdings, account for 1.8% of the total Bitcoin supply, with Bitcoin ETFs alone holding over 192,000 BTC. This is equivalent to approximately $59 billion in assets under management, the highest since early 2022. While this significant value exists, there's no perceived substantial threat to the Bitcoin network's decentralization.
MicroStrategy CEO Michael Saylor, known for converting company treasury assets to Bitcoin since 2020, told CNBC on February 13 about Bitcoin's growing appeal as an asset for investment portfolios. He indicated that institutional investors' decade-long interest in Bitcoin had started realizing with the launch of U.S Bitcoin ETFs. This, he says, was evident in the shifting of capital between futures markets, miners, MicroStrategy, and ETFs.
Saylor additionally emphasized the huge demand-supply gap, with demand from Bitcoin ETFs being ten times higher than the supply from typical sellers like miners. Economic factors as well were greatly different as Bitcoin hit $50,000 for the first time in two years due to key elements like Bitcoin halving and Bitcoin ETF approval in the U.S, says Josh Gilbert, eToro market analyst.
Published At
2/13/2024 12:31:29 PM
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