Written by Anna Tong and Crystal Ho
(Reuters) – Founders Fund, the venture capital firm founded by billionaire Peter Thiel, is once again investing in bitcoin and ether, sources said, signaling Silicon Valley's renewed interest in cryptocurrency markets.
From late summer to early fall last year, the fund invested $200 million to acquire crypto tokens, half in bitcoin and the other half in ether, the two largest cryptocurrencies, two sources with direct knowledge of the matter told Reuters.
The previously unreported move by a prominent Silicon Valley venture capital firm confirms the return of some institutional investors to token investments, which were once the hottest investment strategy before the cryptocurrency market crash in 2022.
The massive bet marks a comeback for cryptocurrency markets, which suffered in 2022 after the collapse of cryptocurrency exchange FTX and other big players shattered prices, tarnished the industry and prompted a regulatory crackdown.
In 2022, the price of Bitcoin collapsed to nearly $15,000, its lowest price since 2020.
Bitcoin and ether prices have gradually risen over the past year, with Bitcoin hitting $50,000 for the first time in more than two years this week, but it remains below its peak of $69,000 in November 2021.
As one of the first institutional investors in crypto, Founders Fund began aggressively buying Bitcoin in 2014, but then liquidated it before the cryptocurrency market crash in 2022, generating returns of about $1.8 billion.
The sources added that last summer, the founder's fund began acquiring bitcoin when it was worth less than $30,000, and bought more bitcoin and ether over the course of a few months. Reuters was unable to determine the average price of those purchases.
A spokesman for the fund declined to comment.
Thiel, a co-founder of PayPal and Palantir, has publicly praised bitcoin, a currency based on blockchain technology that exists outside the purview of central banks, saying it is a store of value like gold and a hedge against central banks' monetary policy.
The affinity for cryptocurrency aligns with the billionaire's interests in libertarianism, small government, and technological innovation.
Founders Fund, known for its early bets in companies like SpaceX and Meta, now has more than $12 billion in assets under management. It hired Joy Krug as a partner in April 2023 to focus on investing in cryptocurrencies.
(Reporting by Anna Tong in San Francisco and Crystal Ho in Toronto; Editing by Kenneth Lee and Sonali Paul)
