Peter Thiel's Fund Returns to Bitcoin and Ether, Sparking Interest in Cryptocurrencies in Silicon Valley: Report

Founders Fund, the venture capital firm founded by billionaire Peter Thiel, is reportedly investing again in Bitcoin and Ether.

This move by the San Francisco-based venture capital firm, which has total assets under management of around $12 billion in 2023, marks a revival of Silicon Valley's interest in the crypto market.

The crypto comeback in Silicon Valley

According to sources familiar to Reuters, Founders Fund allocated $200 million to purchase crypto assets last year, splitting the amount equally between its two largest assets – Bitcoin and Ether. The latest move highlighted the comeback of institutional investors into crypto investing, a strategy that suffered a major blow during the 2022 market downturn.

Founders Fund was one of the first institutional backers of crypto assets. In fact, the company purchased Bitcoin almost a decade ago when its value was below $1,000. It expanded its Bitcoin holdings over the next few years.

Thiel's speech at the 2022 Bitcoin Conference in Miami reiterated his support for Bitcoin and called for its wider adoption. He boldly declared the end of the fiat gaming regime while emphasizing that Bitcoin is still undervalued but has the potential to replace gold. Additionally, Thiel expected the price of Bitcoin to rise 100-fold from its then value of $44,000.

Although Thiel's fund expressed optimism about Bitcoin's future, it strategically exited most of its crypto positions just before the market downturn, citing significant challenges such as the collapse of major players such as FTX and increased regulatory scrutiny.

In doing so, Founders Fund made a profit of $1.8 billion, just at the right time when Bitcoin experienced a dramatic crash, briefly falling below $16,000 later that year. Interestingly, Thiel also expressed that he felt “under-invested” in Bitcoin just months before Founders Fund exited its investments in digital assets.

The comeback, on the other hand, comes amid increasing, accelerated inflows from the recently launched spot Bitcoin ETFs, which led Bitcoin to reach highs not seen in the last two years.

Bitcoin remains the first choice for institutional traders

A recent study by Bybit found that institutional traders showed a clear bias towards Bitcoin and mixed feelings towards Ether, while being cautious towards altcoins. Bitcoin holdings among this demographic increased significantly, doubling in the first three quarters of 2023.

September proved to be a pivotal moment as half of institutional traders' portfolios were invested in Bitcoin. This is in line with bullish market sentiment towards the leading cryptocurrency, buoyed by expectations of regulatory progress and the possible green light for a Bitcoin ETF.

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