Peter Thiel’s fund shorted 8-year bitcoin bet before market crash

Founders Fund, the venture capital firm founded by billionaire Peter Thiel, closed almost all of its eight-year bet on cryptocurrencies shortly before the market began to collapse last year, netting about $1.8 billion.

The San Francisco-based fund made its first investment in bitcoin in early 2014 and has continued to invest heavily in the cryptocurrency. About two-thirds of the total investment was used to buy bitcoin, people close to the fund said.

Founders Fund sold the vast majority of its entire cryptocurrency portfolio by the end of March 2022 — before the digital asset market crashed last May, one of the people close to the fund said.

The fund does not currently have a significant exposure to cryptocurrencies, the people said. The cancellation of his crypto bet was not previously reported. The Founders Fund declined to comment.

Thiel, a big supporter of Republican candidates and a supporter of former US President Donald Trump, was one of the earliest major investors to buy large amounts of bitcoin, and later took a high-profile view of the digital currency.

In April 2022, when Founders Fund sold most of its cryptocurrency holdings, Thiel said he was optimistic about bitcoin’s future. He told a cryptocurrency conference in Miami that “we are at the end of the fiat money regime,” and suggested that its price – which was trading at around $44,000 at the time – could increase 100 times.

Thiel said JPMorgan CEO Jamie Dimon and BlackRock CEO Larry Fink “should put some of their money into bitcoin,” adding: “We have to push them back.”

First listed in 2009, the price of bitcoin has risen from around $750 in 2014 to a high of over $65,000 by November 2021. However, its price has been volatile in recent years, with several major value crashes. , including falling to around $15,500 last November, a two-year low.

The digital asset market has been rocked by the crisis since May last year, forcing high-profile crypto companies such as Terraform Labs, Celsius, Voyager and Three Arrows Capital into bankruptcy.

Anti-crypto market sentiment was further damaged in November after FTX, the second-largest cryptocurrency exchange, closed with more than $3 billion in debt and its co-founder Sam Bankman-Fried was indicted on multiple fraud charges.

By December, bitcoin had lost nearly three-quarters of its value since its peak, and more than $2 trillion had been wiped off the value of the global cryptocurrency market.

Several blue-chip Silicon Valley investors have flocked to digital currencies in recent years, though most have focused their investments on equity stakes in crypto businesses rather than buying cryptocurrencies outright.

Some exceptions to this include cryptocurrency A16z, the crypto arm of venture firm Andreessen Horowitz, which raised $4.5 billion in funding last year and invests directly in cryptocurrency coins and tokens.

Similarly, Paradigm, a cryptocurrency company founded in 2018 by Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang, raised $2.5 billion in funding by the end of 2021.

But many large financial institutions have shied away from cryptocurrencies due to cybersecurity concerns and fears about their links to money laundering and drug trafficking. In 2017, JPMorgan’s Dimon called bitcoin a “fraud.”

Founders Fund’s move into cryptocurrency, one of its key positions, was one of about nine major exits the venture fund made between 2020 and the end of last year, which allowed it to return about $13 billion to investors.

Other appearances also included initial public offerings of companies Thiel has backed since their initial funding, such as Airbnb and Palantir, the data analytics group that Thiel co-founded.

Thiel co-founded PayPal in 1998 and became one of Silicon Valley’s most successful investors, being the first venture capitalist to back Facebook.

Founders Fund manages more than $11 billion, including $5 billion in capital raised in two funds last year, and owns stakes in more than 100 companies, including Elon Musk’s SpaceX, ride-hailing app Lyft and defense technology group Anduril.

Recently, the fund is in talks to buy a $29 billion stake in OpenAI, the company behind chatbot ChatGPT.

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