Peter Thiel’s Founders Fund Purchased $200 Million in BTC, ETH Before Institutions Entered Bitcoin ETFs
Institutional investors have begun experiencing a surge in demand for Bitcoin as Exchange-Traded Funds (ETFs) open up this asset class to the broader financial system. This trend towards institutional investment in Bitcoin and other digital currencies continues to dominate headlines, with a recent report by Reuters highlighting that Peter Thiel’s Founders Fund has invested $200 million in Bitcoin and Ethereum. According to sources familiar with the venture capital fund’s movements in the digital currency space, Thiel’s company also allocated $100 million to Bitcoin as discussions about the approval of Bitcoin Exchange-Traded Funds (ETFs) in the United States gained momentum in 2023.
The Founders Fund has a long history of investing in Bitcoin, with Reuters reporting that the company has been purchasing Bitcoin since 2014. CoinTelegraph previously reported on another significant BTC investment by the fund in 2018, which yielded over $1.8 billion in revenue when it liquidated its Bitcoin assets at the peak of the last bullish trend in Bitcoin in 2022.
While venture capital (VC) and hedge funds like the Founders Fund have been able to directly purchase BTC on the open market, large financial institutions and funds have had to wait for Bitcoin ETFs to gain exposure to this asset class. The price of Bitcoin surpassed $50,000 on February 12, moving beyond the milestone last traded in December 2021. Market analysts and industry commentators have highlighted the impact of Bitcoin ETFs on the recent price surge of Bitcoin. In early February, Bitcoin ETFs attracted more than $1.1 billion in inflows as outflows from the Grayscale Bitcoin Trust continued to decline, according to a February 12 report by CoinShares. Since their approval on January 12, Bitcoin ETFs have attracted $2.8 billion in capital flows.
Bitfinex analysts emphasize that Bitcoin ETFs, excluding Grayscale’s GBTC, hold over 192,000 bitcoins, bringing the total assets under management to $59 billion, the highest level since early 2022. The latest Bitfinex Alpha report also notes that the combined assets of Bitcoin ETFs and MicroStrategy account for 1.8% of the total existing Bitcoin supply. While the value of the held Bitcoin is significant, they suggest these assets pose no substantial risk to the decentralized nature of the Bitcoin network.
Michael Saylor, the founder of MicroStrategy who led the software company’s move to convert its treasury assets to Bitcoin since 2020, told CNBC on February 13 that Bitcoin is becoming an attractive asset in investment portfolios. Bitcoin, being new, digital, global, unique, and unrelated to traditional risk assets, makes it a natural addition to a responsible investor’s portfolio. Saylor added that there’s a decade of pent-up demand for Bitcoin from institutional investors, who can now gain exposure to the digital asset through Bitcoin ETFs in the United States, futures markets, miners, MicroStrategy, and ETFs.
Following this, the asset has found its place, and people are beginning to understand that demand for BTC through these ETFs is ten times higher than the natural selling supplies from miners. Market analysts have also pointed to vastly different macroeconomic factors as Bitcoin crossed $50,000 for the first time in two years, with the Bitcoin halving and the approval of Bitcoin ETFs in the United States being the main focal points, according to eToro market analyst Josh Gilbert.
