Founders Fund’s $200M BTC, ETH Purchase Preceded Bitcoin ETF Surge

Peter Thiel’s Founders Fund has reportedly invested $200 million in Bitcoin (BTC) and Ethereum (ETH) in 2023. The firm invested $100 million in each cryptocurrency, taking advantage of the anticipation surrounding the approval of a Bitcoin exchange-traded fund (ETF) in the United States. Founders Fund has been investing in Bitcoin since 2014, and it previously made a significant profit when it sold its BTC holdings in 2022. While venture capital and hedge funds like Founders Fund could directly purchase BTC, large financial institutions had to wait for the introduction of Bitcoin ETFs to gain exposure to the asset class.

On February 12, Bitcoin exceeded the $50,000 mark, reaching a milestone it had last seen in December 2021. Analysts and experts have attributed the surge in the price of BTC to the introduction of Bitcoin ETFs. In early February, Bitcoin ETFs attracted over $1.1 billion in investment, while outflows from the Grayscale Bitcoin Trust decreased. According to a report by CoinShares, Bitcoin ETFs have accumulated $2.8 billion in capital inflows since their approval in January. These ETFs now hold over 192,000 BTC, representing a total asset value of $59 billion.

The total BTC held by Bitcoin ETFs, excluding Grayscale’s GBTC, and MicroStrategy accounts for 1.8% of the total Bitcoin supply. While this represents a significant value, analysts suggest that it does not pose a threat to the decentralized nature of the Bitcoin network. MicroStrategy founder Michael Saylor stated that Bitcoin is an attractive asset for investors and its addition to investment portfolios is a natural move. He believes there has been a pent-up demand for BTC from institutional investors, which is now being met through Bitcoin ETFs. Saylor noted a rebalancing of capital between futures markets, miners, MicroStrategy, and ETFs, which has contributed to the stabilization and increasing demand for BTC.

Market analysts have identified key factors for Bitcoin’s price surge over $50,000, including the Bitcoin halving and the approval of Bitcoin ETFs in the U.S. These developments have sparked renewed interest and investment in Bitcoin. Analysts, such as Josh Gilbert from eToro, have highlighted these macroeconomic factors as major contributors to Bitcoin’s current success.