Here’s our weekly digest of the latest big reads and news to hit the digital asset space. This week, we’re focusing on crypto venture investing and what it indicates about institutional involvement in the sector, as well as some other indicators which have come through in the past week around institutional adoption.
Andreessen Horowitz Forecasts Fourth Crypto Bull Cycle
Less than a month after launching their new $515million crypto fund, Andreessen Horowitz (a16z) is predicting that “high-quality projects” may drive a new growth cycle in the industry.
In last week’s blog post, the VC fund forecasts: “The 2017 cycle spawned dozens of exciting projects in a wide range of areas including payments, finance, games, infrastructure, and web apps. Many of these projects are launching in the near future, possibly driving a fourth crypto cycle.”
The blog post comes just under three weeks after the VC firm said its new Crypto Fund II exceeded the initial $450 million fundraising target and would launch with a total of $515 million to invest in the space.
Here a16z’s Chris Dixon discusses the crypto price-innovation cycle in week one of the recent a16z Crypto Startup School.
Financial Times: Lifting the Lid on Crypto Funds
Last week the FT looked at how volatility in cryptocurrency prices can cause big losses for highly-leveraged funds. The volatile performance of crypto funds is their selling point as Dan Morehead of Pantera Capital adds in the article: “Bitcoin is such high-octane stuff that putting on any leverage is unnecessary.” What Pantera lost in March, it made up in April, highlighting the importance of size, track record and loyal investors.
A Thesis for Institutional Investment: Why Bitcoin?
Messari’s follow up to their 2020 Halving report looks at how central bank driven monetary debasement will boost institutional demand for store of value assets like gold and silver and bitcoin’s sovereignty, its “secular tailwinds”, and its upside makes it different from other politically neutral, scarce monetary stores of value.
Optimistic 2020 Q1 Update from Electric Capital
In this excerpt from their quarterly letter to limited partners, Electric Capital state they are more optimistic than ever about the emergence of a new programmable money infrastructure and that government’s unprecedented monetary and fiscal stimulus is hastening the emergence of a world where cryptocurrencies and crypto infrastructure will survive.
Goldman Sachs to Host Conference Call on Crisis, Crypto, and Inflation
Goldman Sachs will host a conference call on 27 May titled US Economic Outlook & Implications of Current Policies for Inflation, Gold, and Bitcoin. The event will be hosted by Sharmin Mossavar-Rahmani, the CIO of Goldman’s Investment Strategy Group, alongside Harvard economics professor Jason Furman, and Goldman Sachs’ chief economist Jan Hatzius and they will discuss the impact of the current economic crisis on bitcoin, gold, and inflation.
The news has been heralded as a milestone for the institutional adoption of crypto assets, appearing to signify a complete u-turn on the part of Goldman’s Mossovar-Rhami — who has previously stated that cryptocurrencies fail as mediums of exchange, stores of value, and units of measurement, back in August 2018.
Crypto Spring in Bloom as Institutions and Billionaire “OG” Investors Mature towards Bitcoin
According to Alexis Ohanian, co-founder of Reddit and early investor in Coinbase, the crypto winter is thawing and he asserts that we are on the cusp of a ‘crypto spring’.
In an interview with Yahoo Finance, Ohanian said, “We really do see a crypto spring right now in terms of top-tier engineers, product developers, designers, building real solutions on top of the blockchain.” He added that these developments are, “the best signal of long-term value creation.”
The coming crypto spring is following a wave of fresh support for bitcoin and cryptocurrency among high profile investors like billionaires Paul Tudor Jones, Tim Draper, and Stan Druckermiller.
Ohanian stated, “It’s interesting to see OGs of Wall Street now getting into crypto and bitcoin, it’s increasingly showing that it’s here to stay.”
LMAX CEO says Household Names will Enter Crypto
The next 2 years will be will be critical for institutions entering crypto, according to David Mercer, CEO of LMAX, and the much-awaited wave of interest will be driven by the customer. Currently, big players don’t want to hold crypto, but that’s changing as the credit of the asset class grows. Mercer said factors are moving in the right direction.
On last week’s episode of The Scoop, Mercer revealed how LMAX Digital has already seen a significant uptick in enquiries from banks and funds compared to 2019.
Market Dispersion and Post-Crisis Consequences
In this episode of Chain Reaction, Kevin Kelly sits down with Mark Yukso, CEO & CIO of Morgan Creek Capital Management and Managing Partner of Morgan Creek Digital Assets, to discuss the current state of markets, implications of extreme policy decisions in the wake of COVID-19, and the potential role bitcoin and crypto will play in its aftermath. Mark shares insights from his +25yrs in investment management, drawing parallels to prior downturns and tech cycles while sharing his views on where we’re headed in the new normal.