Peter Thiel, the billionaire entrepreneur and venture capitalist, and his VC firm Founders Fund have invested hundreds of millions of dollars in bitcoin, as CCN.com previously reported.
The investment of Thiel in the cryptocurrency came after the negative short-term predictions in regards to the price trend of bitcoin provided by many analysts. Another billionaire investor Mike Novogratz, who has been an active advocate of bitcoin, boldly claimed that the price of bitcoin could drop to $8,000 and cancelled his plans to launch a cryptocurrency-focused hedge fund as a result.
“We didn’t like market conditions and we wanted to re-evaluate what we’re doing. “I look pretty smart pressing the pause button right now. I didn’t want to have to deal with the schizophrenic emotional side of it. There are just so many conflicts in that business. It was going to be more complicated than I wanted,” Novogratz told Bloomberg on December 23.
Two weeks ago, the price of bitcoin had declined to $11,500, as the entire cryptocurrency market suffered a major correction that led the market valuation of all cryptocurrencies in the market to fall to $450 billion. At the time of reporting, the market valuation of cryptocurrencies remain near to the $800 billion mark, and has nearly doubled since December 23.
Hence, Novogratz’s concern in regard to the short-term performance of bitcoin and other cryptocurrencies in the market was a nonissue, as the market has fully recovered over the past few weeks.
Despite the worrying behaviour of long-time investors like Novogratz, Thiel stated that he is personally optimistic in bitcoin because it is providing financial services to the unbanked, which PayPal, one of the largest payments in the global market, was supposed to offer. He added that if bitcoin can evolve into a robust and premier store of value, it has potential.
“While I’m skeptical of most of them, I do think people are a little bit underestimating bitcoin, specifically, because it is like a reserve form of money. If bitcoin ends up being the cyber equivalent of gold, it has great potential,” Thiel said.
Realistically, if bitcoin can continue to scale and grow as a digital currency and store of value, it will be able to penetrate into the $8 trillion gold market and the $40 trillion offshore banking industry. The global offshore banking industry is arguably the largest market any cryptocurrency market can target, and penetrating into that market could provide more potential to a cryptocurrency than becoming a reserve currency of the global economy.
More importantly, the flow of billions of dollars from institutional investors and retail traders like Thiel’s Founders Fund will allow the price of bitcoin to surge further, allowing its market valuation to achieve the trillion mark in the upcoming months. Many investors have already predicted the market valuation of bitcoin to reach $1 trillion by the end of 2018, and the Founders Fund has placed a hundred million dollar bet on it.
“The representatives have told firm backers that a cascade of cash into technology companies has stretched their valuations to historic highs, making stakes in startups as dangerous a risk as ever. Bitcoin, on the other hand, could multiply several times over in the coming years,” the WSJ report read.
Featured image from Flickr.
Last modified: March 4, 2021 5:03 PM