Yale Dives into Cryptocurrency
Could David Swensen’s move signal the start of institutional adoption for bitcoin and its ilk?
Believe it or not, David Swensen is dipping Yale’s toe into cryptocurrency.
The chief investment officer of the $29.4 billion endowment has invested an undisclosed amount in two separate cryptocurrency venture funds, Andreessen Horowitz and Paradigm, reports CNBC. Horowitz’ $300 million crypto fund had closed in June.
The implementation marks a key moment in the history of the volatile asset class, as large institutions have been absent from crypto denominations like bitcoin. Up to now, the support for the new currency has been mostly from retail investors and the occasional hedge fund. Billionaire George Soros’ family office, for instance, announced plans to trade the digital currency earlier this year.
But university endowments are different, as they are meant to support education. Swensen’s imprimatur could give virtual currency entrée to other such institutions.
The asset class has had a wild ride over the past year, when crypto-mania ran wild as monumentally rapid gains turned many retailers into millionaires seemingly overnight. Bitcoin, the most popular cryptocurrency, neared $20,000 per coin in December.
Then, however, cryptocurrency ran into trouble in 2018. Since January, 50% of bitcoin’s value has been wiped out, as has 63% of all cryptocurrencies. Bitcoin now sits at $6,545 per coin.
Meanwhile, the infrastructure of trading the digital money has expanded, with an increase in crypto-focused funds to 389 from 227 this year. It has no shortage of supporters, like Mike Novogratz of crypto hedge fund Galaxy Digital. Some are even predicting bitcoin to hit upwards of $100,000 within a few years. Soros had once bashed the asset class, but has since changed his tune. Chase’s Jamie Dimon, Warren Buffett, and Bridgewater Associates’ Ray Dalio have all dismissed cryptocurrency as a bubble.
Either way, Swensen’s Yale investment model, which has stressed alternative assets, has logged a 20-year track record of 11.8% positive returns. So his going into cyber-currency could open the floodgates for adoption among the institutional investment world.
It is not known which cryptocurrencies the endowment invested in. Swensen was unable to be reached for comment, and Andreessen Horowitz declined comment.