06 Oct 2018 Josphat Kariuki
Will Yale Influence More Institutional Investors with their $400 Million Crypto Investment?
The co-founder of Coinbase Inc Fred Ehrsam, Matt Huang – former partner of Sequoia Capital, and Charles Noyes (ex-employee of Pantera Capital, a billion dollar cryptocurrency hedge fund) launched the new crypto hedge fund, known as Paradigm. The three launched the fund after raising about $400 million from different investors.
Yale’s $30 billion endowments are managed by David Swensen, who has also invested an unknown amount in the hedge fund. That follows the formation of Yale’s vision to distribute 60% of its assets to other alternatives, like cryptocurrency, by the end of 2019.
The Significance of Yale’s Investment in Cryptocurrency
Swensen and Yale control one of the biggest college endowments in the world. The fund has surpassed every academic institution across the US, making Swensen the most influential figure in the institutional investors market. That’s despite being the most monitored figure on the market.
Earlier this year, in June, a billionaire crypto investor (Michael Novogratz) at the Bloomberg Invest Summit held in New York said that if a major institutional investor enters the market, other leading firms will start accumulating crypto assets such as Ethereum and Bitcoin on a large scale.
On the other hand, market critiques don’t believe that Yale’s investment in Paradigm has any significant effect, compared to direct crypto investments through custodians like Coinbase and BitGo. That may also potentially include Citigroup, Morgan Sachs and Goldman Sachs.
While Paradigm is a fund with a limited scope of interest, its a crypto hedge fund found and steered by veteran professionals in the industry. The move to invest in a crypto-only hedge fund shows Swensen’s interest in cryptocurrencies as alternative assets.
The independence of major digital assets and lack of correlation to the broader financial market enable cryptocurrencies to work as a great and reliable store of value. That comes in handy, especially during times of economic uncertainty.
Yale Becomes the First and the Largest Institutional Investor in Crypto Assets
Through its $30 billion endowments, Yale remains to be the largest institutional investor to enter the cryptocurrency market. The first and biggest institutional investor in crypto assets happens to be a leading academic institution in the U.S and possibly in the globe.
If Yale’s investment in the crypto market initiates FOMO amongst institutional investors, the industry will have rapid improvement in the market development and valuation.
Reportedly, a significant number of large institutional investors are entering the crypto market through OTC (over-the-counter) markets. That comes as a result of an increase in volumes of OTC markets in Asia and US.