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With the volatility of the crypto market rampant, as bitcoin and other currencies recover and plunge for a variety of reasons, investors continue to find the prospect of a crypto ETF intriguing, though so far elusive. Meanwhile, the universe of venture capital funds continues to grow.
The most recent participant in the crypto-fund race is Andreessen Horowitz, who is launching a multi-billion dollar fund to invest in the volatile cryptocurrency ecosystem.
The Silicon Valley venture capital firm, founded by Marc Andreessen and Ben Horowitz, this week announced its new $ 2.2 billion cryptocurrency-focused fund called Crypto Fund III and hopes to allocate that capital. blockchain and digital asset start-ups.
The size of this fund is a testament to the size of the opportunity before us: crypto is not only the future of finance but, as with the internet in its infancy, it is poised to transform everyone. aspects of our lives, Katie Haun and Chris Dixon, partners who run the Andreessens cryptocurrency group, said in a blog post.
The company’s first crypto-focused fund was launched three years ago, when bitcoin fell, losing about 80% of its value from 2017 highs. This most recent fund appears to be arriving under similar conditions .
Bitcoin fell to a two-week low to start the week after news broke that China has stepped up its cut from cryptocurrency mining.
A digital shot
According to data from Coin Metrics, the world’s largest digital currency fell to $ 31,760 on Monday morning, falling below $ 32,000 for the first time since June 8. It is trading near its January lows in recent weeks. The pressure on the cryptocurrency affected smaller competitors like Ether and XRP, which fell 7% and 8.5% respectively.
Movements in the cryptocurrency have hurt funds like the Simplify Volt Pop Culture Disruption ETF (VCAR) and the famous Ark Innovation ETF (ARKK).
Chris Dixon, general partner at Andreessen Horowitz, said the firm is taking a long-term and patient approach in space.
We’ve had highs and lows in the cryptocurrency market and expect there to be a lot more, Dixon told CNBC on Monday. There is potential in the technology, and some of the downturns may be the best investments.
Bitcoin has lost almost half of its value since it hit the $ 60,000 level in April. Although it rebounded from it this week, the famous crypto plunged last week, shattering some key technical levels. Haun and Dixon noted the unpredictability of asset classes and said prices can fluctuate, but innovation continues to increase with each cycle.
We believe the next wave of IT innovation will be crypto-driven, the partners wrote, adding that they were radically optimistic about crypto’s potential.
While the company has invested in large tech companies, Andreessen Horowitz took his first step into the digital asset space through Coinbase in 2013 and continued his digital currency interests by investing in the Facebook-backed scale, also. known as diem.
The difficulty of a crypto ETF
While venture capital funds have performed better, getting approval for a crypto ETF has been notoriously difficult, with no ETFs active to date. On Tuesday, the SEC announced that it was extending the review period for the Valkyrie Bitcoin Fund application, which was filed by Valkyrie Investments in January of this year.
In May, the SEC extended the decision-making period for the Valkyrie Bitcoin Fund by 45 days. The new decision-making date is August 10, 2021. However, the SEC regulator may extend the review period for up to 240 days before making a formal decision on an application.
The Valkyrie Fund is the third Bitcoin ETF proposal to see its review period extended in as many weeks.
The SEC has delayed consideration of the application for the WisdomTree Bitcoin Trust until the end of May. The regulator then announced in mid-June that it would extend the review period for the VanEck Bitcoin Trust app, seeking additional public comments on the proposal.
Without a dedicated Bitcoin exchange-traded fund available in the United States, options for investors are forced to buy the largest digital asset directly, enter the crypto futures market, or invest in various blockchain ETFs such as the Amplify Transformational Data Sharing (BLOK) ETF.
Another crypto fund option could come from VanEck, which had deposit plans for the VanEck Vectors Digital Assets ETF in January. The concept was revealed in a recent filing with the Securities and Exchange Commission.
Digital asset companies may include small and mid-cap companies and issuers from foreign and emerging markets, and the Fund may invest in certificates of deposit and securities denominated in foreign currencies, depending on the filing.
It is not immediately clear whether the new ETF will be comparable to existing blockchain funds on the market.
For more market trends, visit ETF Trends.
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