- Andreessen’s unit revealed the $4.5 billion largest crypto fund in May.
- As of September, the company’s crypto fund lost almost half of its value.
- Andreessen invested about $50 million in bitcoin-related projects in two years.
No investor made more bets on the cryptocurrency market than Andreessen Horowitz when prices skyrocketed last year.
The famous venture-capital firm had established a reputation as Silicon Valley’s greatest crypto bull because of their 50-year-old partner, Chris Dixon, who was one of the first believers in how the blockchain technology underlying crypto may alter business.
His unit was one of the most active cryptocurrency investors last year, and in May, it announced the biggest-ever crypto fund at $4.5 billion.
Andreessen Horowitz is now reaping the consequences. Its biggest bets in crypto, such as Bitcoin and Ethereum, have plummeted in value this year. According to Bloomberg data, the firm’s cryptocurrency fund has lost almost half its value since September.
The firm’s decision to invest heavily in cryptocurrencies at what turned out to be its worst moment might have doomed its venture-capital unit.
When many large investors continued to view bitcoin as nothing more than a haven for speculators and money launderers, Chris Dixon defended its potential by writing blog posts that have become somewhat of a creed among young crypto entrepreneurs.
These posts explained how bitcoin would establish a new, decentralized financial system. In just two years, Andreessen had committed close to $50 million to bitcoin-related ventures, including the Coinbase crypto exchange.
Even though bitcoin and other cryptocurrencies saw a significant decline in value in 2018, Andreessen remained bullish and raised $515 million for a second cryptocurrency fund in 2020.
According to data from The Wall Street Journal, the first crypto fund was Andreessen’s best-performing fund on paper as of last year after multiplying its initial investment by 10.6 times after fees.
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