The 12 Months of Crypto: October
Yale Endowment Invests in $400 Million Crypto Fund
This is part of a 12 part highlight reel by BlockWorks Group where we review the biggest crypto and blockchain story from each month of 2018.
The Story
Back in October, Bloomberg broke the news that the second-largest endowment in higher education had taken the plunge into crypto assets.
Yale’s $30 billion endowment, headed by legendary investor David Swensen, allocated an undisclosed amount of capital to Paradigm, a $400 million fund managed by Coinbase co-founder Fred Ehrsam and ex-Sequoia Capital partner Matt Huang.
Swensen, known for his prolific investments in alternative assets, also invested in Andreessen Horowitz’s $300 million crypto fund, a16z.
2 Months Later
There was a lot of news that broke in October, and deciding which story was the most notable for this month was difficult. Other contenders include the joint-launch of Circle and Coinbase’s stablecoin, USDC and Fidelity’s custody solution. Ultimately, Yale’s announcement was significant because it signalled to a whole new class of investor that crypto is an investable asset class.
Travis Kling has compared endowments and state pensions investing in crypto to a game of musical chairs.
No one wants to be the first to sit down, but as soon as some of the players start taking their seats, FOMO will ensure everyone else starts moving very quickly.
Most asset managers are painfully aware that sometimes the greatest risks come from waiting too long rather than moving too quickly.
It would appear that Yale’s announcement has begun to stop (or at least slow) the music. Just five days after news of Yale’s investments broke, Cointelegraph reported that Harvard, MIT, Dartmouth and Stanford had all made investments in the crypto space as well.
Moving Forward
If 2017 was crypto’s “hype” year, we are now well on our way down (as Gartner puts it) the “trough of disillusionment.”
Big names that once advocated for digital assets will admit defeat and leave the space.
Interest will wane as retail investors who claimed interest in the technology no longer continue to make triple digit returns on investments.
Media outlets will sound the death knell and espouse the death of blockchain.
Announcements like Yale’s are meaningful because they provide a stamp of approval that will become increasingly meaningful in the coming “crypto winter.”
USDC and Fidelity’s custody solution are important, yes, and ultimately consumer adoption is what will drive crypto towards the next phase in its evolution.
But in the meantime, as is the case for all nascent technologies, it will be a small group of people with a crazy idea that keep the industry going. Yale’s announcement, for some, will be the hope that keeps them going.
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