Sequoia Capital and Andreessen Horowitz have recently invested in MetaStable Capital, a cryptocurrency hedge fund.
MetaStable Capital is a hedge fund based in San Francisco launched in September 2014 and known for its investments in cryptocurrencies such as Bitcoin and Ethereum. The company believes that Blockchain technology has the potential to transform vast segments of the global economy.
It was noted that MetaStable is the second investment of Sequoia in a Blockchain-related company. Sequoia has first invested in Polychain Capital which specializes in investing in other Blockchain companies through what's known as ICO.
The first investment of Sequoia was also participated by Andreessen, Union Square Ventures, Founders Fund and Bessemer Venture Partners.
Unlike Polychain Capital, MetaStable invests directly in digital currencies that it believes could become a new form of money.
Andreessen Horowitz, a private American venture capital firm founded by Marc Andreessen and Ben Horowitz in 2009. In 2016, Andreessen Horowitz was also one of the venture capital firms which invested $10 mln also in Polychain Capital along with Sequoia Capital.
The hedge fund takes a value investing approach which can be considered as similar to a Warren Buffet approach in partnership. MetaStable has been known for its skill in Bitcoin crisis investing, a Buffett-like concept of investing when others are in doubt of great returns.
Last summer, MetaStable proved this approach when it took the opportunity to double the Bitcoin position once it plunged to under $550 during the Bitfinex exchange hack in Hong Kong, which was considered as the second-biggest security breach ever of such an exchange.
MetaStable’s third co-founder Josh Seims said that rather than try to time the market or buy into the newest Blockchain trend, MetaStable looks closely at the real-world use cases of various digital currencies, and aims to make at least decade-long bets on the most "credible candidates.”
As of March, the flagship fund of MetaStable went up to 539 percent and is estimated to exceed 1,000 percent since Bitcoin, Monero and other cryptocurrencies which it invested have more than doubled.
SV seeing potential in cryptocurrencies?
As more and more Silicon Valley VCs are running their own ICOs, such investment of both prominent VCs in cryptocurrencies is a sign that traditional venture capital firms are seeing a great potential in cryptocurrency value.