Parsing Andreesen’s Newest Big Bet On Crypto

The phrase “radically optimistic” may recall — at least it does to us — another two-word soundbite from market surges long ago: irrational exuberance.

News came Thursday (June 24), via CNBC, that venture capital firm Andreessen Horowitz is debuting a $2.2 billion fund focused on cryptocurrencies. This is not the firm’s first foray into cryptos, as noted by Fortune. There was a $300 million fund tied to the space that was launched back in 2018, and a $515 million follow on last year.

In a blog post detailing “Crypto Fund III,” company partners Katie Huan and Chris Dixon, who helm the crypto group, said that “the size of this fund speaks to the size of the opportunity before us: crypto is not only the future of finance but, as with the internet in the early days, is poised to transform all aspects of our lives.”

Variations On Some Themes

That’s the general investing thesis, it seems. But drilling down a bit, as noted by CryptoNews.com, the areas of investments will include” next-generation payment and decentralized finance among others. Those areas were referenced in another, earlier blog post announcing Crypto Fund II, where in reference to the store of value, the same partners wrote that “consumers, particularly digitally native users and those in places where the currency isn’t stable, want a modern store of value that is scarce, secure, durable, portable, and censorship-resistant.”

And, in that same post, the thinking around decentralized finance is that “DeFi is a new stack of financial services — think lending, derivatives, insurance, trading, crowdfunding, and more — built on top of blockchains that embraces the core values of the open internet, including 1) open access to anyone in the world; 2) commitment to open source code; 3) permissionless extensibility by third-party developers; 4) minimal-to-no fees; and 5) encryption-backed security and privacy.”

CNBC noted that Andreesen Horowitz also has stakes in firms that are part of the NFT ecosystem such as OpeanSea and Dapper Labs.

Now, we used the term “irrational exuberance” a bit tongue in cheek. But no one can deny that the roller coaster ride of cryptos has been a wild one. Using bitcoin as shorthand or proxy, just last week the price broke through a key $30,000 “psychological” level, and now stands at a bit more than $34,000, but leagues below the $63,000-plus zeniths seen earlier this year. And of course, staking claims in some of the infrastructure itself and services (that would be the DeFi part) makes the plays in cryptos a bit “coin agnostic.” But we’re still in uncharted waters when it comes to regulation, and mining — and whether central bank digital currencies (CBDCs) may muscle any number of cryptos aside.

The recent $2.2 billion fund’s launch shows intent to get in the space in a significant way. And as they say in investing: You pays your money and you takes your pick.