Yale, Whose Endowment Tops $29 Billion, Invests In Crypto: Which Ivy League School Is Next?
Yale University — whose endowment tops $29 billion — has just become the first Ivy League school to invest in cryptocurrencies, in a sign that institutional investors are becoming bullish about the burgeoning digital currency industry.
David Swensen, the chief investment officer at Yale, has invested in two crypto-focused venture funds: Andreessen Horowitz’s $300 million cryptocurrency fund, and Paradigm — a blockchain- and crypto-centric fund launched by Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang.
David Swensen is known as Yale’s “Warren Buffett” because of his success in growing the university’s massive endowment, CNBC reported.
Even A 1% Allocation In Bitcoin Would Top $290 Million
Cryptocurrencies are reportedly a tiny allocation in Yale’s $29 billion portfolio, but observers say the decision will undoubtedly set off a chain reaction among other top university endowments.
That said, even a 1 percent allocation to bitcoin by Yale would top a staggering $290 million.
Two weeks ago, bitcoin perma-bull Mike Novogratz — the founder of crypto investment firm Galaxy Digital Capital Management — revealed that an unnamed endowment had just made a foray into digital currencies, as the Inquisitr previously reported.
While Novogratz did not name Yale University as the Big Dog investor, it now seems clear that Yale was the entity he was referring to.
#Crypto Bull Mike @novogratz Sets $10,000 #Bitcoin Price Target, Citing ‘Institutional #FOMO ’ https://t.co/7ii9FK5z45
— Crypto Bros (@CryptoBros_TO) September 28, 2018
Bill Barhydt, CEO of crypto exchange Abra, said the “herd mentality” of institutional investors will ensure that other endowments will soon make the leap now that Yale has taken the first step.
“People are excited about it, but afraid of being the first, or having to explain themselves,” said Barhydt. “That’s the fear versus greed of institutional investing. There’s a herd mentality there as much as there is in retail investing.”
Investment ‘Herd Mentality’ Could Take Over
Bitcoin and other cryptocurrencies got crushed this summer, but in September, Mike Novogratz said he believes the stars were lining up for a long-term surge in the market.
Novogratz said an impetus for the forthcoming rally was that global institutions like Goldman Sachs and ICE (Intercontinental Exchange Inc.) — the owner of the New York Stock Exchange — were constructing financial frameworks to facilitate the adoption of crypto.
“It’s also a bull market in institutions building the infrastructure needed for real-money investors to start investing in this space,” Novogratz told CNBC (video below). “Three to six months from now, there will be an ‘all-clear’ sign for people — big institutions and pension [funds] — to start investing.”
Most institutional investors copy what their peers do, so if one major university endowment signals that cryptocurrencies are worthwhile, others will follow suit in a domino effect because of “institutional FOMO” (Fear of Missing Out).
CIO: It’s ‘Inevitable’ That Endowments Will Invest In Crypto
In April 2018, Ari Paul — the chief investment officer of crypto investment firm BlockTower Capital — predicted that super-rich universities would start investing in cryptocurrencies this year.
“I do think it’s inevitable from a few angles,” Paul told CNBC. “Even if they never believe in it as an asset class, they’re smart enough to recognize the alpha opportunity.”
Ari Paul, the former portfolio manager for the University of Chicago (which has a $7.8 billion endowment), said several university endowments and pension funds began researching digital currencies as investment vehicles as early as 2015.