Andreessen Horowitz, a top venture capital firm, is “investing aggressively” in cryptocurrencies and has already raised $300 million USD for the fund.
The firm plans to invest in early stage cryptocurrencies and tokens along with later stage networks like Bitcoin and Ethereum and plan to hold the investments for up to 10 years. Chris Dixon, a general partner at the firm, mentioned how they have “experienced ups and downs in the cryptocurrency market, and expect there will be many more”, but they still recognize the “potential in the technology, and some of the downturns can be the best investments.”
Chris drew parallels to the 2009/2010 period when there was a flood of people into the app development space and believes that cryptocurrencies are now in “one of those great times to invest.” However, he did also mention that they “believe [they] are still early in the crypto movement”. Andreessen Horowitz first invested in cryptocurrencies back in 2013 with Coinbase and has yet to sell any of that investment.
Institutional money entering the cryptocurrency space
Since the large spike in cryptocurrency prices this past December, institutional investors have become dramatically more interested in cryptocurrencies. Many financial institutions have begun cryptocurrency investments, but cryptocurrency specific hedge funds are more rare. These investors initially see the returns that cryptocurrencies are creating, but they also recognize the long term benefits of the technological and economic advancements that cryptocurrencies offer. Investors want to make sure that they have a position in such a revolutionary technology since there is a significant likelihood that it will generate high returns over the long run.
However, investment methods can vary based on if the investor is seeking high volatility for short-term speculative trading or seeking out low volatility for long-term safer positions. Institutional money can heavily influence the exchange price and trajectory of cryptocurrencies since more long-term investment in a cryptocurrency will help stabilize its exchange price, but short and fast trading will only exacerbate a coin’s exchange price volatility. So it becomes a repeating cycle where if a coin already has relatively small volatility, it tends to become even less volatile with more long-term institutional money and the opposite if the coin already has high volatility, relatively.
Dash is already creating stability through usability
Dash has been spreading around the world to numerous merchants and consumers, which makes Dash derive more of its value from its usability than from its speculation. This has already made Dash relatively less volatile than other cryptocurrencies, which is appealing to investors seeking a relatively safer investment within the cryptocurrency space. Once these safe long-term investors choose to place their large amounts of institutional money in Dash, it will feed a virtuous circle of stabilizing the price relative to other cryptocurrencies that are more volatile and attract more speculative traders and investors.
Dash has been able to focus on consumer and merchant usability around the world because of its unique governance and treasury system that allows for professionally paid development and outreach specialist to introduce new people to Dash. This allows for Dash to maintain consistently low fees, fast confirmation times, and security along with smooth upgrades to the network and consumer support. These combined features make Dash appealing for everyday transactions, which is why Dash derives more value from its usability than from speculation and makes it a more attractive investment than other cryptocurrencies for long-term investors. This will create a virtuous circle of lowering the volatility even more for Dash and furthering its goal of becoming a peer-to-peer digital currency used and held in everyday life.