The first crypto fund Andressen Horowitz launched in 2019 lost 40% of its value in the first half of the year.
Anonymous sources familiar with the firm’s crypto fund said Wall Street Journal a16z struggles to convince investors that it isn’t betting too much on crypto.
“It’s not prices I’m looking at,” said Chris Dixon, head of a16z’s cryptocurrency. WSJ. “I’m looking at entrepreneurial and developer activity. That’s the key metric.”
The firm’s activity has been scarce in the crypto winter. Recent news from a16z’s crypto portfolio includes the highly anticipated Aptos Layer 1 getting off to a rough start, and former WeWork CEO Adam Neumann delaying Flowcarbon’s token launch.
Despite the rough period, they made a few bets. Recently, a16z participated in a $165 million Series B funding round for the decentralized crypto exchange. changeAccording to Defi Llama, it has $4 billion worth of assets on its platform.
Unfortunately, the mix of macroeconomic factors plaguing markets has been particularly strong.
The total crypto market cap has been hovering around $1 trillion since summer. Compared to the October 2021 bull run, it fell by two-thirds from $3 trillion, according to CoinGecko.
Public companies such as a crypto exchange coin base (COIN) and software company MicroStrategy (MSTR) have seen shares fall. Another blow to a16z, which has lost $2.9 billion from its stake in COIN, according to the WSJ.
Electric vehicle maker Tesla said last week that it has sold a large portion of its Bitcoin holdings to offset losses in digital assets in its portfolio.
And just last month, markets fell again when the Federal Reserve announced another 75 basis point hike to counter rising inflation. Other than Anatoly Yakovenko, CEO of Solana, one of A16z’s portfolio companies, predictions were made that bear markets could continue for another 12-18 months.
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