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Why Is Harvard’s Endowment Investing in Bitcoin?

Harvard Management Co., Harvard University’s financial arm, has entered the crypto market at a time when some analysts believe that skyrocketing crypto prices are poised to crash again. The $39 billion endowment of Harvard University has apparently joined two other investors in investing $11.5 million in Blockstack Inc., a crypto-company looking to earn $50 million for its digital-token launch. Meanwhile, according to a thorough Bloomberg piece, technical indicators show that the volatile cryptocurrency space’s recent advances may be soon reversed.

Why Could Digital Coins Crash Once More?

Since hitting a high last year, the Bloomberg Galaxy Crypto Index is at its most overbought level.
This month, the index has risen by approximately 25% to its highest level since January 2018.
Following that peak of $1,667, it fell by more than 65 percent in the three months that followed.
Bloomberg is the source of this information.

Institutional Money Backs Crypto

Harvard Management and other institutional investors have purchased around 95.8 million Blockstack coins, according to a regulatory filing. Engineers can construct safe applications for things like documents and blogging thanks to the company’s network, which was built by Princeton computer scientists.

The news is a victory for the cryptocurrency industry, which has been seeking for capital from wealthy investors. Initial coin offerings, the digital currency market’s equivalent of an IPO, have essentially plummeted, with the price of prominent coins like Bitcoin still 75 percent below their all-time highs. The influx of institutional capital has been hailed as a watershed moment for the cryptocurrency industry as it tries to overcome regulatory uncertainties and investor concerns about fraud, money laundering, and market manipulation.

‘Stacks’ Coin is being offered by a cryptocurrency company.

According to reports, Blockstack’s fresh money would be used to continue development of the company’s decentralized computing network, which employs the digital currency. The digital currency used by Blockstack, known as Stacks, are said to serve as an accounting mechanism, tracking the economic stake that holders of various private keys on the Stacks blockchain have in the network. According to the company, it has applied to the US Securities and Exchange Commission to offer the tokens under the A+ framework, which allows smaller businesses to sell shares with fewer disclosure requirements and receive funding from lower-tier investors even if the securities are not traded on a major stock exchange. According to Bloomberg, if the application is accepted, Blockstack claims it will be the first SEC-authorized qualified token offering of its sort.

Signals to Sell

The cryptocurrency industry is experiencing a slight resurgence, prompting new interest in the digital coin space from institutional investors such as Harvard Management. Bitcoin and Ether have both increased by more over 25% in April, while XRP has increased by almost 15%.

According to Bloomberg, a technical indicator currently shows that the Bloomberg Galaxy Crypto Index, which monitors some of the most popular digital coins such as Bitcoin, Ether, and XRP, is at its most overbought level since hitting a high last year. The crypto-tracking index has risen about 25% this month to its highest level since January 2018, when it topped $1,667, before plummeting more than 65% in the three months that followed. Despite the current rise, the index has lost about 80% of its value from its all-time high.

Data from Bloomberg Intelligence backs up crypto bears who claim that transaction and exchange volume growth has been disappointing.

“It’s not good to have a highly speculative market surge on diminishing volume.” To signal a persistent trend, you typically need good, robust volume and transactions,” said Bloomberg Intelligence analyst Mike McGlone. “Bulls appear to be grabbing at straws to find something that fits their more emotive, less rational ideas and opinions… The emotional fervor of the previous week looks to be excessive.”

According to The Wall Street Journal, Harvard’s endowment suffered massive losses a few years ago as a result of a few dubious bets, forcing the investment arm to lay off half of its workers. Since then, the endowment has gone through a major reorganization. The new leadership is now experimenting with digital currencies.

Looking Forward

The big endowment fund took a chance on riskier assets like Bitcoin, exhibiting institutional interest in the cryptocurrency market.

Harvard isn’t the first university to invest in cryptocurrencies. According to Bloomberg, two Virginia pension funds invested in a venture capital fund focusing on blockchain and cryptocurrencies earlier this year. Yale University made a large cryptocurrency investment last year as well.

What do you think?

Written by Winston Williams

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