Sovereign funds have already deeply penetrated the cryptocurrency market; who will be the next big investor?
The "invisible whales" of the cryptocurrency market have surfaced, revealing the crypto strategies of sovereign funds.Author: Fairy, ChainCatcher
Editor: TB, ChainCatcher
Last night, Abu Dhabi's state-owned capital MGX announced a $2 billion investment in Binance, setting a record for the largest single investment in the crypto space to date.
Unlike the uncertainty brought by regime changes in North America, the sovereign funds of Middle Eastern countries such as the UAE, Saudi Arabia, and Qatar are long-term and stable, with assets spread across the globe. Being invested by them signifies entry into a higher-dimensional capital circle.
What is even more intriguing is a statement from Binance co-founder He Yi: "Welcome sovereign funds, but financial investors can pass." This raises curiosity about why sovereign funds are so favored. Have they already laid the groundwork, or are they just entering the scene? Which sovereign fund will be the next to make a significant investment?
The Magic of Sovereign Funds : The Game of National Capital
Sovereign funds are established and owned by the governments of sovereign states for long-term investment in financial assets or funds, typically managed by specialized government investment agencies. Compared to private capital, sovereign funds have stronger capital stability and strategic goals, often used to promote national economic growth, hedge financial risks, or ensure intergenerational wealth transfer.
Sovereign funds differ significantly from traditional financial investors in investment logic and objectives:
In recent years, with the transformation of global capital markets, sovereign funds have increasingly deepened their investments in emerging fields such as technology, AI, and Web3, becoming important players in the global capital market.
Currently, the largest sovereign funds in the world are mainly distributed in the Middle East, Northern Europe, and Asian countries, often managing hundreds of billions or even over a trillion dollars in assets. According to Wikipedia, ChainCatcher has compiled a list of "Top Sovereign Wealth Funds from Major Economies or Regions":
Sovereign Funds Have Long Been Deep in the Crypto Market
Sovereign funds' bets on the crypto market are not a spur-of-the-moment decision but a continuous layout over the years.
As early as 2021, Khaldoon al-Mubarak, CEO of Abu Dhabi's sovereign fund Mubadala, publicly stated: "From our perspective, we are focused on the ecosystem around crypto and are actively investing. This may involve blockchain technology, energy usage, and other areas."
In fact, Mubadala entered the crypto market in 2019 and invested in the UAE's first regulated crypto exchange, MidChains.
Other sovereign funds have also taken action in the crypto space:
- Singapore's sovereign fund Temasek has invested in FTX and Web3 gaming service provider Immutable.
- In 2018, Singapore's sovereign fund GIC participated in Coinbase's financing.
- In December 2022, digital asset platform Amber Group announced it raised about $50 million from a new sovereign fund.
- In April 2023, Saudi sovereign fund Sanabil disclosed multiple investments in the Web3 space, including well-known institutions like a16z and Polychain Capital.
- Abu Dhabi's sovereign fund has held approximately 4,700 equivalent bitcoins in the BlackRock IBIT ETF, with expectations for further expansion.
Sovereign Funds Entering the Scene: The "Coming of Age" for the Crypto Market
Abu Dhabi's sovereign fund MGX's $2 billion bet on Binance marks a significant "coming of age" for the global crypto market. Sovereign fund investments not only signify capital inflow but also represent an official level of recognition.
Crypto KOL 0xcult stated that Abu Dhabi's investment in Binance is a key milestone in the industry's development, as the entry of sovereign funds is often seen as a signal of industry maturity.
More importantly, sovereign funds can bring real "hard currency." According to Global SWF statistics, sovereign wealth funds (SWFs) manage $11.09 trillion globally. BlackRock's CEO has stated that if sovereign funds and companies invest 2% to 5% of their funds in cryptocurrencies, Bitcoin could reach $700,000.
Additionally, sovereign funds primarily focus on long-term holdings, with risk resistance far exceeding that of ordinary institutions, which can reduce short-term speculation in the market and enhance overall stability.
Who Will Be the Next Heavyweight Player ?
The UAE has taken the lead; who will be the next country capital to spend lavishly? The editor has compiled a few potential sovereign funds for reference.
Singapore's Temasek announced a pause in crypto investments after the collapse of FTX, but if the market matures further, especially with more sovereign funds entering, Temasek may consider returning.
There have been rumors that Qatar's sovereign wealth fund intends to purchase Bitcoin. Given the rapid rise in the Middle East's acceptance of crypto assets, sovereign funds in the region may follow suit and deepen their investments in this field.
Meanwhile, Trump recently signed an executive order planning to establish a U.S. sovereign wealth fund within a year. Under his vision of a "crypto capital," if this fund materializes, the crypto space could potentially be included in its investment portfolio.
The next "invisible whale" to make a move may soon be revealed.
