Sovereign funds have actually penetrated into the crypto market. Who will be the next big bettor?

Author: Fairy, ChainCatcher

Edited by: TB, ChainCatcher

Last night, Abu Dhabi's state-owned capital MGX announced a $2 billion investment in Binance, directly setting the largest single investment in the crypto space to date.

Unlike the uncertainty brought about by the change of regimes in North America, the sovereign funds of Middle Eastern countries such as the UAE, Saudi Arabia, and Qatar have been stable for a long time, and their assets are spread all over the world. Investment by them means entering a higher-dimensional capital circle.

What is even more intriguing is that Binance Lianchuang Heyi’s words: “Welcome sovereign funds, let’s forget about financial investors.” This makes people wonder why sovereign funds can be so favored? Have they been laid out long ago or have they just entered the market? Which sovereign fund will make a lot of money next time?

The Magic of Sovereign Funds : ****The Game of State

Capital****

Sovereign funds are established and owned by some sovereign governments and used for long-term investments, usually managed by specialized government investment institutions. Compared with private capital, sovereign funds have stronger financial stability and strategic goals, and are often used to promote national economic growth, hedge financial risks or ensure cross-generational wealth inheritance.

There are significant differences in investment logic and investment goals between sovereign funds and traditional financial investors:

In recent years, with the changes in the global capital market, sovereign funds have increasingly invested in emerging fields such as technology, AI and Web3, and have become an important player in the global capital market.

Currently, the world's largest sovereign funds are mainly distributed in the Middle East, Nordic and Asian countries, and these funds often manage hundreds of billions of dollars or even more than trillions of dollars in assets. According to Wikipedia data, ChainCatcher has compiled “the sovereign wealth funds of major economies or regions”:

Sovereign funds have already penetrated into the crypto market

Sovereign funds’ bets on the crypto market are not on a whim, but a layout that has lasted for many years.

As early as 2021, Khaldoon al-Mubarak, CEO of Abu Dhabi sovereign fund Mubadala, publicly stated: "From our perspective, we are focusing on the ecosystem around crypto and are actively investing. This may involve areas such as blockchain technology, energy use, and more."

In fact, Mubadala has been involved in the crypto market in 2019 and has invested in MidChains, the first regulated crypto exchange in the UAE.

Other sovereign funds have also taken action in the crypto field:

• 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 financing
• In December 2022, digital asset platform Amber Group announced that it would raise approximately $50 million from a new sovereign fund.
• In April 2023, Saudi sovereign fund Sanabil disclosed a number of investments in the Web3 field, including well-known institutions such as a16z and Polychain Capital.
• The Abu Dhabi sovereign fund has held approximately 4,700 equivalent Bitcoins in the BlackRock IBIT ETF and is expected to expand further.

Sovereign Fund Entry: "Accompaniment Gift" for the Crypto Market

Abu Dhabi sovereign fund MGX spent $2 billion betting on Binance, ushering in a significant "coming-come gift" for the global crypto market. Investment in sovereign fund not only means capital inflow, but also an official recognition.

Crypto KOL 0xcult Frankly stated that Abu Dhabi's investment in Binance is a key milestone in the development of the industry, because the entry of sovereign funds is often seen as a signal of the industry's maturity.

More importantly, sovereign funds can also bring real "hard currency" . According to Global SWF statistics, the Sovereign Wealth Fund (SWF) manages $11.09 trillion worldwide. BlackRock CEO has said that if sovereign funds and companies invest 2% to 5% of their funds in cryptocurrencies, Bitcoin will reach $700,000.

In addition, sovereign funds are mainly held for a long time, and their risk resistance is far beyond ordinary institutions , which can reduce the short-term speculation of the market and enhance overall stability.

Who is the next heavyweight player ?

The UAE took the lead in making a move. Next, who will be the next national capital that spends a lot of money? The editor has included several potential sovereign funds for reference only.

Singapore's Temasek announced a suspension of crypto investment after FTX collapsed, but if the market matures further, especially when more sovereign funds enter, Temasek may consider returning.

There have been rumors that Qatar's sovereign wealth fund intends to buy Bitcoin. Given that the Middle East’s acceptance of crypto assets is rapidly increasing, sovereign funds in the Middle East may follow closely to further deepen investment in the field.

Meanwhile, Trump recently signed an executive order, planning to establish a U.S. sovereign wealth fund within one year. Under its "crypto capital" vision, if the fund takes shape, the crypto space may also be included in part of its portfolio.

The next "invisible giant whale" that takes action may be revealed soon.