Will bitcoin recover? Leading investors Andreessen Horowitz bet price will go up with $300m cryptocurrency fund

'The long-term trajectory for cryptocurrencies is upward,' said one analyst

The price of bitcoin is in free-fall, having lost almost $14,000 in value since its 2017 peak. But while the cryptocurrency hovers around its lowest point of the year, a new $300 million fund dedicated to the crypto market has given investors fresh optimism.

Leading venture capital firm Andreessen Horowitz said its venture fund would be used to back companies in the space and benefit from the nascent market. The company also revealed it has no intention to sell any of its current cryptocurrency assets for at least the next five years.

In a blog post detailing the $300m fund, Andreessen Horowitz partner Chris Dixon said: "Although the bitcoin whitepaper is now almost 10 years old, we believe we are still early in the crypto movement.

He added: "We are long-term, patient investors. We’ve been investing in crypto assets for 5+ years. We’ve never sold any of those investments, and don’t plan to any time soon... If there is another 'crypto winter,' we’ll keep investing aggressively."

The faith Andreessen Horowitz has in cryptocurrency markets is all the more significant considering the VC firm's track record: Since its inception in 2009 it has invested in more multi-billion dollar startups than any other company, including AirBnB, Uber and Foursquare. It has also been one of the most significant investors in the cryptocurrency space, having contributed to a $25 million funding round to the Coinbase exchange in 2013.

The cryptocurrency markets were further boosted this week by news that Facebook is reversing its decision to ban adverts for bitcoin and other virtual currencies.

The move once again stoked rumours that Facebook is planning either a major acquisition in the space, or potentially even its own cryptocurrency.

Facebook CEO Mark Zuckerberg said at the beginning of 2018 that he plans to "go deeper" with cryptocurrency technology and in May the social network – which boasts more than 2 billion users worldwide – launched an exploratory blockchain group.

Cryptocurrency prices in 2018 have suffered heavy losses but investors are hopeful of a turn-around (AFP/Getty Images)

Other analysts said that the lifting of Facebook's ban will help reverse the price trend of bitcoin and other cryptocurrencies.

"The crypto market has been in bear territory over the last week or so," Nigel Green, founder and CEO of financial services firm deVere Group, said in a statement to The Independent.

"Facebook's step can be expected to help take it back towards the bulls... Savvy investors are looking at the bigger picture."

Looking at the 12-month price history of bitcoin, the cryptocurrency's current value still represents a 260 per cent increase year-on-year.

According to Mr Green, "the long-term trajectory for cryptocurrencies is upward," citing four main reasons that include interest from the likes of Andreessen Horowitz.

"First, the world needs and demands digital currencies in a digital age," he said. "Second, cryptocurrencies are beginning to be adopted by established financial institutions.

"Third, household name retail and institutional investors are jumping on board the crypto train. And fourth, regulation of the cryptocurrency sector is now becoming inevitable."