Why did Harvard University dump all of its $87 million worth of Ethereum?

▲ Harvard University, Bitcoin (BTC)/ChatGPT generated image ©

Harvard Management Company, which manages the endowment fund of the world's most prestigious Harvard University, has reportedly sold off all of its Ethereum (ETH) holdings, leaving not a single one, as the downturn in the virtual asset market deepened.

According to crypto media outlet Watcher.Guru on May 22 (local time), Harvard Management Company's first-quarter institutional investor holdings report (13F) submitted to the U.S. Securities and Exchange Commission (SEC) confirmed the complete liquidation of an Ethereum position totaling $87 million. According to CoinGecko data, the price of Ethereum has struggled, falling 0.2% in the last 24 hours, 6% over the past week, 6.7% over 14 days, and 10% over the past month. In particular, it experienced a severe correction phase, plummeting to the $1,800 level in February earlier this year, leading to the interpretation that Harvard took proactive risk management to defend against further downward pressure.

The background to Harvard's strong move lies in macroeconomic headwinds and geopolitical crises weighing on the market. Throughout the first quarter of this year, the aftermath of the war between the United States and Iran peaked, and recently announced inflation economic indicators continued to surge beyond expectations, virtually eliminating the possibility of an interest rate cut by the U.S. Federal Reserve (Fed). With concerns about prolonged high interest rates making liquidity contraction inevitable, Harvard focused on securing cash by divesting not only Ethereum but also gold, a representative safe-haven asset, as well as shares of global big tech companies such as Nvidia (NVDA), TSMC, and Broadcom.

However, Harvard has not completely turned its back on the virtual asset market and is showing a differentiated response as part of portfolio diversification. While Harvard did somewhat reduce its investment in Bitcoin (BTC) spot ETFs during this asset reallocation process, it still remains on the list of major shareholders holding the largest amount among global institutional investors. This suggests that the perspective of large Wall Street capital on the market leader, now free from regulatory shackles, and other altcoins is entirely different.

Eric Balchunas, a spot ETF expert at Bloomberg, analyzed the situation by stating, "Harvard already holds a large number of blue-chip stocks that have brought enormous profits, so it has a relatively easy structure to absorb temporary losses incurred in the derivatives market." He added, "They adopted a strategy of maintaining their Bitcoin spot ETF position without completely dumping it, waiting for the gradual recovery shown last month." However, in the case of Ethereum, its fundamental appeal to institutions appears to be relatively lower, making it a target for complete liquidation.

Consequently, Harvard's actions clearly demonstrate that investor confidence among global asset holders has been severely damaged as the virtual asset market has been stuck in a boring bear market for several months. Whether Harvard Management Company will rebuild its Ethereum position in the future is highly uncertain at present. Experts advise that the stagnant trend in the altcoin market, including Ethereum, is likely to continue for some time until the outflow of funds from Wall Street giants subsides and macroeconomic conditions turn to an easing trend.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. This content should be interpreted for informational purposes only.*