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Bitcoin (BTC) ETF purchases for pension funds just getting started
The first-quarter addition of two bitcoin exchange-traded funds (ETFs) to Wisconsin’s pension plan portfolio was likely just the beginning for that U.S. state’s investments in cryptocurrencies, said David Krause, a finance professor at Marquette University of Milwaukee.
SWIB bought shares of BlackRock’s iShares Bitcoin Trust (IBIT) and Grayscale’s Bitcoin Trust (GBTC) worth $164 million as of March 31, according to a U.S. Securities and Exchange Commission filing revealed in May.
The news shocked the industry as large institutions, especially pensions, don’t normally invest in young ETFs like spot bitcoin ETFs, but the state investment board has been ahead of the game in the past, Krause said in an interview to PBS Wisconsin.
“The Wisconsin Investment Board has always been innovative,” he said. “It’s a fully funded pension fund, so in a way they have the luxury of being able to invest for the long term. They don’t have to worry about liquidity as much as, say, the Illinois state pension fund, which is only funded at 50% of its level,” he added.
According to its report, at the end of 2023, SWIB managed assets of approximately $156 billion websitemeaning that his holdings in bitcoin ETFs represented a negligible ~0.1% of his portfolio.
Krause, however, said the investment was just a “tip in the water” and he expects SWIB to increase that amount and other pensions to eventually follow suit.
“I think it’s just an entry point. I think they’re testing to see the public’s reaction to whether or not they will resist owning it and they’re using that as evidence, because it really won’t have a substantial impact on the portfolio, until you get to maybe a 1% or 2% positioning. “, he has declared.
Nearly 500 institutional investors disclosed allocations to bitcoin spot ETFs in the first three months of the year. The largest owner as of March 31 was a hedge fund Millennium Managementwhich disclosed holdings of $2 billion in several funds, or about 3% of its total assets under management.