- Michigan’s state pension fund has invested $6.6 million in Bitcoin ETFs
- This is another chapter in the growing mainstream adoption of BTC, other cryptos
In a recent regulatory filing, the State of Michigan’s Retirement System made a landmark decision to invest in cryptocurrencies. The pension fund, overseeing approximately $143.9 billion in assets and meant for state employees, has committed $6.6 million to the ARK 21Shares Bitcoin ETF.
Since their January launch, this investment marks only the second confirmed instance of a pension fund investing in Spot Bitcoin ETFs. This move is indicative of traditional institutional investors’ growing acceptance of crypto assets and may open the door for wider adoption.
Wisconsin’s earlier steps set precedent
Towards the end of March, Wisconsin’s retirement system disclosed its investment in BlackRock’s iShares Bitcoin Trust worth $99 million and in Grayscale Bitcoin Trust (GBTC), valued at $63 million. This, among a portfolio of assets worth $156 billion.
Retail investors have accounted for most of the $32 billion that have flowed into the nine newly-born Bitcoin ETFs in the last 6 months. However, according to VettaFi, some analysts are looking out for any changes in demand levels by institutions like Michigan’s state pension fund.
Similarly, the Mayor of Jersey City, New Jersey, announced plans to allocate funds to Bitcoin ETFs. Mayor Steven Fulop tweeted that the city’s pension fund will invest 2% in Bitcoin ETFs, though no specific timeline was provided for this allocation.
Source: X
These examples mean that interest in investing in cryptocurrencies is deepening, even among public finance officials at different levels.
Risks and challenges
The trend of pension funds investing in crypto is rising, although it’s not without risks.
There have been cases where pension funds suffered huge losses with their cryptocurrency investments. An example is the case of Montreal-based pension fund CDPQ. The firm faced significant losses after its investment in Celsius went south following the firm’s bankruptcy filing back in 2022.
What could happen with pension fund investments?
The increasing exposure of institutional investors to cryptocurrencies may cause significant shifts in the pension fund investing landscape. This development will also usher in a broader acceptance of digital assets in conventional finance.