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Pension Funds Getting Set to Board Bitcoin Bandwagon, Say Insiders

Tim Alper
Last updated: | 2 min read

The American digital asset investment giant Grayscale has suggested that pensions and endowments providers are clambering aboard the crypto gravy train – an opinion shared by an increasing number of financial industry specialists.

Source: Adobe/keatikun

The firm’s new CEO Michael Sonnenshein said, per Bloomberg,

“We’ve started to see participation not just from the hedge fund segment […] but recently from other institutions, pensions and endowments. The sizes of allocations they are making are growing rapidly as well.”

Grayscale claims it has over 3% of the world’s supply of bitcoin (BTC), and Sonnenshein explained that the company’s 10 funds currently manages USD 25bn in assets, up from USD 2bn a year ago, said.

It also intends to double its 24 employees, go on a new marketing drive “introduce half a dozen new products” this year, the CEO added.

Sonnenshein’s comments come hot on the heels of a forecast last month from strategists at JPMorgan, the new Grayscale supremo’s former employees.

After the American firm Massachusetts Mutual Life Insurance (MassMutual) announced it was buying USD 100m worth of bitcoin to add to its general investment fund, JPMorgan experts wrote,

“One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.”

And there is no shortage of support for these claims.

The CEO of the crypto investment fund Three Arrows Capital Su Zhu, opined enthusiastically in November 2020 that “if pensions begin divesting from the zero/negative-yielding global sovereign bond market to buy BTC, that would be a veritable deluge of capital.”

A more conservative opinion was expressed by Frank Spiteri, Chief Revenue Officer at CoinShares, however, who stated in October that pensions operators were still playing it safe.

Spiteri wrote,

“In our engagements, we see interest and participation from every investor segment, apart from pensions and sovereign wealth funds.”

But many have claimed that when it comes to pension funds and BTC investment, it is just a matter of time before managers rush to crypto.

In May last year, Nick Prince, Financial Strategy Analyst at the crypto exchange giant Coinbase, explained that “it is reasonable to expect pension funds to invest meaningfully into this asset class” before banks, insurance companies and sovereign wealth funds make their moves, although he predicted that family offices and endowments would take to crypto before pension managers.

Meanwhile, Castle Island Ventures partner Matthew Walsh has predicted that an American pension fund will publicly announce a bitcoin position before 2021 is out.

And Christopher Wood, the Global Head of Equity Strategy at the American investment bank Jefferies, has reportedly been cutting gold reserves in favor of bitcoin in his long-only global portfolio for USD-denominated pension funds.

At the time of writing (10:09 UTC), BTC trades at USD 39,527 and is up by almost 6% in a day and 35% in a week. Yesterday, it hit USD 40,000 for the first time ever.
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