Wisconsin Pension Plan Likely to Invest Much More in Bitcoin ETF, Marquette Professor Says

The investment by the State of Wisconsin Investment Board into the spot bitcoin ETFs earlier this year is just a trial phase, a professor said.

David Krause said that the board has always been innovative and it’s no surprise that it’s experimenting with bitcoin.

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The first quarter addition of two spot bitcoin exchange-traded funds (ETFs) to the portfolio of Wisconsin’s pension plan was likely just the beginning for that U.S. state’s investments into crypto, said David Krause, a professor of finance at Milwaukee-based Marquette University.

The SWIB purchased shares of BlackRock’s iShares Bitcoin Trust (IBIT) and Grayscale’s Bitcoin Trust (GBTC) valued at $164 million as of March 31, a filing with the U.S. Securities and Exchange Commission revealed in May.

The news shocked the industry as big institutions, specifically pensions, don’t normally invest in young ETFs like the spot bitcoin ETFs, but the state’s investment board has been ahead of the game before, said Krause in an interview with PBS Wisconsin.

“Wisconsin’s investment board has always been innovative,” he said. “This is 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 need to worry as much about liquidity as, say, the pension fund for the state of Illinois, which is only funded at 50% of its level,” he added.

As of the end of 2023, the SWIB managed roughly $156 billion in assets, according to its website, meaning its holdings in the bitcoin ETFs were a negligible roughly 0.1% of its portfolio.

Krause, however, said the investment was just a “toe in the water” and he expects the SWIB to add to that amount and for other pensions to eventually follow suit.

“I think it’s just an entry point. I think they’re testing to see the reaction of the public to whether or not there’s resistance to owning this and they’re using it as a trial run, because it really is not going to impact the portfolio substantially, until you get to maybe a 1% or 2% positioning,” he said.

Nearly 500 institutional investors revealed allocations into the spot bitcoin ETFs in the first three months of the year. The biggest owner as of March 31 was hedge fund Millennium Management, which revealed $2 billion in holdings across a number of the funds, or roughly 3% of its total assets under management.

Edited by Stephen Alpher.

 

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