It was in the news last week that a British pension fund had invested in Bitcoin 65 million dollars, about 3% of his entire fortune. The objective is evidently to offer customers a higher return than that received by purchasing traditional asset classes. These are still isolated cases, as i pension funds continue to stay away from the “cryptocurrency” market. The first reason is the innate distrust towards an asset that is still relatively new and until very recently unanimously despised by the world of traditional finance.
The wind partially changed at the beginning of this year, when the Securities and Exchange Commission gave the green light to the first Bitcoin ETFs on the American market.
With the victory of Donald Trumpthe enthusiasm in the crypto world soars. Bitcoin has reached new all-time highs and is on its way to reaching $90,000. Before the American elections he was trading under 70,000 dollars on the bet that the Republican, who became the sponsor of the new business, would win.
Huge potential masses to invest in Bitcoin
If pension funds decided to allocate even 1% to investments in Bitcoin, it would be a “disruptive” event. In 2023, the top 300 in terms of assets under management held 22,600 billion dollars, an increase of 10% on the previous year. Something like 250 billion at current values would pour into the most popular and widespread cryptocurrency in the world, around 15% of today’s capitalization. But the impact would be far more gigantic. With the mere announcement that the main pension funds would invest, Bitcoin would explode on the exchange platforms. It would finally receive the recognition it still lacks to be considered an asset on a par with shares, bonds, raw materials and gold.
Pension funds have a very long time horizon, as they invest in favor of clients who aim to set aside resources to obtain an income after decades.
For example, they are typically very interested in the 30-year segment of the interest rate curve: very long-term certain coupons. By diving into Bitcoin, they would make it a stable and equally long-lived investment. THE’limited offer would guarantee the maintenance of prices, even more so if big finance signaled that they believed in it.
Between stellar returns and reputational risks
Bitcoin would be a bargain for future retirees. Although looking backwards is almost useless, it can help us understand its future potential. In the last five years alone, prices have skyrocketed by 930%. By investing $1,000 in the fall of 2019, today we would have $10,300 in our portfolio. Imagine if pension funds had believed it in the past: even by employing just 1% of their assets, they would have offered an additional average annual gross return of close to 0.60%.
If they continue to ignore Bitcoin’s potential, it is because they fear for theirs reputation. This is a market that is still little known and appreciated among the general public. Just to give an example, in Italy Italian investments amounted to only 2.2 billion euros as of June 30th and carried out by 1.3 million people. The diffusion is much greater in the United States, where there are 56 million cryptocurrency owners, almost one in five people.
Pension funds, revolution near?
There is a risk that, even just communicating to the public that they have allocated a tiny portion of their investments to Bitcoin, pension funds will receive the disapproval of customers with the rush to withdraw capital. It is probable, therefore, that they will jump into the deal after the most courageous companies that have first thrown their hearts over the obstacle show the best results achieved in favor of their customers. Imagine if a small fund At that point, the members would be the ones to claim a policy change.
It could happen sooner than we think, now that the most powerful man in the world is also a crypto advocate.
[email protected]
