Investment banks Goldman Sachs and Morgan Stanley revealed in regulatory filings that they hold $600 million between them in US spot Bitcoin exchange-traded funds.
That’s a bullish sign for institutional adoption of crypto — including by America’s huge public pension funds, according to Hashdex.
The investment banks’ disclosures “signal a new consensus,” Dramane Meite, head of US and Europe product at the crypto-native asset manager, told DL News.
ETFs want to attract inflows from big public pensions, which command $4.7 trillion. Still, they are conservative in their investment strategies.
After all, they hold the retirement savings of America’s teachers, nurses, and firefighters.
Public pensions allocate most funds — 71% — to equities, with 21% going to debt securities, according to figures from the think tank Urban Institute.
Crypto investments account for a fraction of a percentage point.
ETFs create more comfort among risk-averse investors as they provide exposure to the underlying asset without the hassle and risk of storing it themselves.
Pension funds eye crypto
There are already signs Bitcoin and Ethereum ETFs increase pensions’ comfort with what is after all a niche and highly volatile asset class.
The state of Wisconsin’s investment board bought $99 million of iShares Bitcoin Trust, BlackRock’s spot ETF.
Mostly, adoption will “trickle down” through brokerages and investment banks before it reaches the public pensions — which is why Goldman’s disclosures are so bullish, Meite said.
The more institutional players that disclose significant holdings of crypto, the more pensions will be interested in doing their own due diligence on issuers.
“It’s a ripple effect that goes through the market,” Meite said.
He said while it will take time for pensions to get comfortable with crypto, they fear missing out on returns.
Bitcoin has performed better than most tech stocks over the past decade, according to research by Franklin Templeton.
Crypto market movers
Bitcoin is down 0.3% over the past 24 hours to trade at $58,480.
Ethereum is down 0.7% to trade at 2,616.
What we are reading
Bankrupt Swiss bank plunges $63m euro stablecoin into uncertainty over withdrawals — DL News
Binance Achieves 19th Global Regulatory Milestone, Re-Enters India — Milk Road
Is Ethereum dead? Its revenue is plummeting… — Milk Road
Can Democrats convince crypto voters to back Kamala Harris? This campaign hopes so — DL News
Lending Protocol Aave to Propose Onboarding TBTC in Response to Concerns About Latest WBTC Custodial Changes — Unchained
Joanna Wright writes about markets for DL News. Email her at joanna@dlnews.com.
