Despite this year’s bear market of “historic proportions”, pension funds across North America remain bullish on the crypto sector, according to the Wall Street Journal (WSJ).
Pension Funds at a Crossroad
According to the report, the interest is reflected in asset management firm VanEck, who notes that many pension funds have reached crossroads in 2022, wondering whether to double down on crypto, or otherwise throw in the towel.
Last year, one Houston-based firefighter pension fund put US$25 million into bitcoin and ethereum. While their investment is underwater, leadership understood at the time that “volatility and large swings are expected”.
Other pension funds are viewing the bear market as a potential opportunity for further investment at a substantial discount. While many funds don’t necessarily have conviction in the underlying crypto assets, some are willing to chase yields by engaging in yield farming. Most notably, this has been adopted by a Virginia-based pension fund who told the WSJ that approximately 4.5 percent of its US$6.6 billion in assets under management was being utilised for this purpose.
Of course, not pension funds have adopted this “forward-thinking” approach. Representing the views of most pension funds, one US$300 billion fund for teachers in California recently pronounced it was avoiding crypto altogether, due to its inherent volatility.
Recently, it emerged that a Canadian pension fund invested in Celsius, a crypto “bank” that has since declared bankruptcy. For those paying attention, it was self-evident that the yields were unsustainable, and more importantly, the risk far outweighed any potential benefits. Unfortunately, this wasn’t sufficiently clear for many:
First the CDPQ invests in Celsius and now the Ontario Teachers’ Pension Plan Board has invested in FTX.
Canadian pension fund managers are in serious need of a why “Bitcoin, not crypto” lesson.
— ₿itcoin Gandalf the Orange (@BTCGandalf) June 28, 2022
Institutions continue to lump Bitcoin and crypto in the same sentence. Until they take the time to understand the difference, malinvestment is likely to perpetuate for the foreseeable future.
Disclaimer:
The content and views expressed in the articles are those of the original authors own and are not necessarily the views of Crypto News. We do actively check all our content for accuracy to help protect our readers. This article content and links to external third-parties is included for information and entertainment purposes. It is not financial advice. Please do your own research before participating.
Credit: Source link
