- Prominent banks like UBS, BNP Paribas, and the Bank of Montreal are investing in Spot Bitcoin ETFs, with BMO holding four ETFs worth US$6.3 million.
- The State of Wisconsin Investment Board (SWIB) allocated nearly US$141 million to Bitcoin-related funds, including BlackRock’s iBIT and Grayscale Bitcoin Trust.
- Institutional investments from conservative entities like pension funds could drive significant demand for Bitcoin, legitimising it as an asset class and potentially reducing volatility long-term.
Banks, state investment boards and other companies are pouring money into Spot Bitcoin ETFs, filings show. Yesterday CNA reported that prominent banks such as UBS, BNP Paribas and even Canadian Bank of Montreal hold these funds.
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In the case of the latter, the bank holds not one but four ETFs: The funds from Fidelity, Franklin Templeton, Grayscale and BlackRock are on the bank’s books – a combined US$6.3 million (AU$9.5 million).
But institutional interest doesn’t stop here, with the United States leading the developments.
Now, The State of Wisconsin Investment Board (SWIB) has reportedly disclosed a whopping allocation to Bitcoin in its filing with the US Securities and Exchange Commission (SEC). The fund manager holds almost 2.5 million shares in BlackRock’s iBIT worth almost US$86 million (AU$129 million).
Additionally, the fund also holds over 1 million Grayscale Bitcoin Trust shares valued over US$55 million (AU$83 million). SWIB – with US$156 billion (AU$234 billion) in assets under management (AUM) – is also exposed to the crypto sector via investments in MicroStrategy and Coinbase for example.
Saylor: Bring On The Pension Funds
Eric Balchunas, senior ETF analyst at Bloomberg, said it was an unusual but good sign to see such a large investor move into these funds so early.
Bitcoin HODLer and founder of MicroStrategy Michael Saylor, added that thousands of US pension funds – with US$27 trillion (AU$40.6 trillion) AUM – would be seeking to access exposure to BTC at some stage. If these pension funds start incorporating Bitcoin into their investment strategies, even a small allocation could lead to substantial demand given the overall size of their AUM.
The influx of institutional capital from pension funds could significantly drive up the demand and price of Bitcoin. This could further legitimise Bitcoin as an asset class and increase its adoption.
However, it should be noted that these funds are quite conservative and heavily regulated, with their primary aim to safeguard their members’ interests.
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Large funds like these have a dual mandate: they must grow their members’ assets while ensuring that investments are made responsibly to guarantee a secure retirement nest egg.
Therefore, it’s likely that they are not ‘HODLing to the moon’ but rather taking profits periodically.
This practice of regular profit-taking, rather than holding indefinitely, could help stabilise Bitcoin’s price. Frequent selling by large funds can introduce more liquidity and regularise price movements, and potentially reduce extreme volatility in the long term.
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