According to David Krause, a finance professor at Marquette University in Milwaukee, the addition of two spot bitcoin exchange-traded funds (ETFs) to Wisconsin’s pension plan’s portfolio in the first quarter was probably just the start of the state’s cryptocurrency investments.Shares in Grayscale’s Bitcoin Trust (GBTC) and BlackRock’s iShares Bitcoin Trust (IBIT), worth at $164 million as of March 31, were acquired by the SWIB, according to a May filing with the U.S. Securities and Exchange Commission. Large institutions—pensions in particular—don’t typically invest in nascent exchange-traded funds (ETFs) like the spot bitcoin ETFs, so the revelation stunned the industry. However, as Krause noted in an interview with PBS Wisconsin, the state’s investment board has historically been ahead of the curve.
“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.
According to the SWIB’s website, as of the end of 2023, it controlled about $156 billion in assets. This means that the amount of money it had in bitcoin ETFs was minuscule, making up about 0.1% of its portfolio. But Krause noted that the investment was only a “toe in the water,” and he anticipates that the SWIB will increase it and that other pensions would 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.
The first three months of the year saw nearly 500 institutional investors disclose their allocations to spot bitcoin ETFs. With $2 billion spread among several funds, or about 3% of its total assets under management, hedge fund Millennium Management was the largest owner as of March 31.