Goldman and Morgan Stanley reveal $600m Bitcoin ETF disclosures. Will it be enough to convince pension funds to pile in?

Goldman and Morgan Stanley reveal $600m Bitcoin ETF disclosures. Will it be enough to convince pension funds to pile in?
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Goldman Sachs has revealed that holds millions in spot Bitcoin ETFs. Credit: Jaap Arriens/NurPhoto/Shutterstock
  • The investment banks are holding so much crypto, it showed up in disclosures.
  • That’s going to make public pensions more comfortable with crypto, Hashdex argues.

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.

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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

Joanna Wright writes about markets for DL News. Email her at joanna@dlnews.com.