US Retirement Fund Buys Over $100 Million Bitcoin ETF, Scholar: Hopes for States in the US to Follow Suit

The Wisconsin Retirement System currently holds approximately $160 million in Bitcoin spot ETFs IBIT and GBTC. Finance professor David Krause stated in an interview that stocks and other alternative investments are inherently volatile, while Bitcoin has undergone significant changes and its inflation-resistant capabilities have not been fully recognized.

Wisconsin Retirement Fund Buys $160 Million in Bitcoin

According to SEC filings, the Wisconsin Retirement Fund has allocated 0.1% of its $156 billion asset size to Bitcoin spot ETFs, investing around $160 million in both BlackRock's iShares Bitcoin Trust IBIT and Grayscale GBTC.

The Wisconsin state retirement fund is one of the most financially sound funds in the U.S., ranking fifth in the nation for funding ratio according to a report by the Equable Institute in January of this year.

Bitcoin Offers High Returns and Hedging; U.S. States Can Imitate

David Krause, a professor emeritus at Marquette University in Wisconsin, recently stated in an interview with PBS that U.S. states could consider emulating Wisconsin in investing in Bitcoin spot ETFs.

No Concerns About Liquidity

He pointed out that Wisconsin's investment committee SWIB has always been innovative, capable of long-term investments, and does not need to worry about insufficient liquidity like the Illinois state retirement fund.

While optimistic, David Krause believes that only specific state funds can withstand the cryptocurrency market cycles and volatility:

I don't think those with inadequate funds can afford to invest in Bitcoin because it's a long process.

David Krause did not predict which states are most likely to invest. According to Equable's report, by 2023, only 7 state retirement funds have a funding ratio greater than or equal to Wisconsin's 95%, with Illinois state retirement fund having the lowest funding ratio at 51%.

No Concerns About Bitcoin's High Volatility

David Krause referred to Bitcoin as a "good investment" for state retirement funds, emphasizing its role in diversified investments, high potential returns, and as a hedge against inflation.

When asked about concerns over Bitcoin's high volatility, he countered:

Many assets are unstable. If you really delve into investment portfolios, you will find that many assets, including stocks and some alternative investments, are basically very unstable. Bitcoin has undergone significant changes, with supply and demand beginning to balance. I do believe that the investment community is starting to understand it more and view it as a viable alternative investment, and Bitcoin's ability to hedge against inflation has not been fully recognized.

Will Wisconsin Invest More in Bitcoin?

Many were "surprised" by the quick investment of the retirement fund in Bitcoin ETFs after their launch, instead of waiting a few years as expected. David Krause referred to SWIB's initial investment as a "pilot operation" and stated:

I think this is just a starting point. SWIB is testing public reaction to owning this product. It won't have a significant impact on the portfolio until it reaches 2% of the investment portfolio.

Fintel data shows that SWIB is currently one of the top investors in Bitcoin ETFs. As of June 3, they rank sixth in IBIT holdings and 13th in GBTC holdings.