Wisconsin pension fund buys $100m of BlackRock’s Bitcoin ETF: ‘Expect more’

The State of Wisconsin Investment Board has bought $99 million of iShares Bitcoin Trust — BlackRock’s spot exchange-traded fund product.

The investment board is responsible for managing the assets of Wisconsin’s public pensions, and had about $156 billion in assets as of December 31, according to its website.

“Normally you don’t get these big fish institutions” buying into ETFs in their early stages, Bloomberg Intelligence analyst Eric Balchunas posted in reaction to the filing on Tuesday.

BlackRock’s spot Bitcoin ETF is just four months old. The Securities and Exchange Commission approved it in January, along with 10 others.

But these ETFs “are no ordinary launches,” Eric Balchunas, an ETF analyst at Bloomberg Intelligence, wrote on X.

“Good sign, expect more, as institutions tend to move in herds,” he said.

Wisconsin’s investment in IBIT is likely to grow, Matthew Sigel, head of digital assets research at VanEck — which also offers a spot Bitcoin ETF — wrote on X.

“Public pension funds have the longest time horizon in the markets,” he said, adding that the average retail investor holds a stock for about a year, compared to pensions at three to four years.

“A position like this is likely to grow over time,” Sigel said.

Massive inflows

The retirement savings of America’s firefighters and teachers are a massive source of inflows into ETFs, representing some $4.7 trillion.

Pension plans haven’t piled into crypto assets, however.

According to figures from think tank the Urban Institute, public pensions allocated funds mostly to equities — 71% to be precise, with 21% in debt securities.

Crypto accounted for a mere fraction of a percentage point.

Pension funds have conservative strategies — they’re guarding the life savings of future retirees.

Firms worry about the risks associated with a novel and highly volatile set of assets that occupy an uncertain place in the eyes of regulators.

That’s especially true after a series of high-profile disasters at crypto businesses, including the collapse of exchange FTX.

Risk abounds in traditional assets, too, but that’s mitigated by a trusted network of intermediaries, such as custodian banks and prime brokers.

While that kind of infrastructure is emerging for crypto assets, it’s nascent, asset managers say.

Trusted on-ramps

ETFs could change that.

These products offer a more accessible on-ramp into Bitcoin than regular crypto exchanges.

And because they’re regulated and familiar investment products, they may soothe pensioners’ worries.

“Public funds are notorious for their risk aversion and due diligence,” Sigel wrote in his post.

“Clearly the regulated ETF wrapper has brought new participants to the asset class who could not, for operational reasons, justify owning BTX previously.”

Earlier this month, BlackRock said it expects to see institutions, including pensions, start trading the Bitcoin spot market via ETFs.

Small-scale but sophisticated investors like family offices and high-net-worth individuals are still far more likely to invest in crypto assets, Manuel Nordeste, vice president at Fidelity Digital Assets, said recently.

However, he added: “We’re starting to have conversations with the larger, real money institutional investor types, and we’re getting some of those clients, as well as corporates and so on.’

According to a survey Fidelity Digital Assets conducted of the broader market, 80% of high-net-worth individuals viewed digital assets positively, compared to 23% of pension plans.

And 48% of those were invested in digital assets, while just 7% of pension plans were.

Reach out to the author at joanna@dlnews.com.