Pension Funds are making their way into crypto for the first time ever.
According to news released from Morgan Creek Digital, two pension plans in Fairfax County, Virginia are part of the $40 million raised for their crypto venture capital fund.
That would mark the first time in crypto's history that pension plans have invested in crypto.
Several other investors in the fund included an insurance company, a university endowment and a private foundation.
The $40 million raised might not sound like a lot upon first glance, but they only set out to raise $25 million and had to cap it at $40 million because it was over-subscribed.
That's what we like to hear!
More about it can be found here:
Why is this important?
If you not familiar, pension funds hold an incredible amount of our nation's wealth.
How much wealth you might be wondering?
Currently, U.S. Pension Funds are said manage roughly $25.4 trillion.
Yes that is trillion with a "T"!
The entire crypto market is worth roughly $120 billion currently.
Do you see why some of that money coming in might be significant?
It only takes a little...
Most likely these pension plans are putting very small amounts into crypto investments, which they should be considering there is a considerable amount of risk involved.
However, if these funds kick start a FOMO type of event where other pension funds start getting involved, they only have to get involved at something like a 1% allocation to make a dramatic impact in the space.
I talked about what a 1% allocation in the macro hedge fund space might look like the other day, well imagine what a 1% allocation in the $25.4 trillion pension fund space might look like!
That would be roughly $254 billion of new capital coming in...
Now that would really get things moving!
Stay informed my friends.
Image Source:
https://news.bitcoin.com/will-pension-funds-soon-be-investing-in-crypto/
Follow me: @jrcornel
its started i can taste it lmao
thanks for the info
have a great day or evening should i say
It will be interesting to see if more follow.
i think they will we need patience as in if we have not had any for the last year lol
cheers
Yep, we are used to patience at this point.
was just reading your new article as you sent this
i dont like novogratz
banking insider but you better take him seriously cause he usually knows what
he is talking about
cheers jr have a great evening
The first thing I thought when reading that title was "I want a pension fund that invests in crypto!" One of the primary problems with investing in crypto currently is that the governments of the world don't know how to treat it. It doesn't really fit into their known forms of previous investment. But if something like a pension fund invests in it, it's treated like a pension fund on your taxes. That's good news.
I think people into crypto, or that want to be in crypto, but maybe don't quite understand it, will be interested in things like this. I think they'll find far more interest in it than they even expected, because more people are interested in crypto than actually hold it. When they see some sort of investment fund that has crypto as one of it's investments, they might pay more attention to it, and be slightly more likely to choose that one.
If that happens...then a lot more pension funds might start putting a percentage into crypto, not only to diversify, but as a sort of advertisement.
With that being said, I hope more go for 4% or even 6%, rather than just 1%. Most probably won't choose to invest in crypto at all for a while yet, so if a few choose to have larger percentages, it will be good. We're not talking about 1% of 25.4 trillion, but maybe 1% of a few percents of 25 trillion. So, lets say pension funds controlling 5% of the pension market invest 4% of their holdings in crypto, that's 50,000,000,000. That's 50 billion dollars. Now that's a nice chunk of the crypto market. If those controlling 5% of the pension market only invested 1% of their holdings, that's 12,500,000,000, or 12.5 billion dollars. Still an alright chunk. But, for a real game changing number like your's, quite a few pensions would have to invest quite a bit. You'd likely have a few with somewhat larger chunks in crypto, and others with 1% or less in crypto.
Of course, crypto could have mooned and then crashed because large money like this actually did invest a bit, then sold at around the peak. There's a chance that if this sort of thing happens with pension funds, similar might happen. Hopefully they get in now, rather than after all the other pension funds do, and it's already at another peak.
Yes, I think you are exactly right. Even if they don't buy that much, it adds legitimacy and credibility to the entire industry which will attract more capital. Either way we slice it, it's good news.
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When pension companies invest in cryptocurrencies, it's like investing in vanity company. As long as big investors keep pushing more money in, it will have low risk. When big investors start cashing out, the risk increases exponentially as more big investors are required to enter. As "vanity companies" don't have any real people behind to execute exit scam, there is never big enough risk that would cause catastrophic mass exit.
Not sure exactly what you are saying here... are you saying that more pension funds should be coming in?
As I see it, it's one way of long-term investment with possibility of high profits if planned carefully. I'm saying it's better for one organization to invest big sums in Bitcoin in short period of time than a lot of small investors to put small amount each that total to equally big sums.
Ah ok. Yep, I agree.
This is also encouraging for the future pensioned beneficiaries as they will be able to benefit from the advantages of having improved assets to hedge against inflation and other crisis prone situations.
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Yep exactly. The only reason they purchase is because they see a benefit to doing so. There are several.
This is the kind of news I wanted to wake up too.
Im calling Dec. 18 was the bottom at 3,125 while everyone is expecting for one more big dip, I see it going the other way. 🤞
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I hope you are right. Often markets do what people don't want them to do. In this case that would be not having another lower low as a lot of people are waiting for that final washout to buy.
Exactly. Have you read Market Wizards?
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I don't think i have, do you have a link?
https://amzn.to/2SUQxha
Its a book by Jack D. Schwager called Market Wizards and its just a bunch of interviews with some of the top traders. Its not specifically about crypto currency but it has great information about markets in general.
I believe its a must read for all traders. If you get a trial of Audible on Amazon you can listen to the audio version of it for free. The Kindle version is like $15 and the actual book is about $22 but well worth it.
Everyone Ive asked what book to check out to learn more about markets recommended this book to me. Has allot of great info in there.
You might even find a free version of the audio book on YouTube or something. Ive never checked, I got the book myself.
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Interesting. I have a read a few books like that. I read Trading In The Zone a few times, that is a good one. I used to trade professionally for a prop firm a few years ago. It's a tough racket.
This one is a must read. You’ll love it definitely check it out. I couldn’t put it down once I got started.
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Thanks.