Pension funds and big banks to start allocating Bitcoin via ETFs – Fidelity

(Kitco News) – The launch of the Bitcoin spot (BTC) Exchange-traded funds (ETFs) in the United States are expected to usher in a new era of institutional adoption of cryptocurrencies and drive the price of Bitcoin above $100,000, but so far the rise in price remained below $70,000 as institutions were slow to get going. make allowances.

However, this could soon change, as pension funds begin to consider investing in Bitcoin, and with over $4 trillion in capital held by funds in the United States, even a small percentage allocation could generate significant inflows.

According to Manuel Nordeste, Fidelity’s vice president of digital assets, the company has started engaging with major pension funds about the possibility of investing in Bitcoin through ETFs, and the list of interested parties is growing.

“Now 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,” Nordeste said during a recent speaking engagement.

Pension funds have historically been more cautious about risky investments like cryptocurrencies due to strict risk management protocols; However, the launch of spot BTC ETFs has opened the door to allocation using an investment vehicle they are familiar with.

“Small-scale but sophisticated investors like family offices are more active in crypto investments because they can adapt quickly to new opportunities, unlike pension plans which require extensive deliberation,” Nordeste explained.

If pension funds follow small-scale investors like family offices and hedge funds into crypto, it could mean a major step toward mainstream acceptance of digital assets.

Nordeste’s comments follow reports from BlackRock that they had held educational conversations about Bitcoin ETFs with institutional players such as sovereign wealth funds and pension funds.

“Many of these interested companies – whether pensions, endowments, sovereign wealth funds, insurers, other asset managers, family offices – are having ongoing discussions around due diligence and research, and we play a role from an education perspective,” said Robert Mitchnick, BlackRock’s head of digital assets.

And it’s not just Bitcoin that has attracted the attention of large investors, as stablecoins and the tokenization of real-world assets are also areas in which they are showing great interest.

“When we think about this space, we see the potential for digital assets to benefit our clients and the capital markets, with a focus on three areas: cryptoassets, stablecoins and tokenization,” said Mitchnick. “And these pillars are all interdependent. This is a very important thing for people to understand. And the work we do in each informs our strategy and ideas for others.

According to a deposit with the U.S. Securities and Exchange Commission (SEC), BNP Paribas, Europe’s second-largest bank, recently acquired $40,000 worth of BlackRock’s iShares Bitcoin Trust (IBIT), putting the bank ahead of many pension funds and US pension funds by adopting Bitcoin-based investments products.

Despite the small size of the allocation considering that the bank has $600 billion in assets under management (AUM), the move is significant as it marks one of the first instances where a major European bank has allocated Bitcoin via an ETF. This speaks to a growing acceptance of crypto among conventional financial entities.

A 13F deposit by Global Retirement Partners (GRP), a retirement advisory firm with more than $140 billion in assets under management, shows that the firm has also begun to allocate to Bitcoin ETFs. According to According to Julian Fahrer, co-founder and CEO of Apollo Stats, GRP currently holds shares in seven different Bitcoin ETFs and one Bitcoin mining ETF.

Fahrer also reported that Susquehanna International Group, a leader in quantitative trading, has become one of the largest institutional Bitcoin whales, allocating $831 million to the ten ETFs.

Fahrer reported the figures from Susquehanna’s May 7 13F filing, which showed the value of the company’s Bitcoin ETF portfolio as of March 31, 2024.

The most recent update by Fahrer came on Wednesday, showing US Bank, the fifth largest bank in the United States. with $405 billion in assets under management, holds $14 million worth of shares in Bitcoin ETFs.

And it’s not just asset managers based in the US or Europe who are getting in on the action, as the launch of BTC and Ethereum spot ETFs in Hong Kong has prompted institutions in the region to start trading. allowances.

Other filings early in the first quarter of 2024 showed that various investors, including wealth funds, family offices and banks, had already allocated a portion of their portfolios to various Bitcoin ETFs. This includes investments from South State Bank ($34 billion in assets under management), Park Avenue Securities LLC ($9.9 billion in assets under management), Inscription Capital LLC ($1.3 billion in assets under management), Wedmonth Private Capital ($1 billion in assets under management) and American Nation Banks ($637 million in assets under management). .

U.S.-listed Bitcoin ETFs have already seen record growth and trading volumes since their launch in January, and if growing interest from institutional investors is any sign, the long-term trajectory appears bullish.

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not a solicitation to trade any commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no liability for loss and/or damage arising from the use of this publication.

Source