Bitcoin’s Next Big Price Surge Could Result from Pension Funds Entering the Crypto Market
There are some rumours circulating on the internet related to pension funds entering the cryptocurrency space with several investments. However, is possible for pension funds to be investing in such a volatile digital asset?
According to a recent report released by Bitcoin.com, the largest 300 pension funds manage $6 trillion in assets. However, it is unlikely that some of these funds engaged in cryptocurrency investing during 2018. One of the main issues that could have stopped them to invest in virtual currencies is the fact that there are strict investor protection regulations.
Pension funds have large sums of money to manage, and they are one of the main investors in important companies around the world. Some of the investments these funds make are related to property, equities and cash, among others. Virtual currencies are too volatile and risky for the pension funds to start investing in the space.
During the last few days, there were some important figures and media outlets in the space writing about pension funds entering the crypto market. One of them is Zerohedge that wrote on Twitter that pensions are now buying virtual currencies.
Pensions now buying cryptos
— zerohedge (@zerohedge) December 28, 2018
Although Zerohedge wrote this tweet, there is no link backing that statement or story behind this information.
Clearly, pension funds are experiencing difficult times and in the future, the situation could be even harder. The performance of these funds is slowing down. There are low-interest rates around the world, inflation rates that put pressure on the investments that these companies have, slower growth around the world, and an ageing population.
On the matter, he wrote:
“It will take time for pensions funds to get comfortable with investing in Bitcoin. We need to educate multiple stakeholders and demystify this nascent industry. When one makes the decision, it will create a cascading effect that leads to hundreds of them jumping in.”
He has also explained that Bitcoin is a great asset for pension funds to invest due to two main reasons. The first one is that Bitcoin is a non-correlated asset. Indeed, it has almost zero correlation with the S&P 500 for example in the last 180 days. The second reason is that Bitcoin has very high possibilities of growing many times. This second thing makes it more attractive taking into account the risks involved in investing in Bitcoin.
During the last ten years, Bitcoin has also behaved better than the S&P 500 index and it is expected to do it also in the next ten years. Although there are certain limitations for these pension funds to invest in this virtual currency, in the future we might be able to see new investment entering the space.