Pension Funds Investing in Cryptocurrencies has Very Bullish Importance for the Bitcoin Market
Bitcoin (BTC) has surpassed $4,000 a few days ago and the market seems to be very positive for the future of the space. According to Peter Tchir, an experienced trader, this positive sentiment in the crypto market is also related to pension funds starting to invest in virtual currencies.
According to him, the first story that attracted his attention is related to two public pension funds that are anchored to Morgan Creek’s new $40 million Blockchain Venture Capital Fund. Moreover, there was another story related to the University of Michigan that was interested in investing in the cryptocurrency market.
He explained that he met Mark Yusko of Morgan Creek and discussed some of the issues that would allow the market to gain more institutional traction in the cryptocurrency market.
One of the things that the the trader explains is that it is extremely difficult for pension funds to allocate money into new asset classes. According to Tchir, pension funds have several rules and regulations that they have to follow. He compared it with Family Offices, which can make investments in new technologies.
He wrote about pension funds:
“Public pension funds by their nature and mandate are not typically designed to make dramatic changes to their portfolio or to “dabble” in something just because it seems interesting.”
He went on saying that the pension funds that invested in cryptocurrencies through Morgan Creek put a lot of time and effort to get the necessary permissions to be able to make these investments.
Tchir explains that if there were some funds that invested in the crypto market, other funds will also follow the trend. There were several funds that were interested in investing in virtual currencies. However, most of them were reluctant to become the first movers in the industry. Now that several other funds invested in the space, others could follow.
The third thing that Tchir mentions in the article is that if pension fund money enters the crypto space, it will have to be released by the fund consultants. These consultants are very conservative and methodical in terms of the investments they make.
Tchit explains that if there is a flood of investment from pension funds into Bitcoin and cryptocurrencies, he could change his opinion regarding his bearishness on crypto.
Nevertheless, he says that there are two things that are worth mentioning. The first thing that analysts need to understand is whether the funds that are being moved to the market represent a massive intention from pension funds to enter the space, or it is related to a few and very aggressive funds looking to gamble a small percentage of their assets on digital currencies.
The second point he marked is whether the money will be backing technologies and platforms or it will get directly into cryptocurrencies.
He ended the article explaining that he is neutral on Bitcoin and cryptocurrencies for the first time in about 18 months. He says that he has a lot of doubts about the future of the space and that there could be a “near term pullback.”
Today, February 24, Bitcoin fell around 6% in the last 24 hours. Indeed, it broke under $4,000 after being traded close to $4,200. Now, Bitcoin is being traded around $3,800 and it has a market capitalization of $67 billion.