Two Public US Pension Funds Investing In Crypto
Today we’re going to look at how the First US Pension Funds have dived into Investing in Cryptocurrencies. Now, according to Bloomberg, the two pension plans in Fairfax County, Virginia, which includes the Fairfax County Employee’s and Fairfax County Police Pension Plans were the two largest investors in Morgan Creek Digital’s new $40 million venture capital fund which focuses on cryptocurrency and blockchain investments.
The Funds decision is both equally big and great news as it is the first time a US pension fund has joined the cryptocurrency investment space. These pensions manage an asset portfolio of approximately $1.2 billion each. Other investors who also invested in the crypto fund, include an insurance company, a university endowment and a private foundation.
Many cryptocurrency enthusiasts believe that, while the institutional market is interested in the cryptocurrency industry because of the volatility and potential to make significant gains, unfortunately, many have shied away due to the bearish market conditions, potential market manipulation, and unclear regulations. So the news that a US Pension Fund has actively joined is definitely great news for the industry.
Even with the bear market, there has always been ongoing support for cryptocurrencies. While the Virginian Pension funds are the first pension funds to invest, they are definitely not the first institutions. These pension funds have joined many other institutions who have also gone crypto such as Yale University, that invested in digital assets fund last year. Many of these institutional investors see Bitcoin as a new and emerging opportunity that can offer a very attractive asymmetric return profile.
So how does Morgan Creek Digital’s Venture Fund work?
Anthony Pompliano, the Founder of Morgan Creek Digital, mentioned that the fund’s structure is like a traditional VC fund that will invest in the equity of companies in both the blockchain and cryptocurrency space. The new fund already has investments in companies like Bakkt and Coinbase. They will also be holding a small percentage in liquid cryptocurrencies.
Despite the positive news, we have to take into account that in 2018, Bitcoin did lose a staggering 75 per cent from its all-time high. Pompliano is however confident and argued via a phone interview with Bloomberg that “There’s a belief in the institutional world that if the industry will be around for a long time, it will be very valuable. The smart money is not distracted by price but looks at the long-term trends, and believes they’re betting on innovation as a great way to deliver risk-mitigated returns.”
So what are my thoughts on this situation guys?
Now, cryptocurrency critics often mention that while the institutional investors are coming in, there aren’t any public pensions funds. Well, February 12 was a fantastic day for the industry as Pompliano mentioned, the institutions aren’t coming. They’re already here.”
I’m sure you’ve heard it all, that institutions are sceptical on joining because of the concerns raised around manipulation, volatility, lack of security and many others. While these problems still exist, the fact that two public pension funds have taken the plunge into the cryptocurrency world has significant ramifications for the cryptocurrency industry in general. I believe that these two funds can act as a model for other funds who are looking to step into the space. Pompliano takes this a step further and believes that other pensions should definitely invest as cryptocurrencies could serve as a viable hedge for funds against an “impending US pension crisis.”
So what are your thoughts on this situation guys?
Do you think more US pensions will be entering the crypto sector soon?
Or do you think these first pensions are outliers and it’ll take a while before we see more action?
Let me know what you guys think in the comments below. It’s Cindy with CryptoPig. Catch you guys around!
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Disclaimer: Cryptopig content is written by a team of blockchain passionate people. We are not registered as investment advisors. Don’t take the information in this post as investment advice and make sure you do your own research before investing. Cryptocurrencies are a very risky investment, never invest more money than you can afford to lose.
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