Renowned professor David Krause of Marquette University recently told Wisconsin Public Radio that other states in the US can follow Wisconsin’s lead and invest in BTC ETFs. Krause referred to BTC as a “good investment” for state pension funds, highlighting its diversification benefits, potential upward returns, and its use as a hedge against inflation. Krause added that the ability of BTC to eliminate volatility caused by government actions is still not fully recognized.
While Krause remains optimistic, he clarified that only the State of Wisconsin Investment Board (SWIB) and a few other state funds are capable of withstanding the cyclical nature and volatility of the crypto asset market. “I don’t expect financially challenged states to afford such investments because it’s a long-term game,” he said.
Krause did not predict which states are most likely to invest. However, data from Equable shows that by 2023, seven state pension funds will have funding ratios equal to or greater than Wisconsin’s 95%. Three of these funds have excess funding ratios exceeding 100%. On the other hand, the Illinois State Retirement Systems has the lowest funding ratio at 51%.
Krause also commented on the potential for Wisconsin’s status to rise. He referred to SWIB’s initial investment as a “trial run” and said, “I think this is just a starting point. I think they’re testing the public’s reaction to see if anyone resists having this portion of their funds invested.”
Krause also emphasized the speed of Wisconsin’s investment, stating that the investment industry was “surprised” that pension funds invested so quickly after the launch of BTC ETF products, rather than waiting for several years as expected.
SWIB currently holds over $160 million worth of BTC ETF stocks, including BlackRock’s IBIT and Grayscale’s GBTC. Krause estimates that this investment represents 0.1% of SWIB’s total value of $18 billion, although the latest documents show a lower value of $37.9 billion for the fund.
According to Fintel data, SWIB is currently among the top investors in BTC ETFs. As of June 3rd, the company ranks sixth in terms of IBIT holdings and thirteenth in terms of GBTC holdings.