The pension system in the US holds a ton of cash.
So, there’s this proposal in the Arizona State Senate that’s looking to get Bitcoin exchange-traded funds (ETFs) included in a couple of the state’s retirement funds.
They’re currently doing another round of review in the House after it got a narrow win in the Senate 16-13 on February 22.
If this thing gets through, it’s going to push the Arizona State Retirement System and the Public Safety Personnel Retirement System to think about including Bitcoin ETFs in their investments, according to the state docs.
If these pension funds decide to invest in Bitcoin ETFs when the price is above $70,000, it could really pump up the market.
Certainly there is a lot.
If 0.1% of that 55 trillions comes to bitcoin ETF, that is already millions of dollars.
The problem is that the high volatility is not good pension funds.... the downs (which may reach 50-60% in a year) may cause big discussions among the pensioners...
You mean kinda like what happened to the UK pension funds during the bonds crash? While i don't expect anything like this happening anytime soon, it seems almost negligent to not have at least a little exposure to Bitcoin at this point. And if Bitcoin would make only like, say 1% of a pension fund, a temporary down of 50-60% would be negligible.
What I liked about studying:
Considering Bitcoin like traditional safe haven investments like gold, this in itself is a major achievement for Bitcoin, and this is one of the positive effects of Spot Bitcoin ETF approval.
I do not know if this study has been approved and turned into law. Will this become effective in all American states or will it be specific to the state of Arizona only?
Well, but within the many types of pensions there is room for it. There are pension funds by expected retirement age, and for those who are going to retire in 20 years, for example, it has a place in the mix. Traditionally for people nearing retirement they held more potentially volatile assets, such as stocks, and as retirement age approached they increased the percentage of safer assets, such as bonds. It's just a matter of getting Bitcoin into the volatile asset mix. Even pension funds that are not governed by an expected retirement age for their participants have a place in small amounts.
When Bitcoin was worth 20 thousand dollars or cheaper, pension funds were not able to buy Bitcoin. Bitcoin has a "mining cost" and if I ran a large pension fund, I would buy a Bitcoin ETF when the market supply is below the "mining cost".
The problem is that as much as we consider it negligible, bitcoin doesn't go down at just 50-60% and there's bound to be some people that are pensioners that would be unlucky enough to get their pension coinciding with the prices going down and they're not going to be waiting for their pensions to go back up in 2 or 3 years before they can get back to a stable point where they can get their pensions without getting any losses. Maybe the 1% could work but I know how the system works in a lot of countries, they don't take risks without a payoff on their side, even though the system is so full of bureaucracy and paper works, the system tries its best to make sure that the thing that they're going to implement would fit their agenda and even though this might get accepted I still think that the pensioners are probably not going to like that anyway.