Since 2020, there has been a steady trend of investment in the cryptocurrency market from the corporate sector. Investment and pension funds of the USA, Canada, Great Britain, New Zealand, Norway, Germany, Israel and many countries from the G-20 group actively switched to the virtual asset market, although earlier they preferred to rely exclusively on investments in classic assets such as securities. bonds and real estate. And if in 2017-2019 the cryptocurrency market had a reputation as a very risky platform, which is of interest mainly to retail investors, then over the past two years the situation has changed radically. Investments in virtual assets began to be viewed by large institutional investors as a more promising and profitable way to increase capital than currency speculation on FOREX or transactions on the stock market.
This process began back in 2019, when Morgan Creek Digital Capital received its first targeted cryptocurrency investment from US government pension funds.
Some companies, such as MicroStrategy, have chosen to buy bitcoins as their corporate strategy, regardless of the price, and thereby setting a new trend in investments. They explain their choice by fearing further devaluation and further depreciation of the US dollar. Indeed, in the last century alone, the American currency has lost 97% of its purchasing power. And the volume of emission of the US dollar in 2020-2021 turned out to be simply record-breaking and contributed to a significant acceleration of inflationary processes both within the country and around the world.
Another notable player and adherent of investing in virtual assets is the Grayscale fund. The monthly volumes of Bitcoin purchases by this company can amount to several tens of thousands of BTC or more.
One of the largest investment companies Fidelity Investments, which manages assets worth $10.4 trillion, does not lag behind the above funds in terms of buying cryptocurrencies.
Over the past two years, news about the purchase of bitcoins by another investment fund, for example, such as MassMutual and others, has often flashed in the media.
Some funds prefer to invest not directly in cryptocurrencies, but by buying bonds of well-known and successful companies focused on the virtual asset market. For example, Miller Value Funds purchased MicroStrategy convertible bonds, which MicroStrategy itself channeled to buy bitcoins. And the head of Miller Value Funds himself, Bill Miller, considered it necessary to confirm that the board of the company and he personally fully support MicroStrategy’s strategy for the purchase of virtual assets.
Rothschild Investment Corporation decided to take a similar path, which acquired a total of 30,454 shares of the aforementioned Grayscale fund.
Over the past two years, pension funds from around the world have also been actively diversifying risks in their investment areas using virtual assets.
One of the first pension funds in cryptocurrency, if not directly, but indirectly back in 2019, was invested by the California State Pension Fund (CalPERS). You need to understand that CalPERS is not some kind of dwarf fund, but one of the largest US government pension funds with total assets of over $400 billion. In the fourth quarter of 2020, this fund almost seven times increased investments in the Riot Blockchain mining company, so by making it clear in which industry it sees the prospects for growth in the profitability of his assets.
Likewise, the New Jersey retirement fund has also relied on virtual assets, directing its investments to mining companies.
KiwiSaver Growth Strategy, a New Zealand pension fund managed by New Zealand Wealth Funds Management, has chosen to invest 5% of all its funds in bitcoin.
The Pension Fund of the Government of Norway (it is often called the Oil Fund), made a start-up investment by purchasing 577 MTC for $6.3 million. Surely it was just a “test of the pen.” Interestingly, this fund was able to accumulate more than $1 trillion in assets, including 1.4% of all global stocks and securities, making it the world’s largest sovereign wealth fund.
Altshuler Shaham, a large Israeli pension fund, has invested $100 million in a bitcoin trust of the investment company Grayscale.
New York-based investment firm Jefferies has staked its bet on bitcoin in its global investment portfolio for retirement funds, slashing gold investments in favor of cryptocurrencies for the first time in years.
Many critics of virtual assets have recently been forced to change their anger to mercy, given the rapid rise in the value of many cryptocurrencies. For example, the head of the influential investment fund BlackRock, Larry Fink, which manages almost $8 trillion, is now almost confident that virtual assets can play the role of a tool for saving and increasing capital in the future.
According to JP Morgan, over the course of 2020-2021, pension and sovereign wealth funds are steadily withdrawing hundreds of billions of US dollars from the stock markets to invest in other, more promising markets. It is not difficult to guess that we are talking about cryptocurrencies.
On April 22, 2021, the Bundestag approved a new bill, according to which, starting from July 1 of this year, German investment funds, serving also large institutional investors, received the right and official permission from the German Federal Government to invest up to 20% of their assets in cryptocurrencies. The permit applies to open-ended and closed-end investment funds for institutional clients (the so-called Spezialfonds), insurance companies and pension funds. Even roughly, we are talking about investments in the virtual asset market, amounting to trillions of euros.
As you can see, the virtual asset market is becoming more and more interesting for large funds and institutional investors every year, and the flow of assets from classical markets such as FOREX and the stock market is only increasing. At the same time, we are only at the initial stage of mass adoption of this asset class. And those institutional and retail investors who believed in cryptocurrencies before anyone else and were not afraid to invest in them will benefit from this!