Marquette University professor emeritus David Krause told PBS Wisconsin May 31 that other US states could follow Wisconsin in investing in spot Bitcoin ETFs.
Krause called Bitcoin a “good investment” for state pension funds, highlighting its role in diversification, its high potential upside and its use as a hedge against inflation. He added that Bitcoin’s ability to remove the volatility of government actions is not sufficiently recognized.
Despite his optimism, Krause clarified that only the State of Wisconsin Investment Board (SWIB) and some other sovereign wealth funds can afford to withstand crypto market cycles and volatility.
He said:
“I don’t expect those who are underfunded to be able to afford that [invest] because this is a long piece.”
Krauss did not predict which states are most likely to invest. However, data from Equable indicates that seven state pension funds had a funding ratio greater than or equal to Wisconsin’s 95% in 2023. Three of the seven funds had a funding ratio greater than 100%.
Conversely, Illinois had the least funded state pension board, with a funding ratio of 51%.
Wisconsin could invest more
Krause also commented on the possibility of Wisconsin’s position growing. He called SWIB’s initial investment a “trial run” and stated:
“I think it’s just an access point. I think they are testing to see the public’s reaction to whether or not there is resistance to owning this.
Krause highlighted the rapid nature of investment in Wisconsin, saying the investment industry was “surprised” that a pension fund invested in spot Bitcoin ETFs so soon after the products launched, as opposed to years after launch as expected.
SWIB owns more than $160 million in spot Bitcoin ETF shares, consisting of BlackRock’s IBIT and Grayscale’s GBTC. Krause estimated that the investment represents 0.1% of SWIB’s total $180 billion value, although the latest filing shows the fund has a lower value.37.9 billion value.
According to data from Fintel, SWIB is currently among the top Bitcoin ETF investors. As of June 3, it had the sixth largest IBIT and the 13th largest GBTC position.
The company first announced its investments on May 14.