After Michigan and Wisconsin, a new American state wants to integrate bitcoin into its pension fund: Florida.
Bitcoin for the old days
The launch of Bitcoin ETFs helped unlock a very specific type of investor in the United States: state pension funds.
In May, the investment office of the state of Wisconsin – which manages $156 billion in assets for the Wisconsin Retirement System – revealed that it has invested $162 million in several Bitcoin ETFs. That is to say 0.1% of his portfolio.
The State of Michigan fund ($140 billion) did the same, but in smaller proportions, with an investment of $6.6 million.
Another state should soon join the dance, and not the least: Florida. Its GDP is higher than that of Spain…
The CFO of the “sunshine state” was on CNBC this Thursday to announce the news. For Jimmy Patronis, “Bitcoin is here to stay. It will continue to appreciate and it would be foolish not to be prepared to do everything in our power to take advantage of this opportunity.”.
Asked why the Chinese government remained in the background, Mr. Patronis said that “It’s a mistake not to pay attention to it [au bitcoin]”.
Mr. Patronis has also been hostile to the CBDC. “We must be able to protect ourselves against the control that a centralized currency (CBDC) would offer to the federal government. I don’t want the federal government to know what I’m buying, where and when.”
“Bitcoin is digital gold that will help diversify the state of Florida’s portfolio. It will provide a hedge against the volatility of other major asset classes”he added again.
BTC Strategy
The idea of diversifying the portfolio with bitcoin is simple. It's about balancing the need to provide a guaranteed return for retirees with prudent risk management.
The typical strategy of a pension fund is to invest predominantly in government bonds. Treasury bonds are considered the least risky securities available while offering stable returns.
Shares of large multinationals and their bonds complement pension fund portfolios. These three asset categories have long been the only ones to which pension funds were exposed.
But things have changed since the financial crisis of 2008 which resulted in a long period of rates close to 0%. The rules have been relaxed in the face of Treasury bond yields that are often lower than inflation…
The public debt is now so large that it is difficult to imagine that rates can remain high for very long. Hence the appeal of bitcoin which, due to its absolutely finite monetary mass, presents itself as a low-risk asset. More and more pension funds will be inspired by what Microstrategy is doing.
Mr. Saylor's company was the first publicly traded multinational corporation to adopt bitcoin as a treasury asset. It currently holds more than 210,000 BTC ($14 billion) and has just announced plans to raise 42 billion dollars to acquire more.
This strategy has so far been a monumental success. Not only did the company see its balance sheet swell by billions of dollars, but its stock price exploded higher.
Other companies have adopted the same strategy, including Semler Scientific and Metaplanet. And if its shareholders vote in this direction in December, the giant Microsoft should also take the plunge.
Finally, remember that Donald Trump promised to create a strategic reserve of bitcoins if he is elected this Tuesday, November 5.
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