Source: Blockchain Knights
David Krause, professor emeritus at Marquette University, told Wisconsin Public Broadcasting on May 31 that other U.S. states could follow Wisconsin’s lead in investing in a spot BTC ETF.
Krause called BTC a “good investment” for state pension funds, emphasizing BTC’s role in diversification, such as its high potential upside returns and its use as a hedge against inflation, among others.
Krause added that BTC’s ability to smooth out volatility from government actions is not yet fully appreciated.
Despite his optimism, Krause clarified that only the Wisconsin Investment Board (SWIB) and a few other state funds are able to withstand Crypto asset market cycles and volatility.
“I don’t expect the underfunded states to be able to afford some investments because this is a long-term play.”
Krause did not predict which states are most likely to make the investments. However, data from Equable shows that seven state pension funds have funding ratios greater than or equal to Wisconsin’s 95% in 2023. Three of the seven funds have over-funded ratios of more than 100%.
In contrast, Illinois is the least funded state pension board with a funding ratio of 51%.
Krause also expressed his views on the possibility of Wisconsin’s status rising.
He called SWIB’s initial investment a “test run,” saying, “I think it’s just an entry point. I think they’re testing the waters to see if there’s resistance to owning this portion of the money.”
Krause also highlighted the quickness of Wisconsin’s investment, saying that the investment industry was “surprised” that pension funds invested so soon after the launch of the spot BTC ETF product, rather than several years after the launch as expected.
SWIB holds more than $160 million in spot BTC ETF shares, including BlackRock’s IBIT and Grayscale’s GBTC.
Krause estimates that the investment represents 0.1% of SWIB’s total value of $180 billion, though the latest filings put the fund’s value lower at $37.9 billion.
According to Fintel data, SWIB is currently the leading BTC ETF investor. As of June 3, the firm’s IBIT holdings ranked sixth and GBTC holdings ranked thirteenth.
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