There were news this week that the largest pension fund in the world is exploring Bitcoin as a potential diversification tool.
The Government Pension Investment Fund (GPIF) which sits at around 1.5 Trillion assets under management, is now looking at Bitcoin.
If you dont understand what that means, let me further clarify it for you.
Pension funds are investing in traditional asset classes such as domestic and international stocks, commodities, bonds.
Balancing a pension fund’s allocation strategy involves achieving two crucial objectives: ensuring the fund can meet the financial needs of retirees without falling short while also generating sufficient returns to fund those needs.
This requires a careful and precise approach that combines defensive measures to protect the fund’s assets and aggressive strategies to maximize returns.
There is a huge problem with the traditional investments, and Pension funds know it, the real growth of investments like Bonds considerating inflation rates, is negative. Not jus that, but Japan QE is already at a point of no return, the money expansion is going towards infinity, if this wasnt enough the demographics of Japan are heavily skewed towards the elderly.
Now, they are considering, adding the only real, digital, scarce, money that exists on earth, and have a real possibility that with a decent allocation % to their portfolio, they could have hope.
Remember BTC market cap is around 1.2 Trillion at this moment. If we imagine the fund with currently 1.5 Trillion AUM allocates 5% of its assets it would represent a 75 billion inflow.
The whole BTC market cap, is around 1.4 Trillion.
Dont forget, there are also multiple individuals, investment funds, institutions, companies, trying to get as much Bitcoin as they possibly can.
The bill has yet to be passed by parliament but if approved and the fund decided to start investing in Bitcoin, what do you think would happen?
Not just for the price of Bitcoin, and the supply-demand dynamics, think of the ones that will follow!
- Norway Sovereign wealth fund with 1.6 Trillion in AUM
- National Pension Service -NPS of South Korea with 775 Billion in AUM
- California Public Employees’ Retirement System – CalPERS +500 Billion in AUM
Even a tiny allocation to Bitcoin would start to move the price.
Get this frame correctly into your mind:
“Its not about the allocation aiming for returns in a portfolio, its about who grabs more of the most finite and scarce asset that mankind has ever seen”