A Swedish pension fund called AP7 illustrates the byzantine ways in which these managed assets can get exposure to cryptocurrencies like Bitcoin, without the end beneficiaries really being aware of it.
A Cointelegraph article by Marie Huillet today reports on how millions of Swedish pensioners are unwittingly invested in Bitcoin-related assets.
Specifically, Huillet mentions Tesla, an electric vehicle company, and Square, a payment company that also gets popular attention from investors and traders.
What both of these have in common is that neither of them was originally prized for its Bitcoin holdings. Square has been seen as a retail technology play, and Tesla needs no introduction to anyone who has seen its stock soar 800% in a year. You might think that a company like Microstrategy, perhaps best known in headlines for its BTC acquisition, could be thought of as a “BTC pure play” – Tesla? Not so much.
To say that Tesla represents a Bitcoin play seems strange, but is largely accurate after a massive investment by Elon Musk’s firm in the cryptocurrency itself. Yes, the company still makes cars, but the question is on what’s on the balance sheet. In that sense, the ledger may seem just a little bit, to some less sophisticated eyes, like one of those “mafia front” business operations of ancient legend.
So regardless of how these stock offerings are branded, analysts argue that the weighting of Bitcoin in their asset column makes them exposed to the volatility of the cryptocurrency, which can be substantial.
While this may be better than being exposed to subprime through parties like Lehman Brothers or AIG, there is still quite a lot of caution involved in building pension returns on cryptocurrency.
“Will a multi-million dollar pension fund invest in the cryptocurrency market?” writes an unnamed (but, strangely, pictured) author at RKN Global, in observing this trend. “The 300 largest pension funds control around 6 trillion US dollars in assets. It seems unlikely that these pension funds will be investing in cryptocurrency anytime soon, no matter what advantages BTC or other cryptocurrencies have. Another reason is that pension funds have large amounts of cash to invest and when it comes to private and listed companies, they are possibly the largest investors. Crypto, on the other hand, is not regulated and is very volatile in nature.”
Stay tuned for more on pension funds and their positions vis a vis crypto.