Retirement planning With Bitcoin near $100,000, even pension funds are buying cryptocurrency Michigan's and Wisconsin's state employee pension funds among top holders. Mary McDougall, Nikou Asgari, and Alan Livsey, Financial Times Jan 16, 2025 9:32 am | 99 Credit: Aurich Lawson / Getty Credit: Aurich Lawson / Getty Story textSizeSmallStandardLargeWidth *StandardWideLinksStandardOrange* Subscribers only Learn morePension funds are dipping their toes into buying bitcoin, in a sign that even typically staid corners of finance are finding it hard to ignore the potential outsized returns from cryptocurrencies.Pension schemes for the states of Wisconsin and Michigan are among the top holders of US stock market funds devoted to crypto, while some pension fund managers in the UK and Australia have also made small allocations in recent months to bitcoin using funds or derivatives.Advisers say the surge in bitcoin last year, which more than doubled to touch $100,000, has spurred the interest of conservative trustees.Crypto analysts predict it could double again this year with the arrival of a pro-crypto Trump administration. The president-elect has vowed to make the US the bitcoin superpower of the world and end a regulatory crackdown on the sector.Matt Scott, a consultant at Mercer, which advises UK pension funds, said: Since election day we have been getting a flood of queries intrustees dont like to think that theres a hot asset class out there that they dont know anything about.Most pension funds have turned to the regulated US exchange traded funds approved last year, which invest directly in crypto on investors behalf and track the price of tokens such as bitcoin and ethereum.The State of Wisconsin Investment Board was the 12th biggest shareholder in BlackRocks bitcoin ETF at the end of September, according to its latest filings, a holding that would now be worth about $155 million after the fund leapt 50 percent since the start of the quarter.Michigan is the sixth-largest shareholder in Grayscales ethereum ETF, and its stake is worth $12.9 million, based on a November regulatory filing. It is also the 11th-largest holder in the ARK 21Shares Bitcoin ETF, run by investor Cathie Wood, and which is up 14 percent since the election.Pension funds move back into crypto follows some notable failures in the crypto market crisis two years ago. Canadas Ontario Teachers Pension Plan wrote off a $95 million investment in failed digital currency exchange FTX when it collapsed in 2022. Caisse de dpt et placement du Qubec, Canadas second-largest pension fund manager, conceded it went into crypto too soon when it wrote off a $150 million investment in crypto lending platform Celsius Network.Theres no doubt that the headwinds are disappearing...I think youll see more of this institutional adoption, said Alex Pollak, head of UK and Israel at 21Shares, a Swiss cryptocurrency exchange traded product provider.In the UK, pensions consultancy Cartwright said it had advised on its first bitcoin deal, with a small undisclosed 50 million pension scheme allocating about 1.5 million directly to bitcoin rather than through an ETF, in the hope that outsize returns might help plug its funding deficit.Sam Roberts, director of investment consulting at Cartwright, said while the pensions industry was slow moving he expects this year to be very interesting in terms of schemes deciding to allocate more to crypto.He said more than 50 individual savers had approached the consultancy saying they are not happy with their pensions provider and they would like their entire fund to be moved into crypto.Cartwright has been speaking to two multiemployer pension funds about setting up a bitcoin fund for investors to opt into if they so choose, so that the funds would not lose members looking for crypto exposure.They could see a lot of members move to them...there would be a definite first-mover advantage, said Roberts, who added that the discussions were still in early stages.Australias AMP, which manages pension funds, has also used bitcoin to juice returns.This year AMP portfolios took the plunge and made a modest allocation to bitcoin futures, said Steve Flegg, a senior portfolio manager at AMP. We generally thought that even though crypto is risky, new and not yet fully proven, that it had become too big, and its potential was too great to continue to ignore.Still, funds allocating to bitcoin and other cryptocurrencies remain a minority in the pensions industry, with consultants mostly reluctant to recommend exposure to their clients.In December, the US Government Accountability Office warned crypto assets have uniquely high volatility after it identified 69 crypto asset investment options available to investors in retirement plans.We dont think pensions funds should allocate to cryptoits highly volatile and we dont see any robust valuation framework that can justify the value, said Daniel Peters, a partner in Aons global investment practice, who added that a better way for pension funds to get exposure was through hedge funds with expertise and skill in the asset class.We fundamentally dont think this should be part of a pension fund strategy for those reasons unless they are allocated via a specialist manager, he said. 2025 The Financial Times Ltd. 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