Will Wisconsin's investment in spot BTC ETF spark the next wave of follow-on investments?
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Will Wisconsin's investment in spot BTC ETF spark the next wave of follow-on investments?
Marquette University emeritus professor calls BTC a "good investment" for state pension funds, emphasizing BTC's role in diversification.
Navigating Web3 tides with focused insightsSource: cryptoslate
Compiled by: Blockchain Knight
David Krause, emeritus professor at Marquette University, told Wisconsin Public Radio on May 31 that other U.S. states could follow Wisconsin’s lead in investing in spot BTC ETFs.
Krause described BTC as a "good investment" for state pension funds, emphasizing its role in diversification—such as its high potential upside returns and utility as an inflation hedge.
Krause added that the ability of BTC to eliminate volatility caused by government actions has not been fully recognized.
While Krause remains optimistic, he clarified that only the State of Wisconsin Investment Board (SWIB) and a few other state funds have the capacity to withstand the market cycles and volatility associated with crypto assets.
"I don't expect underfunded states to afford such investments, because this is a long-term game."
Krause did not predict which states are most likely to make such investments. However, data from Equable shows that in 2023, seven state pension funds had funding ratios greater than or equal to Wisconsin’s 95%. Among these seven, three were overfunded by more than 100%.
In contrast, Illinois is the most underfunded state pension plan, with a funding ratio of just 51%.
Krause also shared his views on the likelihood of Wisconsin increasing its position.
He referred to SWIB's initial investment as a "trial run," stating: "I think this is just an entry point. I believe they're testing public reaction to see if there's any resistance to holding these assets."
Krause also highlighted the speed of Wisconsin's investment, noting that the investment community was "surprised" that a pension fund moved so quickly after the launch of spot BTC ETF products—rather than waiting years as many had expected.
SWIB holds over $160 million in shares of spot BTC ETFs, including BlackRock’s IBIT and Grayscale’s GBTC.
Krause estimated the investment accounts for 0.1% of SWIB’s total value of $180 billion, although recent filings show the fund’s actual value is lower at $37.9 billion.
According to Fintel data, SWIB is currently one of the leading investors in BTC ETFs. As of June 3, it ranked sixth in IBIT holdings and thirteenth in GBTC holdings among institutional investors.
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