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Pensions Count On Bitcoin Eggs For Retirement

Don’t let today’s modest declines in the bitcoin (BTC) price fool you. The signs suggest that crypto mainstream adoption is getting closer, at least if you ask the founder of digital asset management firm Morgan Creek Digital, Anthony Pompliano.

The firm announced that its $40 million crypto venture fund is being “anchored” by a pair of U.S. pension funds, which means a percentage of plan members’ retirement savings will now be tied to digital currencies. Rising demand has been reflected in higher prices in recent days, which has emboldened bitcoin bulls and brought prices back within a stone’s throw of the $4,000 range.

This morning our team at Morgan Creek Digital announced a new $40 million crypto venture fund anchored by two public pensions. The institutions aren’t coming. They’re already here. ? — Pomp ? (@APompliano) February 12, 2019


Asymmetric Return Profile

The pension fund allocations come from two plans under the same umbrella — the Fairfax County Retirement Systems in Virginia. The plan’s chief investment officer, Katherine Molnar, is cited in Bloomberg saying that the blockchain reflects an “emerging opportunity” with an “attractive asymmetric return profile.’’ This assessment flies in the face of the theory that the bitcoin price is highly correlated to that of the equity markets.

In a defined benefit retirement plan, the plan sponsor sets asset allocation on behalf of employees. This differs from a defined contribution plan such as a 401(k), in which the members choose from a list of funds. If it does well, it could have a domino effect on other large pension funds, which is how hedge funds made their way into retirement plans beginning with CalPERS in the 1990s.

The Morgan Creek fund is reportedly comprised of both liquid cryptocurrencies, including bitcoin, in addition to the equity of businesses that have exposure to the blockchain and crypto.


Regulatory Rigmarole

In yet another sign that institutional adoption of crypto is near, another bitcoin ETF is in the works, one that market leaders suggest will have a shot at passing the regulatory muster. California-based ETF issuer Reality Shares has come up with a clever idea, one that is subtle enough that it just might make it past the regulatory rigmarole.

Reality Shares filed a prospectus with the U.S. SEC for an ETF Trust whose exposure to bitcoin futures would not surpass 15%. Crypto market leaders including eToro Senior Analyst Mati Greenspan applauded the move on Twitter.

Seriously, how has nobody thought of this before?! By limiting the fund to just 15% $BTC and diversifying with other sovereign currencies this ETF, if approved, will protect investors from whatever manipulation the SEC seems to be afraid of. — Mati Greenspan (@MatiGreenspan) February 11, 2019

Fundstrat Co-Founder Thomas Lee called the concept “brilliant.” 

Institutional investors couldn’t have picked a better time to adopt crypto, with bitcoin median transaction fees at their lowest levels since 2015, according to market data firm Diar. The bitcoin transaction count, meanwhile, is at the most robust levels witnessed since 2017, and we all know what came next.


The author is invested in digital assets, but none mentioned in this article.

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