World’s top pension fund eyes Bitcoin

Japan’s Government Pension Investment Fund (GPIF) is considering Bitcoin (BTC) as a potential investment diversification tool amidst economic and technological changes.

According to a Mar. 19 announcement, the Government Pension Investment Fund (GPIF) of Japan, recognized as the world’s biggest pension fund, is considering Bitcoin as a possible tool for diversification. The GPIF unveiled plans for new long-term investment strategies in light of significant societal and economic shifts, alongside rapid technological advancements.

To address these evolving challenges, the GPIF has initiated a five-year research initiative aimed at discovering innovative investment diversification methods. This initiative places a strong focus on sustainability and managing risks.

Part of this initiative involves the GPIF seeking information on a range of potential diversification instruments, including assets it currently views as illiquid and does not possess. Among those assets there are cryptocurrencies such as Bitcoin, precious metals such as gold, and other types of assets.

This recent announcement from the GPIF serves as a request for information and does not confirm the fund’s future expansion into any of those assets. The decision to conduct further research will be based on the data gathered through this request.

Founded in 2006 by the Japanese government, the GPIF’s investment strategy has traditionally focused on core infrastructure funds, which support essential social and economic activities. The fund diversifies its investments across traditional assets such as domestic and international stocks and bonds, in addition to alternative assets like infrastructure and real estate.

The report highlighted the fund’s goal to leverage its long-term investment horizon for achieving stable and efficient returns, despite short-term market price fluctuations. As of December 2023, GPIF managed assets totaling 225 trillion Japanese yen ($1.54 trillion), securing its position as the largest pension fund globally.

Although GPIF is in the preliminary stages of exploring the inclusion of Bitcoin in its portfolio, some global pension funds have already made moves into Bitcoin-related assets. For instance, in November 2023, South Korea’s National Pension Service announced the acquisition of over 280,000 shares in the U.S.-based Coinbase.

With the approval of the United States Bitcoin spot exchange-traded funds (ETF) by the Securities and Exchange Commission back in January, the world’s first cryptocurrency has gained more credibility which may get major financial institutions on  board. Following the approval, the daily Bitcoin ETF inflows surpassed $1 billion earlier this month.

Featured image: Ideogram

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