Marquette University professor emeritus David Krause told PBS Wisconsin on May 31 that other US states could follow Wisconsin in investing in spot Bitcoin ETFs.
Krause called Bitcoin a “good investment” for state pension funds, emphasizing its role in diversification, its high potential upside returns, and its use as a hedge against inflation. He added that Bitcoin’s ability to remove the volatility of government actions is underrecognized.
Despite his optimism, Krause clarified that only the State of Wisconsin Investment Board (SWIB) and some other state funds can afford to withstand crypto market cycles and volatility.
He said:
“I don’t expect those that are underfunded can afford to [invest] because this is a long play.”
Krauss did not predict which states are most likely to invest. However, data from Equable indicates that seven state pension funds had a funding ratio greater than or equal to Wisconsin’s 95% in 2023. Three of the seven funds had overfunded ratios above 100%.
Conversely, Illinois had the least funded state pension board, with a 51% funded ratio.
Wisconsin could invest more
Krause also commented on the possibility that Wisconsin’s position will grow. He called SWIB’s initial investment a “trial run,” stating:
“I think it’s just an entry point. I think they’re testing to see the reaction of the public to whether or not there’s resistance to owning this.”
Krause highlighted the rapid nature of Wisconsin’s investment by stating that the investment industry was “amazed” that a pension fund invested in spot Bitcoin ETFs so soon after the products launched, as opposed to years after launch as expected.
SWIB holds over $160 million in spot Bitcoin ETF shares, consisting of BlackRock’s IBIT and Grayscale’s GBTC. Krause estimated the investment makes up 0.1% of SWIB’s $180 billion total value, though the latest filing reports the fund as having a lower $37.9 billion value.
According to Fintel data, SWIB is currently among the top Bitcoin ETF investors. As of June 3, it had the sixth-largest IBIT and 13th-largest GBTC positions.
The company first disclosed its investments on May 14.
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