The latest crypto news in Japan see the country’s largest government pension fund (GPIF), which manages assets worth $1.5 trillion, starting to consider diversifying its investments with Bitcoin.
After Japanese legislation allowed funds to directly custody Bitcoin, the GPIF has expanded its horizons by considering possible entries into risky and unconventional assets.
After ETFs in the USA, institutional participation in Bitcoin seems to be destined to grow.
All the details below.
Crypto news: a pension fund in Japan explores new diversification strategies with Bitcoin
Yesterday the GPIF, the largest government pension fund in Japan, dropped a news bomb by publicly announcing that they are evaluating possible strategic investments in Bitcoin, with the aim of diversifying their portfolio and benefiting from exposure to a volatile asset class.
This revelation came at the very moment when the fund was soliciting information and useful ideas regarding illiquid assets, such as for example gold, forests, and agricultural land, as part of its commitment to the construction of a diversified portfolio that goes beyond stocks and bonds.
The Japanese fund has not yet entered Bitcoin but this latest move could signal in advance the imminent exposure to the digital currency
【情報提供依頼】GPIFは、低流動性資産等に関する有益な情報やアイデアを募集します。https://t.co/1irwYhCa6d pic.twitter.com/kfgivTCFU0
— GPIF (@gpiftweets) March 19, 2024
Historically, the GPIF has maintained a conservative approach to investments, favoring business segments with a low risk profile.
However, after the government of Japan has explicitly signaled the intention to enter the world of digital assets, with Prime Minister Fumio Kishida giving investment funds the opportunity to personally hold cryptocurrencies, the government pension entity has chosen to focus on technological progress and new trends in global finance.
This is a significant step towards integrating digital resources like Bitcoin into the country’s economic fabric.
In yesterday’s announcement from GPIF, we can read the exact words from the fund managers:
“In addition to basic knowledge about the assets covered by the information supply, we are also looking for information on how foreign pension funds incorporate them into their portfolios and on real investment cases”
According to research from the Japanese fund, Bitcoin represents a very risky and volatile asset, but it serves as a hedge against inflation, playing a role similar to that of gold but with better graphic performance.
Allocating a small percentage of your portfolio to Bitcoin could therefore play a fundamental role in achieving excellent results in the long term.
We remind you that GPIF manages the pensions of over 67 million Japanese citizens, with investments that are 97% covered in bonds and stocks to maintain a medium-low risk profile.
Diversifying into speculative assets like Bitcoin represents a substantial change for an institutional investor of this caliber managing multi-billion dollar assets.
In the coming months, if the news translates into action and the fund starts buying Bitcoin, the impact on prices could be significant.
Institutional interest in Bitcoin grows after ETFs in the United States
After the Bitcoin spot ETFs arrived in the United States, institutions around the world have started to consider the possibility of investing in Bitcoin.
The news of GPIF’s intention in Japan to explore diversification solutions in cryptocurrencies is just the cherry on top of a movement that began at the end of the third quarter of 2023, when something was starting to simmer on Wall Street in the field of investment funds.
More and more public and private entities, which manage and invest their clients’ assets, are considering including a small part of their allocation in the cryptocurrency in question, defined several times by Larry Fink and other experts as “digital gold”.
Just a few days ago, the asset manager WisdomTree, as well as one of the most well-known ETF issuers in the sector, revealed that according to its studies Bitcoin can improve the risk/return profile of a diversified portfolio.
In the report published, then distributed online by news media, we read that the fund recommends an exposure of 1% if you have a neutral sentiment on Bitcoin, while for a more proactive attitude a higher allocation is advisable (up to 5%).
On the other hand, being against Bitcoin would mean for WisdomTree ignoring one of the best profit opportunities in the markets of recent decades, taking on a much worse risk than a neutral perspective.
It is clear that over time more and more institutions, based all over the world, will start making the same evaluations as GPIF and WisdomTree because it is simply the results that speak and show what it means to be exposed, even if only to a small extent, to Bitcoin.
By now, cryptocurrency has reached a prominent position compared to the rest of the international asset classes, abandoning the reputation of being the currency of criminals to be framed as a digital store of value.
The true mainstream adoption for Bitcoin has yet to come: we are only at the beginning of a parabolic phase that will see the cryptocurrency included in most of the best institutional investment portfolios.
All this will further contribute to removing supply from the market, pushing its price even higher towards new, unexplored horizons.