This week, the Japanese Government Pension Investment Fund (GPIF) called for more information on diversifying its investments. Nothing particularly newsworthy here - the government is looking at a myriad of different ideas from farming to gold - but read the financial news headlines and there’s only one new option cited: Bitcoin. Why?
What the GPIF does is important and its influence far-reaching. It’s the one of the world’s largest pension funds, with assets worth 225 trillion Japanese yen (around $1.5 trillion), and an overall gain of 2.62% in the last quarter of 2023. To put it plainly, if a fund of this size is diversifying, the market will likely want to follow its lead. Good news for falling Bitcoin, if you are to believe the headlines.
The GPIF announcement highlights the need for diversification, explaining that in “response to major changes in the economy and society and rapid technological progress, we will develop basic policies from a long-term perspective.” However, when you deep dive further into the text, Bitcoin is mentioned only once among a list of different options, and even then, as a mere example of a crypto asset, and not a call for information on Bitcoin specifically. Curious indeed.
The translated excerpt puts out a call for: “basic information regarding assets, etc. (for example, forests, farmland, gold, crypto assets (Bitcoin, etc)”. However, from the Forbes headline “Japan’s Trillion Dollar Pension Fund Considers Bitcoin” to Nasdaq’s “Japan's $1.5 Trillion Pension Fund Explores Diversifying Into Bitcoin” it’s easy to leave with the impression the GPIF is only looking in one direction.
Although similarly enthusiastic, CNBC did expand somewhat in the body of their story, explaining the “pension fund on Tuesday said it is requesting information on “illiquidity assets” such as Bitcoin, as part of research into potential new investments.” While the wording may be murky, the impression it leaves is clear.
So, why such a big push from the big financial news organizations, centering Bitcoin in the headlines? It’s anyone’s guess. But one thing is for sure, if the GPIF were to invest in Bitcoin, it would mark a big shift in Bitcoin’s status among investors. If one of the world’s largest investment funds can choose Bitcoin as a part of its portfolio, who might follow?
We look forward to the GPIF’s findings, and eagerly await news on whichever diversification options they eventually take. In the meantime, we will continue to Observe with interest.
