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A United Kingdom-based pension scheme has become the first in the country to add Bitcoin to its repertoire. Announced by Cartwright, a pension consultancy firm, it’s been described as a “bold step”.
The unnamed pension scheme has moved to invest 3% of its assets into cryptocurrency, which Cartwright says could have a “big positive financial impact”.
This is about Bitcoin’s volatile nature, in which its value can exponentially rise as we saw in 2021, or plummet, which happened in 2022. At the time of writing, Bitcoin is up 12.33% versus the past month, totaling $68,812.29 (£52,981.57) per Bitcoin.
Cartwright’s Director of Investment Consulting, Sam Roberts said in a press release, “Trustees are increasingly looking for innovative solutions to future-proof their schemes in the face of economic challenges.”
“This bitcoin allocation is a strategic move that, not only offers diversification, but also taps into an asset class with a unique asymmetric risk-return profile.”
The investment happened last month, in October, with the buy-in taking place when Bitcoin was at $65,800. Speaking to Corporate Advisor, Glenn Cameron – head of digital assets for Cartwright – said that he believes that Bitcoin is starting a “two-decade-long growth cycle”.
Cameron said, “The logic is that it is an asymmetric investment opportunity. If you put in 2 percent, the maximum you can lose is 2 percent – if it goes to zero. But the upside is potentially significant.”
UK firm follows US into Bitcoin investments
Despite the risks associated with Bitcoin and cryptocurrency’s fluctuating prices, Cartwright seems confident in their strategy. This partially revolves around Bitcoin’s potential scarcity as it reaches the 21 million mark and “halving”.
Every four years Bitcoin “halves”, significantly reducing its value. This then builds back up off the smaller number, which could have big dividends for schemes going forward. On top of this, once the coin hits 21 million found through mining, no more will be produced. This has a good chance of driving up its value too. It is estimated that the last coin will be mined in 2140.
Pension schemes of this nature will invest in things like stocks, bonds, or company shares. Once you reach retirement age and pull the pension, the aim is to increase your wealth through these investments.
This differs from UK-based pension schemes like Nest, which only accumulate interest based on what has been paid into the scheme.
Even better, the UK Pension Fund who just did a 3% AUM allocation to Bitcoin appears to have opted for self-custody, not ETF exposure@OnrampBitcoin's work seems to have been part of what helped Cartwright onboard the first UK Pension fund without having to go through an ETF https://t.co/EdLaoyJAqn
— Daniel Batten (@DSBatten) November 4, 2024
However, this isn’t the first time a pension scheme has chosen to invest in cryptocurrency. Daniel Batten, a Bitcoin writer, posted to X that this is 30 times higher than the Wisconsin Pension Fund’s allocation in May. Jersey City also followed suit in July too.
Other firms have begun to swallow up Bitcoin since the U.S. Securities and Exchange Commission (SEC) allowed trading exchange-traded funds (ETFs). Blackrock currently owns 433,713.2 BTC, which equals $29,873,696,805 according to the Bitcoin Treasuries tracker.
Featured Image: Pexels, Wikicommons & Bitcoin
