Jersey City's pension fund is currently in the process of investing in Bitcoin. This was announced yesterday by Mayor Steven Fulop on the short message service 𝕏.
Not usually my topic in a post, but I'll share it anyway - the question of whether crypto/bitcoin is here to stay is largely settled and crypto/bitcoin has won. The #JerseyCity pension fund is in the process of updating paperwork with the SEC to invest % of the fund in bitcoin ETFs, similar to what the Wisconsin pension fund did (2%). This will be finalized by the end of the summer and I'm sure it will eventually be more common.
I've been a long time believer in crypto (through the ups and downs), but overall I think blockchain is one of the most important new technological innovations since the internet. #Bitcoin #Bitcoin2024
Steven Fulop, Mayor of Jersey City
Not my normal subject matter in a post but I'll share anyway - the question on whether Crypto/Bitcoin is here to stay is largely over + crypto/Bitcoin won. The #JerseyCity pension fund is in process of updating paperwork to the SEC to allocate % of the fund to Bitcoin ETFs
... https://t. Steven Fulop (@StevenFulop) July 25, 2024
The pension funds are coming
When it became known via the mandatory filings with the US Securities and Exchange Commission (SEC) that the pension fund of the US state of Wisconsin held around USD 163 million in Bitcoin spot ETFs in the first quarter, the first experts were certain that the ball was now slowly but surely rolling. The so-called 13F filings for the second quarter should provide information on whether other state pension funds have already joined by the deadline in mid-August.
What is remarkable about Mayor Steven Fulop's post is that he references the State of Wisconsin Investment Board (SWIB) in the announcement and emphasizes that he is certain that it will be more common for pension funds to hold Bitcoin in the future. According to SWIB, if the investment is actually made at the end of the summer as announced, the New Jersey pension fund would be the second US state pension fund to hold Bitcoin - albeit only indirectly via Bitcoin ETFs.
Jersey City's pension fund is called the Employees' Retirement System of Jersey City (ERS) and is responsible for the pensions of people employed by the city. It is not known exactly how much the fund manages, but it should only be a few hundred million US dollars. An allocation of around two percent of the capital to Bitcoin spot ETFs, as the mayor is promising, is therefore unlikely to have much impact on the Bitcoin price. The decisive factor here is the signal effect.
In total, there are around six trillion US dollars in state pension funds in the USA. If all of these pension funds were to invest the aforementioned two percent in the Bitcoin spot ETFs, this would cause the price of Bitcoin to skyrocket. Around 120 billion US dollars in buying demand would then hit the limited asset. That is roughly twice as much as the Bitcoin spot ETFs from the USA currently manage combined.
At well over 30 trillion US dollars, the entire US bond market is many times larger than the investment volume of state pension funds. Should it actually become common practice for pension funds in the USA to invest only a small percentage of their capital in the asset, this would result in a sharp rise in prices.
Political implication
Steven Fulop has been the mayor of Jersey City, the second largest city in the state of New Jersey with around 300,000 inhabitants - behind Newark - since 2013. The 47-year-old is currently running for governor of New Jersey. The fact that he is speaking out in favor of Bitcoin - even if the words "blockchain" and "crypto" leave a bland aftertaste - could also be part of his strategy to win votes.
The election for governor of New Jersey may not take place until November 2025, but the primaries have already filled up with numerous prominent candidates. Fulop is a member of the Democratic Party, which tends to be more critical of Bitcoin than the Republicans.
There is currently a general trend in US politics for politicians, such as Republican presidential candidate Donald Trump, to campaign with a pro-Bitcoin stance. Increasing efforts to open up to Bitcoin and Co. can now also be seen from the ranks of the Democrats.
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