Canada’s Largest Pension Fund Gets Cold Feet on Crypto

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The biggest pen­sion fund in Cana­da has giv­en up on its cryp­to research. The move comes dur­ing a deep­en­ing cryp­to win­ter and a year of con­ta­gions and collapses.

On Dec. 7, it was report­ed that Canada’s biggest pen­sion fund, CPP Invest­ments, will no longer be study­ing invest­ment oppor­tu­ni­ties in the dig­i­tal asset sector.

Accord­ing to Reuters, the firm declined to give a rea­son but said it had made no direct invest­ments in crypto.

Cryp­to mar­kets have dumped more than 70% since their peak lev­els just over a year ago. How­ev­er, instead of seek­ing bear mar­ket bar­gains and oppor­tu­ni­ties, the pen­sion firm has got cold feet.

Canadian Pension Fund Crypto Losses

Accord­ing to the report, the firm man­ages around $US388 bil­lion for rough­ly 20 mil­lion Cana­di­ans. Fur­ther­more, the move fol­lows com­ments by CPPI chief exec­u­tive John Gra­ham ear­li­er this year when he expressed caution.

The firm’s Alpha Gen­er­a­tion Lab, which research­es emerg­ing invest­ment trends, was formed in 2021 to inves­ti­gate cryp­to. How­ev­er, Gra­ham has been skep­ti­cal, stat­ing that FOMO (fear of miss­ing out) wasn’t a strong enough rea­son to invest in crypto.

“You want to real­ly think about what the under­ly­ing intrin­sic val­ue is of some of these assets and build your port­fo­lio accord­ing­ly,” he said in June.

Cana­di­an pen­sion funds are not pro­hib­it­ed from invest­ing in cryp­to. Nev­er­the­less, the col­lapse of the FTX exchange and ecosys­tem has left many with burnt fingers.

As report­ed by BeIn­Cryp­to, the Ontario Teach­ers’ Pen­sion Plan has writ­ten off its $69 mil­lion invest­ment in FTX. How­ev­er, the invest­ment rep­re­sent­ed less than 0.05% of the firm’s total assets of around $176 billion.

Canada’s sec­ond-largest pen­sion fund, Caisse de dépôt et place­ment du Québec (CDPQ), has also been stung this year. The firm wrote off a $109 mil­lion invest­ment in bank­rupt cryp­to lend­ing firm Cel­sius ear­li­er this year.

The Ontario Munic­i­pal Employ­ees Retire­ment Sys­tem (OMERS) has also invest­ed in cryp­to busi­ness­es. How­ev­er, accord­ing to the report, the firm, which man­ages $88 bil­lion, exit­ed them all in 2020. 

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Crypto Is a Long-Term Investment

Pub­lic pen­sion funds have large­ly avoid­ed cryp­to invest­ments in the Unit­ed States.

How­ev­er, sev­er­al have ven­ture cap­i­tal arms that have invest­ed in cryp­to-relat­ed com­pa­nies. This year’s con­ta­gions have been caused by cen­tral­ized com­pa­nies and the peo­ple behind them – not crypto.

Rather than invest­ing in a com­pa­ny, it may be a bet­ter strat­e­gy to buy and hold the phys­i­cal assets, as MicroS­trat­e­gy does. Grant­ed, it would face heavy loss­es sell­ing at the bot­tom, but pen­sion funds are long-term investments. 

For exam­ple, buy­ing Bit­coin on this date in Decem­ber 2019 would have yield­ed a 124% return in just three years if sold today.

Disclaimer

The infor­ma­tion pro­vid­ed in inde­pen­dent research rep­re­sents the author’s view and does not con­sti­tute invest­ment, trad­ing, or finan­cial advice. Bein­Cryp­to doesn’t rec­om­mend buy­ing, sell­ing, trad­ing, hold­ing, or invest­ing in any cryptocurrencies



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