By
Chimamanda U. Martha
April 19th, 2024
The refusal to pursue crypto investment may underline a wider trend of investors withdrawing from the sector.
Sources belonging to the Canadian pension fund CPP Investments (CPPI) have said the fund said is no longer pursuing opportunities in the cryptocurrency sector. Thought to be the largest Canadian pension fund, CPPI manages approximately $285 billion for 20 million Canadians.
According to the report, CPPI deployed a three-man team from Alpha Generation Lab to research the possibility of making a crypto investment in 2021. However, the unit has since been redeployed to other areas.
Why the Canadian Pension Fund Is Avoiding Crypto Investment
While CPPI did not share its reasons, it cited its CEO’s earlier comments. Earlier, CEO John Graham said:
“You want to really think about what the underlying intrinsic value is of some of these assets and build your portfolio accordingly.”
Graham stated the pension fund was still studying cryptocurrencies to understand them before investing in them.
Meanwhile, there are suggestions the Canadian pension fund may simply be trying to avoid making losses. Recall that two other pension funds have lost funds invested in the crypto sector this year.
Caisse de dépôt et placement du Québec (CDPQ) lost about $112 million after crypto lending firm Celsius declared bankruptcy. The firm has since initiated legal proceedings against Celsius.
More recently, the Ontario Teachers’ Pension Fund lost about $70 million which it invested in FTX in October 2021. With the fund accounting for just 0.05% of the fund’s total net assets, OTPF’s investment loss is minimal and it has written it off. “Not all of the investments in this early-stage asset class perform to expectations,” it concluded.
Are Investors Abandoning Crypto?
The refusal to pursue crypto investment may underline a wider trend of investors withdrawing from the sector. According to a survey by Bankrate in September, only 21% of Americans remain comfortable investing in cryptocurrency in 2022. Comparatively, 35% were comfortable in 2021.
While cryptocurrency’s popularity with American investors is on the decline, in 2022, only about 21% of Americans feel comfortable investing in cryptocurrency, according to Bankrate’s September survey. That’s down from 35% in 2021.
While individual and retail investors may be jumping out, there are suggestions institutions may be biding their time to jump into the sector. According to Sheraz Ahmed, managing partner of Storm Partners, institutions will choose based on “how innovation and technology could benefit them.”