By
Temitope Olatunji
April 26th, 2024
Japan’s Government Pension Investment Fund (GPIF) seeks to diversify its investment portfolio to deal with major changes in the global economy and society.
The heightened volatility of Bitcoin (BTC) has not deterred institutional investors from showing great interest in the flagship coin and the vast alternative cryptocurrency market. The largest pool of retirement savings in the world based in Japan, the Government Pension Investment Fund (GPIF) is the latest major pension fund manager to show interest in Bitcoin as an investment asset. According to an announcement released on Tuesday, GPIF requested detailed information on potential investment diversification tools led by Bitcoin, and precious metals.
Notably, the company referred to the potential investment diversification tools as illiquid assets. Furthermore, GPIF has not held any of the ‘illiquid’ assets geared towards portfolio diversification since its inception in 2006. Currently, GPIF has over 200 trillion Japanese Yen in its assets under management (AUM), which is equivalent to around $1.54 trillion.
The plan to diversify into Bitcoin is a major move that could lead to a huge market shift in the web3 sector. Moreover, GPIF has solely focused on domestic bonds, domestic stocks, foreign bonds, foreign stocks, private equity, real estate, and infrastructure in the past.
“Our primary investment strategy is diversification by asset class, region, and timeframe. While market prices may fluctuate in the short term, GPIF will take full advantage of our long-term investment horizon to achieve investment returns in a more stable and efficient manner,” GPIF previously stated.
The announcement from GPIF comes a few weeks after the Japanese cabinet signed a bill to allow venture capital firms to hold crypto assets. Nonetheless, the Japanese parliament has yet to pass the bill, thus creating a regulatory gap.
A Growing Trend in Bitcoin Mass Adoption
The notable rise of Bitcoin to a trillion-dollar globally traded digital asset has convinced most institutional investors and fund managers of its longevity and dominance. Already, several other pension funds – led by the Houston FireFighters pension fund and South Korea’s National Pension Service have already tapped into Bitcoin and crypto-regulated products to diversify their investment portfolios.
The adoption of Bitcoin and crypto-related products by institutional investors has significantly helped increase the overall liquidity and volatility. Moreover, most of the institutional investors are long-term holders with no intention of selling in the near term despite the underlying volatility and uncertainty.
As a result, the cryptocurrency market has regained $2 trillion in valuation months before the anticipated parabolic bull run. Historically, the cryptocurrency market led by Bitcoin has experienced major bull runs several months after the halving event.
However, the heightened cryptocurrency demand has helped Bitcoin price reach a new all-time high (ATH), despite the high liquidation triggered by Tuesday’s market correction.