Life and annuity companies are increasingly dedicating part of their asset base to Bitcoin (BTC). While the top crypto has delivered the best returns over the past decade, the long-talked-about institutional herd seems to be finally making its way to the BTC market.
During the bear market of 2018, Bitcoin developmental efforts from multiple stakeholders seemed to focus on improving BTC’s regulatory stance. These efforts saw the emergence of institutional-grade custody platforms among other prerequisites needed for greater participation by regulated entities.
Over the last year, publicly listed firms have begun to add Bitcoin to their balance sheets, citing fiat currency debasement concerns. Significant cash influxes by major central banks to support stimulus packages enacted by governments to soften the economic blows struck by the coronavirus pandemic has market commentators fearful of rising inflation.
With pension funds and insurance joining other public corporations in investing in Bitcoin, attention is now shifting to whether governments themselves will begin to invest in BTC via their sovereign wealth funds. Meanwhile, 2021 remains a bullish year for the largest asset by market capitalization with its March closeout representing the best Q1 performance in eight years.
Retirement funds holding Bitcoin
As previously reported by Cointelegraph, KiwiSaver, a $350-million retirement plan operated by New Zealand Funds Management, recently allocated 5% of its assets into Bitcoin. At the time, James Grigor, chief investment officer at NZ Funds, remarked that Bitcoin’s similarities to gold make BTC an attractive asset for life and annuity firms.
According to Grigor, NZ Funds amended its offer documents back in 2020 to include cryptocurrency investments in its catalog. This move allowed the company to purchase BTC back in October when Bitcoin was trading around the $10,000 price mark.
In less than six months, NZ Funds’ KiwiSaver product is now likely sitting on almost six-fold profit on its Bitcoin investment. For the NZ Funds’ executive, Bitcoin presents another set of opportunities outside the usual traditional asset route.
Indeed, Bitcoin’s established history of aggressive compounding capabilities despite any price retracement seems to be catching the attention of big-money players. Hedge funds, family offices and publicly listed companies have been allocating assets to Bitcoin in recent times.
Back in 2018 and 2019, Morgan Creek’s Mark Yusko and Anthony Pompliano identified pension funds and insurance as a class of institutional investors that should consider investing in Bitcoin. At the time, Pompliano predicted that pension funds would face significant challenges in meeting their future obligations if they did not aggressively pursue portfolio diversification beyond the usual investments in bonds and stocks.
In February 2019, Morgan Creek announced a blockchain-focused venture fund anchored by two public pension funds in the United States, among other investors. Since then, a few other pension funds and insurance firms have executed some form of exposure to Bitcoin.
As reported by Cointelegraph at the time, Massachusetts-based insurance provider MassMutual added Bitcoin to its general investment account. MassMutual reportedly bought $100 million worth of BTC from New York Digital Investment Group while also putting up a $5-million equity stake in the company.
Detailing the company’s Bitcoin investment thesis, MassMutual’s Chelsea Haraty told Cointelegraph that the move was indicative of the firm’s broader strategy of capitalizing on emerging opportunities while diversifying its asset portfolio, adding:
“In addition, our investment in NYDIG and Bitcoin aligns with MassMutual’s overall commitment to innovation, giving us measured yet meaningful exposure to a growing economic aspect of our increasingly digital world. Importantly, our $100-million investment in Bitcoin through NYDIG represents .05% — or less than one-tenth of 1% — of our total GIA.”
Haraty’s characterization of MassMutual’s Bitcoin outlay as “measured yet meaningful” echoes the sentiments espoused by market proponents like Yusko and Pompliano who have encouraged insurance firms and pension funds to invest in Bitcoin. Indeed, 1% is often used as an adequate proportion for BTC exposure for institutional investors.
Hedging dollar-denominated liabilities
Back in January, Michael Sonnenshein, CEO of Grayscale crypto fund, remarked that pension funds were fuelling the growth of the crypto asset management firm. According to Sonnenshein, endowments and pensions were among the active investors in the firm’s Bitcoin trust.
NYDIG CEO Robert Gutmann has also provided further confirmation that life and annuity companies are increasingly reevaluating their investment allocation with a view to engineering some exposure to Bitcoin.
In a virtual podcast with Raoul Pal, an investment strategist and founder of Real Vision, Gutmann declared that several life-and-annuity companies were making inquiries about investing in Bitcoin. According to Gutmann, the current drive for BTC exposure for pension funds and insurance firms went beyond fears of currency debasement to concerns over the risks associated with having insufficient cover for dollar-denominated liabilities, stating:
“If you look at the world today on a forward basis, it is reasonable to be asking yourself as an investment committee or as an allocation committee [if] having all of [their] assets denominated in dollars against dollar-denominated liabilities is the right allocation mix.”
Pension funds have not been exempted by the economic stresses occasioned by the ongoing coronavirus pandemic. In July 2020, Japan’s Government Pension Investment Fund — touted to be the largest in the world — posted a first-quarter loss of $165 billion, roughly Bitcoin’s market capitalization at the time. The loss was indicative of the market turmoil caused by the events of March 12, 2020, known as Black Thursday.
While not as heavy as the dents taken by pension funds during the global financial crisis of 2008, COVID-19 has negatively impacted the performance of many pension funds around the world. According to a report by Bloomberg back in February, the Ontario Municipal Employees Retirement System, or OMERS — one of Canada’s largest pension funds — recorded a 2.7% asset decline on a year-on-year basis.
Poor investment choices during the ongoing COVID-19 pandemic are reportedly to blame for Omers’ asset depreciation, with investments in markets such as legacy financial services, energy companies and other “old economy” equities failing to yield gains. Even Berkshire Hathaway CEO Warren Buffett dumped bank stocks in favor of gold back in August 2020.
Amid the substantial losses suffered by pension funds during the 2008 global financial crisis were calls for reforms in the private pension sector. Indeed, pension funds in countries under the Organization for Economic Co-operation and Development umbrella lost an estimated $3.5 trillion due to the crisis.
For OMERS and other pension funds suffering their largest losses since the 2008 crisis, the foregone opportunity of not adding any Bitcoin exposure is becoming more apparent. To put Bitcoin’s dominance over traditional assets in perspective during the COVID-19 era, BTC is up more than 650% since the World Health Organization classified the coronavirus as a pandemic in March 2020.
Sovereign wealth funds next in line?
Apart from pension funds and insurance firms, reports are emerging that sovereign wealth funds may become the next major participants in the institutional Bitcoin investment scene. According to NYDIG’s Gutmann, governments are also in talks with the company toward allocating some of their assets to BTC.
While having direct exposure is likely what these talks are about, Norway’s oil fund — the government’s pension fund — holds an indirect Bitcoin investment. The world’s largest sovereign wealth fund, with over $1 trillion in assets, has indirect BTC exposure via its investment in business intelligence firm MicroStrategy.
During Gutmann’s podcast appearance with Pal, the Real Vision founder also revealed that Temasek — Singapore’s sovereign wealth fund — is also a Bitcoin investor. According to Pal, Temasek, with an asset base valued at about $306 billion, has been buying virgin BTC from miners.
Market commentators like Pal say sovereign wealth funds will bring in a “wall of money” into the Bitcoin space. Such an influx of institutional buying power could likely fuel another parabolic advance in BTC’s price. As is the case with insurance companies and life and annuity firms, Bitcoin likely offers a suitable investment instrument to be used as a hedge against dollar-denominated liabilities.
Coinbase Pro Lists Tether as USDT Supply Approaches 50 Billion
In an announcement on April 23, Coinbase Pro stated that it had enabled trading for the Tether stablecoin. The move is huge news as previously the leading exchange would only support its own native stablecoin, USDC.
The announcement added that support for USDT will generally be available in Coinbase’s supported jurisdictions, with the exception of New York State. The only version of USDT available will be the Ethereum ERC-20 standard.
Trading will begin on or after 6 PM Pacific Time Monday, April 26, if liquidity conditions are met, it added. The following pairs will be available: BTC/USDT, ETH/USDT, USDT/EUR, USDT/GBP, USDT/USD, and USDT/USDC.
Tether is not available on the regular Coinbase exchange yet and is limited to the Pro version which is more suited to professional and institutional traders.
Starting today, inbound transfers for USDT are now available in the regions where trading is supported. Traders cannot place orders and no orders will be filled. Trading will begin on or after 6PM PT on Monday April 26 , if liquidity conditions are met. https://t.co/F5o73g8o4v
— Coinbase Pro (@CoinbasePro) April 22, 2021
Tether Supply Surges
The move comes as Tether’s circulating supply approaches a milestone all-time high of 50 billion. According to the Tether Transparency report, there are currently 49.58 billion USDT in circulation.
Of that total, almost half of it, or 24.4 billion is based on Ethereum while the majority of the remainder, almost 26 billion is circulating on the Tron network.
Since the beginning of 2021, the total supply of Tether has increased by 137% outlining the surge in demand for stablecoins in DeFi related activities.
Comparatively, there is currently 13.4 billion USDC in circulation according to the company that owns it, Circle. It has had an even greater increase this year with 244% since January 1.
The third-largest stablecoin is Binance USD which currently has a circulation of 7 billion according to Coingecko. The surge in supply for BUSD this year has been even greater at over 600%, largely driven by Binance Smart Chain and DeFi yield farms on PancakeSwap.
Crypto Market Correction Deepens
Cryptocurrency markets are currently correcting hard with a decline in total market capitalization of 20% from its all-time high of $2.3 trillion on April 16. Over the past 24 hours, $280 billion has left the space as Bitcoin and its brethren continue to pull back.
According to Coingecko, BTC prices have slumped 9.4% on the day dropping below $50K for the first time since March 7. It has now formed a lower low since the previous correction which could be a sign of a major trend reversal.
ORBS Is Now Accessible on Binance Smart Chain Via AnySwap
[PRESS RELEASE – Please Read Disclaimer]
The ORBS token is now accessible via the Binance Smart Chain. Hodlers can swap tokens to and from the Ethereum network. Exploring this additional blockchain allows Orbs to leverage BSC’s potential for speed, low costs, and DeFi purposes.
This integration of ORBS onto Binance Smart Chain is made possible through the cross-chain bridge developed by Multichain.XYZ – a platform co-developed by Anyswap and Andre Cronje. By integrating this functionality, holders can now move ORBS to and from the Ethereum and BSC networks at their own leisure.
Given the potential for BSC in the DeFi space, support on this blockchain can unlock new use cases for Orbs. As BSC is home to near-daily launches of new projects, products, and services, it is one of the more exciting blockchains in the industry today. It has a competitive edge over Ethereum – which remains the main ecosystem for DeFi – by providing faster transactions at a much lower cost.
“While the Ethereum ecosystem is leading the pack in terms of DeFi activity and public interest, in the last couple of months we are seeing more and more DeFi alternatives growing on BSC. Says Orbs co-founder Tal Kol. “We knew we had to be part of the opportunities and innovations happening in the BSC ecosystem” he continued.
As more and more DeFi alternatives launch on BSC, it makes sense for the ORBS token to be interoperable. As Orbs is a prolific decentralized finance project with unique advantages and multiple upcoming projects under development, both ecosystems will benefit from this compatibility. With the help of cross-chain bridges – such as multichain-xyz – the DeFi ecosystem can continue to grow and evolve into more encompassing solutions.
Moreover, Orbs and the Binance exchange strengthened their partnership in January to promote ongoing innovation in the world of decentralized finance. They were the first core sponsors of the DeFi.org accelerator bootstrapping new projects and DeFi protocols.
Other projects being worked on by Orbs include Liquidity NEXUS – to bridge the gap between CeFi and DeFi – and the Orbs DeFi Portal – an aggregation service for information regarding Orbs and decentralized finance. There is also the Orbs DeFi Grant Program which aims to foster ongoing growth among contributors developing the network and ecosystem.
Orbs is a public blockchain infrastructure designed for mass usage applications – offering developers a proper mix of performance, cost, security and ease of use. The Orbs protocol is decentralized and executed by a public network of permissionless validators using Proof-of-Stake (PoS) consensus.
Orbs Now Bridged to Binance Smart Chain (BSC) with Anyswap
Blockchain company Orbs said it is now available to trade on Binance Smart Chain (BSC). The move is yet another milestone in Orbs’ efforts to build bridges between complementary blockchains that will eventually bridge ORBS to multiple ecosystems.
With the release of this feature, ORBS holders will be able to leverage their tokens to participate in DeFi applications on the Binance network. At the same time, they tap into Binance’s ever-growing ecosystem that allows for cheap transactions and high scalability.
The BSC integration is also another step in growing token liquidity across multiple chains, while also preparing for the ability of other assets to live on the Orbs network.
ORBS, which has some $272 million in liquidity and around $1 million in 24-hour volume, was formerly only hosted on the Ethereum blockchain, which is currently suffering under increasingly high gas fees.
To kick-start this integration, Orbs is utilizing the cross-chain bridge infrastructure developed by multichain.xyz, which makes applications compatible with new and legacy systems. Effective today, ORBS tokens can be swapped from the Ethereum mainnet to the BSC mainnet and back.
Once the swap is complete, the ORBS token will be visible in the Binance Wallet connected to the service. From there, users can trade, swap, and interact with the associated token as they would with any supported asset in the Binance Chain.
The rapid rise of the Ethereum-based DeFi ecosystem has fueled the migration of many relevant applications to alternative blockchains. The trend has accelerated after the expensive gas fee on the Ethereum network has limited functionality and made many defi protocols barely usable.
Is BSC the Ethereum killer?
As the Defi ecosystem continues its boom, Ethereum seems to be losing its market to Binance Smart Chain (BSC). Binance’s native blockchain has become the go-to alternative for many traders, onboarding millions of users at an eye-watering pace.
As a result of BSC’s rising popularity, BNB token price has skyrocketed to become the world’s third biggest cryptocurrency, trailing only behind Bitcoin and Ether. Trading volume on Binance’s network has also outpaced that of Ethereum, a clear shift of the market to the new chain.
For Orbs, the main motivating factor for integrating Binance Chain is to give users new ways to use ORBS on various DeFi applications within the nascent ecosystem.
Orbs’ vision is to convert real-life businesses to blockchain at scale by turning the trust-enabling technology into mass-usage applications for many sectors.
The Israeli blockchain garnered attention earlier this year after partnering with Binance to fund a recently launched accelerator for decentralized finance innovation.
Named ‘DeFi.org,’ the incubator reviews submitted applications, even anonymous ones, and the one that fulfills requirements and receives approval gets the accelerator’s assistance.
Successful applicants receive many benefits and incentives including mentorship, funding from scratch and exposure to the DeFi community.
Upon receiving approval, they also get a “special consideration” if they apply to take part in Binance’s seed fund for Bridging DeFi and CeFi. In line with the sponsorship, Orbs also provides startups with a grant under the company’s Grant Program.
Meanwhile, Orbs has recently introduced a new liquidity-as-a-service application that makes access to defi easier for professional investors. Dubbed ‘Liquidity Nexus,’ the application provides a massive source of new liquidity for interested defi projects.
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