Michigan Pension Fund Becomes the First to Invest in Ethereum ETFs with $11 Million Stake

Michigan’s pension fund now holds a $11 million stake in Grayscale’s Ethereum ETF.

According to a recent SEC filing, the state diversified its crypto portfolio to now include 460,000 Grayscale’s ETHE shares and 110,000 ARK BTC ETF shares.

This massive Ether ETF stake reflects Michigan’s support for crypto, setting the pension fund apart from other state funds. It also highlights Ethereum’s potential as a viable investment option besides Bitcoin.

Michigan Pension Fund Chooses More Ethereum Over BTC in Latest Investment Move

Michigan’s pension fund has invested in Ethereum through Grayscale. It owns about 460,000 shares in the Grayscale Ethereum Trust, valued at around $10.07 million. The pension fund also bought 460,000 shares in the Grayscale Ethereum Mini Trust. This smaller trust is worth about $1.12 million.

These investments show Michigan’s growing interest in Ethereum. Eric Balchunas, a well-known ETF analyst at Bloomberg, made an interesting point. He said Michigan’s pension fund chose to buy more Ethereum ETFs than Bitcoin ETFs, which is a big deal.

Michigan invested $11 million in Ethereum ETFs while putting only $7 million into Bitcoin ETFs despite Bitcoin’s impressive performance and value over Ether. Balchunas called this a “win” for Ethereum. He thinks it could positively impact Ethereum price-wise.

Michigan’s decision marks a shift toward a broader range of digital assets. Most pension funds stick with Bitcoin as their primary crypto choice. But now, Michigan is showing more interest in Ethereum.

The state’s larger Ethereum investment reflects something new. It’s not just about holding crypto; it’s about seeing the potential in Ethereum’s unique technology.

Ethereum supports decentralized finance (DeFi) projects, smart contracts, and more flexible uses for its blockchain. These are features Bitcoin doesn’t offer in the same way.

While Michigan invested more in Ethereum, it still holds Bitcoin. It bought 110.000 shares in the ARK 21Shares Bitcoin ETF, worth around $7 million. This may be smaller than its Ethereum stake, but it shows that Michigan wants a mix in its crypto investment portfolio.

Michigan Leads the Charge, Inspiring Other States to Consider Crypto ETFs

Matthew Sigel, who leads digital assets research at VanEck, also took note of Michigan’s move. He called Michigan a “pioneer” in the crypto space. Sigel highlighted that Michigan is now one of the top five holders of Ethereum ETFs.

Other states are also getting on board. For instance, Florida’s Chief Financial Officer, Jimmy Patronis, recently supported adding Bitcoin to Florida’s retirement system.

This shows that more states may follow suit soon, seeing crypto as a good long-term investment. Moreover, other states are also considering Bitcoin and crypto as solid investment options for public funds. States like Wisconsin and Jersey have also considered investing in crypto.

This shift shows how public fund managers are starting to see crypto differently. Many now view it as a way to protect against inflation, diversify their portfolios, and spread risks against uncertainties.

However, while crypto interests grow, there is still caution. Data showed that Bitcoin ETFs had the second-largest net outflow ever on Monday. This suggests that while interest in crypto is rising, some investors are still pulling back, balancing the excitement with a bit of caution.

On November 4, Bitcoin spot ETFs saw a huge outflow of funds. A total of $541 million exited the funds that day, making it the second-largest single-day outflow ever. The highest outflow on record was $563 million, which happened on May 2.

Ethereum spot ETFs were also affected. According to WuBlockchain, they had a smaller outflow, with around $63.2 million withdrawn on November 4.

However, not all Bitcoin ETFs saw losses. BlackRock’s IBIT ETF was the only one that gained funds that day, according to data from SoSoValue.