Michigan Becomes One of the Largest Ethereum ETF Holders in the US

Key Takeaways

• Typically risk-averse managers are betting big on the future of digital assets.
• U.S. and U.K.-based pension funds have begun to gain exposure to crypto ETFs.
• Michigan’s $11 million Ethereum ETF investment is just the latest sign that cryptocurrency is going mainstream.

Michigan’s state pension fund has become the first public pension system in the United States to invest in an Ethereum (ETH) exchange-traded fund (ETF).

The $11 million investment, disclosed in a recent 13F filing, makes Michigan one of the top five largest holders of ETH ETFs.

Michigan Pension Fund Makes History

The pension fund’s investment in Ethereum ETFs is significant, given that most government-approved funds have previously invested only in Bitcoin (BTC)-based products.

The Michigan fund’s stake in Ether ETFs now totals approximately 460,000 shares of Grayscale Ethereum Trust (ETHE), worth $10.07 million, and an equivalent amount of Grayscale Ethereum Mini Trust (ETH) shares, valued at about $1.12 million.

Prior to this, the Michigan state pension fund purchased nearly $7 million worth of Ark Invest’s BTC ETF shares in July.

The Michigan pension fund is now leading the country’s crypto ETF investment charts, with a total investment of $18 million in Bitcoin and Ethereum ETFs.

Bloomberg ETF analyst Eric Balchunas called it a major win for ETH ETFs, which have performed poorly compared to their BTC counterparts. 

“Not only did Michigan’s pension buy Ether ETFs but they bought more then they did of Bitcoin ETFs—$10 million vs $7 million—this despite BTC being up a ton and ether in the gutter. Pretty big win for ether which could use one,” Balchunas added.

Since launch, BTC and ETH ETFs have recorded net inflows of $24.2 billion and $480 million, respectively.

A Shift in Pension Fund Investments

Michigan is not alone in its foray into crypto investments.

Over the past few years, several states in the U.S. have proposed investing in Bitcoin and other crypto assets. In many cases, pension funds are among the first to test the feasibility of such investments.

Wisconsin, for instance, was among the first U.S. states to invest in Bitcoin ETFs via its pension fund, investing $164 million in iShares Bitcoin Trust and Grayscale’s Bitcoin Trust earlier this year.

Across the Atlantic, Cartwright, a multi-billion-dollar U.K. pension fund, announced a 3% Bitcoin allocation in October, making it the first UK-based fund to do so.

The growing interest of state-affiliated funds in crypto and crypto investment products highlights the rising trust in the crypto market.

Most state funds avoid investment in volatile assets and young ETF products, but the growing institutional demand and adoption have led state funds to tap into crypto, marking the start of a new investment era.