Regulated exchanges such as the Chicago Board Options Exchange, CME Group, and Nasdaq are either already trading or planning to trade bitcoin futures, an asset that is known to be particularly volatile and risky.
In an article for Bloomberg, Jasmine Ye Han spoke with industry professionals to determine what the role of bitcoin will be in this market, specifically within the context of pension funds.
“Bitcoin futures allow institutional investors to get exposure while avoiding the operational risks in holding bitcoins directly,” Ye Han writes, “But it may be some time before defined benefit pension funds adapt to the new asset class because of its volatility, the fiduciary risks, and potential price manipulations.
Ye Han spoke with DWC managing partner Keith Clark about bitcoin’s potential as a diversifier.
“Pension plans focus on future liabilities and contributions due because benefits are defined in documents,” Clark told Bloomberg. “Bitcoin has well-documented volatility, and plan sponsors might not want to take the risk with even a small allocation.”The fate of bitcoin, much like the nature of the asset itself, is somewhat unpredictable. To learn more about bitcoin futures, pension funds, and to hear other professional opinions, read the rest of Ye Han’s article for Bloomberg.