Recent developments reveal that eleven US state pension funds are facing significant financial setbacks due to their investments in MicroStrategy stock, which have plummeted by over 60%. The material draws attention to the fact that this situation underscores the inherent risks associated with investing in volatile cryptocurrency-related equities within conservative public portfolios.
Investments by State Funds
The New York State Common Retirement Fund and the Florida State Board of Administration are among the notable funds that have heavily invested in MicroStrategy. Their combined investments, which initially totaled nearly $570 million, have now dwindled to approximately $240 million, reflecting a staggering loss of around $330 million.
Impact of Bitcoin Fluctuations
MicroStrategy's stock has experienced a dramatic decline of 67% over the past six months, a downturn that is closely linked to the fluctuations in Bitcoin, the company's primary treasury asset. This situation serves as a stark reminder of the concentration risk that public pension funds face when investing heavily in a single volatile asset class, particularly one tied to the unpredictable nature of cryptocurrency markets.
In a related development, Nomura Holdings has scaled down its cryptocurrency holdings following significant financial losses, as detailed in their recent report. For more information, see details.
