Michigan Becomes First State Pension Fund to Add Ethereum ETFs, With $11M Investment

The State of Michigan Retirement System recently added Grayscale’s Ethereum exchange-traded fund (ETF) to its portfolio, marking the first instance of a state pension fund investment in the Ether-based product since it debuted in July.

🚨 First State Pension Fund Buys #ETH ETF 🚨

State of Michigan Files 13F Discloses New ETH ETF Holdings; Becomes Top 5 Holder of $ETH & $ETHE pic.twitter.com/3eYrCh3ldG

— matthew sigel, recovering CFA (@matthew_sigel) November 4, 2024

In a 13F filing, Michigan’s pension agency disclosed ownership of 460,000 shares in Grayscale Ethereum Trust (ETHE), worth approximately $10 million as of the close of Q3, placing it among the fund’s top five investors, according to VanEck’s Matthew Sigel. Additionally, the agency revealed it held 460,000 shares in Grayscale Ethereum Mini Trust ETF (ETH), valued at around $1.1 million.

Big Win for Ether?

Despite Bitcoin’s (BTC) recent price gains and Ether’s relative underperformance, Michigan’s pension fund has allocated more funds to Ether ETFs, with over $11 million invested in Ether (ETH) compared to $7 million in Bitcoin ETFs. Bloomberg Senior ETF Analyst Eric Balchunas noted the allocation as an indication of the fund’s strong support for Ether.

Meanwhile, ETF analyst Nate Geraci added that spot Ethereum ETFs might hold greater long-term potential than many anticipate.

U.S. State Pension Funds Eye Digital Assets

Michigan’s pension fund’s investment in Ethereum ETFs mirrors its earlier approach to BTC. In July, the fund reported holding 110,000 shares in the ARK 21Shares Bitcoin ETF, which accounts for approximately 0.003% of its total managed assets.

Other states are also showing interest. The State of Wisconsin Investment Board (SWIB) allocated $164 million to spot BTC ETFs managed by Grayscale and BlackRock, accounting for around 0.1% of its assets. Similarly, Jersey City’s Employees Retirement System (ERS) has included Bitcoin ETFs as part of its portfolio diversification efforts.

Florida’s Chief Financial Officer, Jimmy Patronis, recently joined the trend by urging the state’s retirement fund managers to consider investing in Bitcoin. In a letter to the Florida State Board of Administration (SBA), Patronis highlighted BTC’s potential as “digital gold” and suggested it could act as a stabilizing asset within a diversified portfolio.

The interest from state pension funds reflects broader market trends observed in recent weeks. On-chain data indicates that BTC-based products recorded net inflows of $2.22 billion for the week of October 28 to November 1, marking the third-largest weekly inflow since their inception. In comparison, spot ETH ETFs saw inflows of $13 million.