Public pension funds have increasingly purchased cryptocurrency in recent years. While valuations have grown in recent years, the last month has seen coin values plummet before gradually rebounding.
Pension fund representatives and outside experts say the total public investment in cryptocurrency is minuscule, and the digital currency is still a viable purchase with public dollars when done carefully.
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Public employee pension funds are some of the largest institutional investors in the country. They not only serve as a nest egg for the nation’s retired public servants but also invest more than $6.5 trillion in taxpayer and employee contributions into the market. These funds have begun to increasingly dip their fiscal toes into cryptocurrency in recent years by adding fractions of the volatile investment to further diversify portfolios.
Since mid-November, cryptocurrencies began a slide, wiping out billions of dollars in market valuation in a matter of days. The crypto market’s stall, according to the Bloomberg Billionaire’s Index, was severe enough to be a primary downward driver that cost the Trump family more than $1 billion in a week.
Bitcoin, seen as a bellwether of cryptocurrencies, saw a nearly 8% sell-off on Dec. 1 that dropped its price below $84,000. The coin sold for more than $124,000 just two months prior.
The volatility of cryptocurrencies has led to several warnings against public funds from investing.
A Government Accountability Office report released on Dec. 4, 2024, found that Bitcoin was the most stable of the five crypto assets available to 401(k) plans. It was still four times as volatile as the S&P 500.
An Aug. 4 report from the nonprofit advocacy group Better Markets warned that dozens of states had either passed or were working on legislation that would allow public pension funds to include ETFs into their portfolios.
“State pension funds are not venture capital,” Brady Williams, legal counsel for Better Markets, said in a release. “These are long-term, risk-averse portfolios meant to provide a secure, stable retirement for teachers, firefighters, nurses, and countless other public servants. Cryptocurrency is fundamentally incompatible with that mission.”
Which pensions are buying crypto?
As recently as 2022, the CFA Institute found just eight public pension funds in the U.S. that disclosed any cryptocurrency investment. A study released in November found 17 of the nation’s largest pension funds had a cumulative $3.3 billion invested in ETFs.
Better Markets said the incentive for higher growth amid growing unfunded liabilities and more workers retiring are behind the increased buy-in from public funds.
The California Public Employees’ Retirement System, or CalPERS, is the nation’s largest public pension fund. It disclosed a $144 million purchase of Strategy Inc. in its latest federal disclosure. The tech company has purchased hundreds of millions of dollars in Bitcoin in 2025, according to Bloomberg.
The State of Wisconsin Investment Board purchased more than $150M in shares of Bitcoin exchange-traded funds earlier this year but sold its stake over the summer, according to Pensions & Investments. Its final valuation was more than $330 million.
“Allocations change frequently and reporting schedules vary, so it’s difficult to speak to the entire universe of public pension funds,” Hank Kim, executive director for the National Conference on Public Employee Retirement Systems, told SAN.
How does the cryptocurrency slide affect public funds?
Kim said each pension is different, allocating according to their individual investment policies and risk management frameworks. He said the November survey of pension funds investing in cryptocurrency amounts to 0.1% of the funds’ total assets.
“This is generally representative of what we’re seeing in the relatively few instances of crypto investment—cautious approaches with limited exposure,” he said.
David Krause, emeritus associate professor of finance at Marquette University, has written several papers on pension funds investing in cryptocurrency. He said he supports the diversification of retirement funds, but isn’t sold on coins as a long-term investment.
“Bitcoin, Ethereum, Solana, and a handful of other blockchain-based platforms may have some economic utility going forward, although not primarily as units of payment, where I believe stablecoins will prevail,” he told SAN Monday. “The thousands of other altcoins, especially meme coins, are largely speculative vehicles or outright frauds with no fundamental value.”
Should a pension decide to invest in crypto, Krause said using an ETF as opposed to directly holding something like Bitcoin mitigates risk.