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NPS investment in Coinbase signals growing interest in crypto market

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National Pension Service headquarters in Jeonju, North Jeolla Province / Yonhap

By Lee Yeon-woo

The National Pension Service (NPS), Korea's largest institutional investor, recently made a significant investment in Coinbase, the foremost cryptocurrency exchange in the U.S. The move marks a notable change in NPS's strategy, which had previously shunned such investments due to concerns over volatility.

According to a report filed by the NPS to the U.S. Securities and Exchange Commission, the public pension fund purchased 282,673 shares of Coinbase, valued at approximately $19.9 million, in the third quarter of this year.

NPS's investment in Coinbase has reportedly yielded nearly a 40 percent profit, largely attributed to the recent surge in the value of Bitcoin. The surge is believed to be driven by the expected approval of a Bitcoin spot-exchange-traded fund (ETF).

As the market cautiously awaits the end of the so-called "crypto winter," bolstered by favorable conditions surrounding Bitcoin, the future earnings of Coinbase shares could see significant growth. There are also market expectations that Coinbase's share price might reach $100, particularly following the anticipated approval of the Bitcoin ETF next year.

Although the NPS has not directly invested in virtual assets, its inaugural investment in a crypto exchange has significantly heightened interest in that sector.

Some suggest that the NPS should consider increasing its investments in virtual assets, arguing that diversifying portfolios is a reliable method for managing risk.

"Yale University's endowment fund, initially almost entirely allocated to government bonds in the early 1980s, began to diversify by incorporating stocks with low bond correlation," a research center associated with Korbit, one of the domestic crypto exchanges, wrote in its weekly report, Friday. "Yale has been investing directly in cryptocurrencies like Bitcoin and Ethereum for several years, proving this shift is part of a broader strategy."

"Meanwhile, the amount of NPS investments in Coinbase is only 0.0000325 percent of its total assets, which exceed 800 trillion won. In order to significantly enhance the cost-effectiveness of the portfolio, its scale of investment in virtual assets should be increased," the research center said.

Some also anticipate that investing in Bitcoin will gain prominence next year, especially as volatile global conditions continue. This trend is driven by the growing recognition of Bitcoin as a means of hedging against volatility in traditional markets.

Lee Yeon-woo


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