Sovereign Funds into crypto (I)

Sovereign funds are the most important players in the financial system. In this series of 4 weekly articles we will analyze every Thursday during this month of August the current situation and possible impact of Sovereign funds into crypto.

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Impact of Sovereign funds into crypto

Who has the power in financial markets? It’s not who you think. Sovereign wealth funds, government pension funds, central bank reserve funds or state-owned enterprises are the most influential actors in the financial market. Sovereign Investments Funds (SIF)  manage $30 Trillion in assets (crypto market it’s now $2T).

They don’t like to appear in the media, but they like to influence the economy. Passive investment, long time horizon view, sustainability and diversification are some of the main characteristics, and that’s why almost nothing of the $30T has yet been invested in the crypto market.

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They are responsible for the rise of Uber, Alibaba or Spotify and other examples of transformative players in the digital economy. 

Most of them lack transparency, driven by political aims, poor governance controls, generates unfair competition, corruption, … but they rule the financial market.

They are fostering some of the big players in different tech sectors, like AI and Big Data, one of their favorite fields.

In this article we will try to estimate the future impact of those huge players into the crypto world, and which could be the role of Belobaba in it.

1. Who are they?

Let’s take a look into the top ten Sovereign Wealth Funds:

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Source: Sovereign Wealth Fund Institution- https://www.swfinstitute.org/

Some of them are bigger than the GDP of some European countries. Most of them are related to countries that are looking for economic alternatives to its huge natural resources (oil, gas, …) before they finish.

A good example is the Norway Government Pension Fund (known as the oil fund). They hold, on average, 1.5% of every listed company on earth. Double the GDP of Norway. Imagine the power they have.

Another kind of SIF are the pension Funds, even bigger than SWF:

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Source: Sovereign Wealth Fund Institution- https://www.swfinstitute.org/

If we take a look into the top funds by assets in the world, most of them are related to specific country governments (central banks, banks, …) (the last two of the list are asset managers that work for some of the SIF).

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Source: Sovereign Wealth Fund Institution- https://www.swfinstitute.org/

Some of these giants come from Asia and are not related with oil. Their source of savings are their trade-based economies. The “made in china” means Europe and US pays in $ and €, then the central bank of china prints money and buys this foreign currency. That’s why China holds $4T dollars!! Imagine the impact this have into the USA economy, but that would need another serie of articles…

By now, the big idea here is that we have some very unknown players that unusually appear into the media, have very strong public connections are the ones who decide where the big money goes.

Next week we will see which part of this 30T$ assets in management are into crypto.

Yours in crypto

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