Quick Facts

Norway’s sovereign wealth fund, Norges Bank, recently reported a significant loss of $40 billion in the first quarter of 2025.

Norway’s Sovereign Wealth Fund: A Potential Bitcoin Hedge?

Norway’s sovereign wealth fund, Norges Bank, recently reported a significant loss of $40 billion in the first quarter of 2025. This drop in value is attributed to a decline in US-listed technology stocks, exposing the risk of concentrated positions. As the global economy continues to face uncertainty, some investors are beginning to turn to cryptocurrencies like Bitcoin as a potential hedge against market volatility. In this article, we’ll explore whether Norway’s sovereign wealth fund could consider increasing its exposure to Bitcoin to mitigate risks.

The Sovereign Wealth Fund’s Dilemma

Norway’s sovereign wealth fund is a behemoth, boasting an impressive $1.7 trillion in assets under management. The fund’s investment strategy is primarily index-driven, following the FTSE Global All Cap Index. However, this approach means that the fund’s portfolio is heavily concentrated in North American companies, with 65% of its exposure coming from US-listed stocks. This concentration in a single region and sector could lead to significant losses if market conditions worsen.

Indirect Exposure to Bitcoin

As it stands, Norges Bank has an indirect exposure to Bitcoin through its stock market investments. The fund owns shares in companies that hold significant amounts of Bitcoin on their balance sheets, such as Strategy, Mara Holdings, Coinbase, and Riot Platforms. This indirect exposure amounts to approximately $356 million, presenting a potential sell pressure risk to Bitcoin in times of market uncertainty.

Why Consider Bitcoin?

Bitcoin’s volatility has made it an attractive hedge for some investors. Data shows that a 5% hypothetical allocation in Bitcoin back in 2018 would have boosted the fund’s equities benchmark performance by 56%. Additionally, the cryptocurrency’s decentralized nature and lack of direct correlation with traditional assets make it an appealing diversification tool.

Abu Dhabi’s Lead

Abu Dhabi’s $437 million stake in BlackRock’s iShares Bitcoin ETF (IBIT) sets an interesting precedent. Similarly, the State of Wisconsin Investment Board has held $321 million in spot Bitcoin ETFs, demonstrating the growing use of cryptocurrency as a hedge. This trend suggests that other sovereign wealth funds may be considering Bitcoin as a way to diversify their portfolios and reduce risk.

Why Not Buy a Bitcoin ETF?

While it’s unlikely that Norges Bank would directly buy a Bitcoin ETF without changing its investment mandate, there are alternative ways to gain exposure to the cryptocurrency. The fund could increase its investment in companies with significant Bitcoin holdings or consider investing in a global equity index that tracks companies with a notable Bitcoin presence.

The Road Ahead

Norges Bank has stated that it will increase its investments in US stocks, but this move doesn’t necessarily imply a direct exposure to Bitcoin. It’s essential to monitor the fund’s future investment decisions and consider potential changes to its strategy in response to market fluctuations.

Norway’s Sovereign Wealth Fund Suffers $40 Billion Q1 Loss: Will It Mitigate Risk by Boosting Bitcoin Exposure?

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