Harvard University has significantly raised its stake in Bitcoin, increasing its holdings in spot Bitcoin exchange-traded funds by 257% during the third quarter. As of September 30, the iShares Bitcoin Trust is now the institution”s largest disclosed ETF position, valued at $442.8 million. This move underscores a notable trend among institutions as they reassess the role of digital assets in long-term investment strategies.
According to Matt Hougan, Chief Investment Officer at Bitwise, Harvard has also elevated its investments in gold ETFs by 99%, bringing its total exposure to approximately $235 million. This strategic shift indicates a clear preference for Bitcoin, with two dollars allocated to Bitcoin for every dollar invested in gold. Such decisions reflect how one of the world”s largest endowments is redefining its approach to hedge assets amid ongoing global economic volatility.
Despite the significant increase in its Bitcoin holdings, which represents a modest 0.75% of Harvard”s $57 billion endowment, the university now ranks among the top 20 holders of BlackRock”s Bitcoin fund. This highlights the scale and importance of its engagement in the digital asset sector.
However, Harvard”s aggressive accumulation coincided with a sharp market correction. Since the end of the third quarter, Bitcoin has experienced a decline of over 20%, dropping from approximately $114,000 to around $92,000. This downturn exposes the university to a potential unrealized loss of about 14% on its recent Bitcoin purchases, translating to an estimated $89 million paper loss, assuming acquisitions were made near July”s lows.
While this decline represents only a small fraction of the total endowment value, it is notable that Harvard”s investment performance has trailed several Ivy League peers over the last decade. The university reported an annualized return of 8.2%, placing it ninth among ten elite institutions tracked by Markov Processes International. Despite an 11.9% gain for the fiscal year ending June 30, Harvard fell behind rivals such as MIT and Stanford.
As for the rationale behind investing in Bitcoin, Joshua Rauh, a finance professor at Stanford University, noted that many investors increasingly view Bitcoin and gold as potential hedges against instability in the global monetary system and a declining U.S. dollar. However, he warned that neither asset guarantees protection, emphasizing that their effectiveness can vary based on specific scenarios.
Harvard”s pivot towards Bitcoin is particularly striking given the previous skepticism expressed by some members of its faculty. In 2018, economist Kenneth Rogoff had predicted that Bitcoin would gravitate closer to $100 than $100,000, citing anticipated regulatory crackdowns on its use cases. In his recent book, he acknowledged misjudgments regarding the regulatory landscape, expressing surprise at the extent to which regulators have tolerated significant digital holdings without severe repercussions.
Nonetheless, Harvard”s deeper involvement in digital assets has not been without criticism. MarketWatch”s Brett Arends labeled the investment an “environmental disaster,” highlighting Bitcoin”s substantial annual energy consumption, which reportedly surpasses that of entire nations like Thailand and Poland. Additionally, some experts have raised concerns about Bitcoin”s practical utility. Stanford professor Darrell Duffie expressed astonishment at Harvard”s commitment, pointing out that Bitcoin generates no dividends and its practical use in transactions remains limited.
The cryptocurrency continues to face challenges, evident by the recent acceleration of outflows from spot Bitcoin ETFs, with over $2.7 billion exiting these funds in the past five weeks. This trend raises questions about Bitcoin”s ability to regain the $100,000 level in the near future.
