Norway’s $40B Misadventure: Is Bitcoin the New Sovereign Savior?

by

Highlights, dear reader:

  • Norges Bank, the colossal $1.7 trillion behemoth, managed to lose a mere $40 billion in Q1 2025, thanks mainly to the capricious whims of American tech stocks—how utterly predictable.

  • An eyebrow-raising $356 million indirect dalliance with Bitcoin lurks in their portfolio, threatening to rain down some serious sell pressure amidst a world teetering on trade wars and recession. Charming.

  • Meanwhile, Abu Dhabi’s sovereign wealth fund dances with a $437 million stake in a spot Bitcoin ETF, suggesting some believe Bitcoin is the financial panacea du jour.

Picture this: Norges Bank, Norway’s sovereign wealth fund with the kind of cash pile that could choke a small country, stumbled into a $40 billion loss in early 2025—not that anyone expected their infatuation with US tech giants to end well. Alongside this drama, they quietly harbor 3,821 BTC hiding behind their stock investments, a potential tinderbox for Bitcoin’s price should panic ensue in our ever-so-stable global economy.

In these turbulent times, might Norges Bank consider embracing Bitcoin—with open arms or at least a wary toe dipped into Bitcoin-related companies or ETFs? The nasal twitches of high finance suggest: “Not likely.”

Norway’s investment fund is staunchly committed to what one might call “traditional” assets—or in English, “everything but Bitcoin.” The fund has no gold (sold off before it was chic), preferring instead a love affair with stocks, bonds, and an impressively diverse real estate portfolio that includes everything from retail spaces to renewable energy projects. So exotic.

To put it in perspective, they sold their gold stash by 2004, when gold was less than $400 per ounce—a shrewd move, assuming one enjoys watching potential riches piled up in hindsight. Since then, that shiny metal has utterly outshone the S&P 500 by 280%. Equities currently occupy a hefty 71.4% of the fund. One wonders how long the global trade wars will last before Norway’s grand investment yacht takes on too much water.

2024 was a year of triumph, with the fund delivering a cool $222 billion in profits, though their stock market bets nudged down by a modest 1.6% in Q1 2025—nimble as an oil tanker, really. CEO Nicolai Tangen assures us the fund dances mainly to the tune of the FTSE Global All Cap Index, a sprawling list of over 7,100 stocks from everywhere that’s developed or developing—and heavily weighted (65%) towards North America because, well, why not?

Deputy CEO Trond Grande affords a bit of wiggle room for active investment, hinting their US tech stock exposure has been slightly shy of the benchmark for eighteen months—a reminder that even sovereign funds must sometimes behave like cautious debutantes at a ball.

Speaking of tech darlings, some holdings like Strategy, Mara Holdings, Coinbase, and Riot Platforms carry considerable Bitcoin on their balance sheets, gifting the fund an unasked-for $356 million indirect Bitcoin exposure by the end of 2024. Quite the surprise party.

Historical musings reveal that a modest 5% Bitcoin allocation in 2018 could have boosted returns by a cheeky 56%. But alas, Norges Bank treads cautiously—lest the board think it frivolous to dabble in crypto witchery.

Theoretical Bitcoin ETFs? Probably a pipedream, but indirect exposure lingers

Realistically, Norges Bank buying into spot Bitcoin ETFs—without storming Parliament to rewrite mandates—appears a task for certain theatrical amateurs. Yet, quietly increasing stakes in Bitcoin-laden companies is within the realm of possibility, though no signs yet of such cunning strategy, save the CEO’s vague promise, dated April 24, of beefing up US stock investments. Cryptic at best.

On the contrary, Abu Dhabi’s Mubadala Investments carries a $437 million stake in BlackRock’s iShares Bitcoin ETF (IBIT), while Wisconsin’s investment board clings to $321 million in similar funds—a clear hint that sovereign and semi-sovereign entities are flirting with crypto as a hedge, much to the chagrin of traditionalists.

This piece is offered purely for your amusement and enlightenment—far be it from us to dispense legal or investment advice, or to express anything resembling a definitive worldview. The thoughts herein belong solely to their author, who likely enjoys a good cup of tea while observing these fiscal soap operas unravel.

Read More

2025-04-28 02:29