Norges Bank's Sovereign Wealth Fund Loses $40 Billion in Q1 2025 Due to Tech Stock Decline

Norges Bank, Norway’s sovereign wealth fund, reported a significant loss of $40 billion in the first quarter of 2025. The primary cause of this decline was the drop in the value of US-listed technology companies, which made up a substantial portion of the fund’s investments. This loss highlights the risks associated with concentrated positions in volatile sectors.

The fund’s indirect exposure to Bitcoin through its stock market investments amounted to 3,821 BTC, valued at $356 million by the end of 2024. This exposure presents a potential sell pressure risk for Bitcoin, especially given the socio-political uncertainty and the risk of an economic recession caused by the global trade war.

Given the current economic climate, there is speculation about whether Norges Bank could increase its investments in Bitcoin-related companies or buy spot Bitcoin exchange-traded funds (ETFs) as a way to hedge risk. However, it seems unlikely that the fund would consider buying a Bitcoin ETF, especially since the fund does not hold any gold. Besides stocks and bonds, Norges Bank invests in real estate, including retail, industrial, renewable energy, and logistics properties worldwide.

Norway sold all of the central bank’s gold by early 2004, when gold was trading below $400. Since then, gold has outperformed the S&P 500 by 280%. Equities now make up 71.4% of the fund’s total investments, so if the global trade war continues, significant losses could occur.

Norges Bank investments generated $222 billion in profits in 2024, and its stock market portfolio dropped by only 1.6% in the first quarter of 2025. Norway’s sovereign wealth fund is “mainly index-driven,” according to CEO Nicolai Tangen, specifically following the FTSE Global All Cap Index. Although this index includes over 7,100 stocks from both developed and emerging markets, it is based on market capitalization, which means 65% of the exposure is to North American companies. But, according to Norges Bank Deputy CEO Trond Grande, there is some flexibility for active investment, and their exposure to US-listed tech stocks has been below the benchmark for the past 18 months.

Some of these holdings, such as Strategy, Mara Holdings, Coinbase, and Riot Platforms, hold large amounts of Bitcoin (BTC) on their balance sheets. As a result, even if not intentional, the sovereign wealth fund had a $356 million indirect exposure to Bitcoin at the end of 2024.

Data shows a 5% hypothetical allocation in Bitcoin back in 2018 would have boosted the fund’s equities benchmark performance by 56%.

Technically, it seems unlikely that Norges Bank could buy into the spot Bitcoin ETF without changing the fund’s mandate. However, increasing exposure to companies with significant Bitcoin holdings appears possible. Still, there is no sign of such a move, although Nicolai Tangen stated on April 24 that the fund will increase investments in US stocks.

The fact that Mubadala Investments, one of Abu Dhabi’s sovereign wealth funds, held a $437 million stake in BlackRock’s iShares Bitcoin ETF (IBIT) helps build a case for such investment. Similarly, the State of Wisconsin Investment Board held $321 million in spot Bitcoin ETFs, showing the growing use of cryptocurrency as a hedge.