Check Also

Fed May Have Indirectly Supported MicroStrategy’s Bitcoin (BTC) Moves


The US Fed administration is known to be skeptical about cryptocurrencies

The US Fed administration is known to be skeptical about cryptocurrencies. However, the recent central bank, a fund traded on stock exchanges (ETF) made by an investment, ironically Bitcoin (BTC) connected sank two bonds (junk bond) turned out to be one of the first practitioners.

Following the pandemic that started last year, the Fed intervened in the markets by injecting cash into bond exchange-traded funds, among others. The bank’s investment makes it the fourth-largest holder of the cryptocurrency-linked SPDR Bloomberg Barclays High Yield Bond (JNK) ETF as of late March, according to Bloomberg data.

On June 9, MicroStrategy offered $500 million worth of bad bonds to pave the way for further investment in BTC, attracting investors who wanted to invest more in this cryptocurrency but were unable to buy outright for various reasons.

ETFs are financial instruments that trade on an exchange, like stocks, but monitor a specific market or asset, like Bitcoin. Since about 0.01% of the SPDR Bloomberg Barclays High Yield Bond ETF is allocated to MicroStrategy bad debts, this technically means that the software company is facilitating future Bitcoin investments, provided the Fed holds the bonds.

In other words, given Fed Chairman Jerome Powell’s statement last April that Bitcoin should be viewed as a “highly speculative asset,” this means that the US central bank has contributed to the speculation.

Additionally, the iShares Broad USD High Yield Corporate Bond (USHY) ETF is reportedly another Fed investment that owns a “small piece” of MicroStrategy debt .

Commenting on MicroStrategy’s inclusion in the fund, Bloomberg Intelligence ETF analyst Athanasios Psarofagis said he was “surprised to see it there in such a short time “, although it was a “pretty small amount” . Psarophagis added:

“Fixed-income portfolio managers have some discretion as to what bonds they can have in their portfolio, so they can add a small potion before being included in a prospective index.”

“Bitcoin has reached Wall Street,” MicroStrategy CEO Michael Saylor told Bloomberg earlier this week . “My mission is to create a conduit between the $400 trillion ocean of traditional assets and the $1 trillion Bitcoin pool.”

However, some market watchers argue that the bond does not provide its buyers with benefits equal to direct investments in cryptocurrency. “A bond has a fixed return, so you will never get the upside of Bitcoin ,  said Christopher White, CEO of financial services firm ViableMkts . 

Write a Comment

Comment