Thursday, June 17

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

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The US Fed administration is known to be skeptical about cryptocurrencies. But it has recently emerged that the central bank, with its investment in an exchange-traded fund (ETF), may ironically be one of the first adopters of a Bitcoin (BTC)-linked junk bond.

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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, Fed Chairman Jerome Powell said last April that Bitcoin “a highly speculative entity” Given his statement that he said it should be viewed as

Ek olarak, iShares Broad USD High Yield Corporate Bond (USHY) ETF’inin MicroStrategy borcunun “a little piece” It is reported that there is another Fed investment that has

Commenting on MicroStrategy’s inclusion in the fund, Bloomberg Intelligence ETF analyst Athanasios Psarofagis said, “although it is quite a small amount.” “surprised to see it there in such a short time” told. 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.”

MicroStrategy CEO Michael Saylor told Bloomberg earlier this week “Bitcoin has reached Wall Street” said. “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. Christopher White, CEO of financial services firm ViableMkts, “A bond has a fixed return, so you will never get the upside of Bitcoin” said.

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