The market confidence setback from the “May 19” falls in the crypto-asset market was eased somewhat on June 14, when market “bellwether” Bitcoin (BTC) returned to the $40,000 mark, peaking at $41,064, up 3.83% in 24 hours.
The clear-cut news on the funding level came from US-listed MicroStrategy (MicroStrategy). As of mid-May this year, the company already owned 92,079 BTC.
In addition, Paul Tudor Jones, founder of Tudor Investment, disclosed in an interview for the first time that his current portfolio includes a 5% position in bitcoin, and that the vast majority of the remaining positions will be adjusted only after the Fed’s policy becomes clearer.
Wall Street celebrities are not taking a shot at bitcoin on a whim, as rising U.S. inflation is causing financial markets to give feedback.
On June 14, the Federal Reserve Bank of New York released survey results showing that U.S. inflation expectations rose significantly in May, with the median one-year inflation estimate rising for the seventh consecutive month and hitting a new high of 4%; the median three-year inflation estimate rose to 3.6%, the highest since August 2013.
The feedback from financial markets hedging against the effects of inflation is not only reflected in bitcoin. at the close of trading on June 14, the S&P 500 index, an important indicator of U.S. stocks, closed at 4247.44 points, up 0.18%, just one step away from breaking through to a new all-time high of 4249.74 points.
At this point, Wall Street financiers stand at the crossroads and look to the Federal Reserve in unison. This week, the world’s central banks will announce interest rate resolutions, the Federal Reserve to raise interest rates, when to raise interest rates, become the inflection point of general concern in the financial markets. If the United States tighten monetary policy, financial markets will likely face a dip, some buyers stand by.
Already hoarded more than 90,000 BTC MicroStrategy added another position
Bitcoin’s return to $40,000 after 21 days has slightly boosted some market confidence. On the 19th of last month, the crypto-asset market was hit hard, with ‘weathervane’ bitcoin taking a succession of dips, at one point falling to $29,000, down 54% from its bull market high of $64,000 million, and its market cap evaporating in half for a short time.
The cryptocurrency community attributed the rise to a renewed position in MicroStrategy, a US-listed company with a heavy position in bitcoin.
On June 14, business consulting firm MicroStrategy filed paperwork with the U.S. Securities and Exchange Commission (SEC) planning to offer $1 billion worth of Class A common stock, the funds of which would be put to general corporate use, including the purchase of bitcoin.
The plan comes just a week after MicroStrategy raised money through a private debt offering to buy bitcoin and other crypto assets. The bonds, which are open to qualified institutional investors, are primarily senior secured notes due 2028, and on June 14, the company disclosed that it was raising $500 million in the bonds to invest $488 million in bitcoin purchases.
MicroStrategy issued $400 million in convertible bonds just last December and put the financing into bitcoin.
As of mid-May of this year, MicroStrategy’s BTC holdings by the newly created subsidiary had reached 92,079 coins, according to the latest statement. According to statistics, the average purchase price of these bitcoins is around $24,000, which is a float of over 60% at the current $40,000
MicroStrategy’s plan to issue another $1 billion in Class A common stock suggests that its ‘buy-and-buy’ of bitcoin will continue. The company, which has become the world’s largest publicly traded company in terms of bitcoin holdings, has been adding to its position since last year, having seen its stockpile of bitcoin as a way to “protect itself from inflation.
More recently, Paul Tudor Jones, founder of Tudor Investment, has been added to the ranks of those using bitcoin as a hedge against the effects of inflation. In a recent interview, he disclosed that he currently has a 5% position in gold, bitcoin, cash and commodities in his portfolio, and that he will have to wait for more clarity on Fed policy before he can make a judgment on how to deploy the remaining 80% of his holdings.
As a legendary Wall Street trader who specializes in nabbing gold from macroeconomics, Jones keeps a close eye on the U.S. inflation situation and the Fed’s response.
In mid-May this year, the U.S. Consumer Price Index (CPI) released in April rose 4.2% year-on-year and up to 0.8% from a year earlier; at the same time, the April Production Price Index (PPI) rose 6.2% year-on-year and 0.6% from a year earlier.
Both figures exceeded market expectations at the time and were seen as important signals of rising inflation in the U.S. and the visible impact of the Federal Reserve’s quantitative easing policy.
At the time, the market was concerned that this higher-than-expected inflation would bring about a Fed rate hike and a tightening of monetary policy. The market also reacted quickly, with the three major U.S. stock indices falling wildly. A few days later, the ‘5-19’ waterfall in the currency market arrived. Instead, the 10-year U.S. bond yield climbed to near 1.7%, often the result of high inflation data, which, outsiders predicted, would likely spur the Fed to tighten monetary policy.
And after the financial markets were hit hard, the Federal Reserve stated that inflation is only temporary. This attitude released the message to the public that the central bank would continue quantitative easing, and subsequently, the U.S. stock market saw a rebound.
One month on, in Paul Tudor Jones’ view, inflation is not temporary, “the last two months of year-on-year CPI growth is well above the 2% policy target and the actual economic data is challenging the Fed’s policy stance.
Inflation higher Wall Street watching the Fed rate meeting
A number of data are confirming the judgment of Paul Tudor Jones.
Data released by the U.S. Department of Labor on the 10th showed that, on a seasonally adjusted basis, the U.S. Consumer Price Index (CPI) rose 5% year-over-year in May, the largest year-over-year increase since August 2008. This means that the cost of living for U.S. residents continues to rise.
On June 14, the Federal Reserve Bank of New York released survey results showing that U.S. inflation expectations rose significantly in May – the median one-year inflation estimate has risen for the seventh consecutive month and hit a new high of 4%; the median three-year inflation estimate rose to 3.6%, the highest since August 2013.
The high inflation environment in the United States, not only bitcoin rose and returned to $ 40,000, the three major U.S. stock indices also two up and one down. June 14 closed with only the Dow Jones down 0.25%; the Nasdaq up 0.74%, the S&P 500 closed at 4247.44, up 0.18%, just a step away from breaking a new record high of 4249.74.
Against the backdrop of rising inflation expectations, Wall Street’s focus fell on the Federal Reserve’s two-day (15th, 16th) interest rate meeting, plus no rate hike, when to raise interest rates again became the focus of market attention.
It is worth noting that, unlike May, on June 14, U.S. bond yields fell instead of rising. This has become the basis for the market to judge that the Fed will not tighten monetary policy in the near future.
Last month, Federal Reserve Chairman Jerome Powell calmed the panic like saying that the Fed will tell the time of tapering asset purchases in advance to avoid repeating the “tapering panic” in 2013.
A media survey of 51 economists also showed that more than half expect the Fed to raise interest rates in 2023; about 40% of the economists interviewed expect the Fed to hint at the end of August that it plans to start scaling back its current $120 billion monthly bond purchases; and about 24% of economists also expect the signal to appear in September.
Paul Tudor Jones Jones believes that this rate meeting will be the most important in the career of Fed Chairman Powell, “If the Fed still treats the inflation spike carelessly at this meeting, I will bet fully on the inflation trade, probably buying commodities, cryptocurrencies and also gold.
JPMorgan Chase also believes that “inflation is not temporary,” but they are responding to the possibility of higher inflation forcing the Fed to raise interest rates by hoarding cash, and the firm’s CEO Jamie Dimon said at an online financial conference that JPMorgan Chase has $500 billion in cash and “we have been accumulating more and more cash, waiting for the opportunity to invest at higher rates.
Another moment that will affect financial markets is expected to come a day later this Thursday, June 17 in the early hours of Beijing time, when the Federal Reserve will announce its interest rate resolution.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/bitcoin-returns-to-40000-as-u-s-inflation-expectations-rise-high/
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