In the international market in the past two days, the related actions of MicroStrategy have attracted the attention of the cryptocurrency market and the traditional financial market. This company, which holds more than 90,000 bitcoins and valued at more than 3 billion US dollars, has begun to issue more bonds and buy more bitcoins when bitcoin is currently falling. Yesterday, MicroStrategy proposed the issuance of junk bonds to raise 400 million US dollars . Note that junk debt does not refer to real junk, but refers to bonds issued by companies with lower credit ratings or poor profit records. It may also be The rating of bonds issued by companies in the start-up period has not yet exerted an effort to influence their future development potential. The result was far beyond the amount MicroStrategy wanted to raise at the beginning. MicroStrategy received approximately $1.6 billion in orders.
Bloomberg quoted people familiar with the matter as saying that a large number of hedge funds expressed interest in this, and finally decided to issue bonds worth US$488 million to buy more bitcoins. Normally speaking, it takes courage to invest in junk debt. After all, its poor credit rating and profitability may make the originally negotiated interest rate troublesome, so why are so many institutions rushing to buy MicroStrategy’s junk debt? There are two main reasons. One is that the annual coupon rate of this batch of bonds is set at 6.125%. The yield in the junk bond market is quite good, and it is much higher than that of national bonds . It is normal to be welcomed by investors.
The second point is that although MicroStrategy’s own business performance is not good, the performance of buying and holding Bitcoin in the past year has caused the company’s performance to rise sharply, and even the first quarter of this year’s financial report is the best in the past ten years. Yes, it also shows that these investors may also be very optimistic about the performance of Bitcoin , believing that MicroStrategy can exchange these interest rates through Bitcoin. As the CEO of MicroStrategy said, “MicroStrategy realizes that if crypto assets grow by more than 10% per year, you can borrow at an interest rate of 5% or 4% or 3% or 2%, then you should raise as much borrowing as possible and Convert it into encrypted assets.” What’s more interesting is that the Fed may indirectly hold part of this bond.
After the outbreak of the new crown epidemic last year, the Federal Reserve urgently expanded QE and relaxed the standard to buy junk bond ETFs. As of the end of March this year, the Fed has become the fourth largest holder of the junk bond ETF SPDR Bloomberg Barclays High Yield Bond ETF (JNK). The scale of Bitcoin-related junk debt issued by MicroStrategy accounts for about 0.01% of JNK. If the Fed has not liquidated JNK in the past two months, it means that the Fed has indirectly bought the first Bitcoin junk debt in US history, even if it is relatively small.
Bloomberg data shows that not only JNK, but also another junk debt ETF held by the Federal Reserve, iShares Broad USD High Yield Corporate Bond ETF (USHY), also holds a small amount of Microstrategy Bitcoin junk debt. Although it is unpredictable mixed with coincidences, it is also a fact that the Fed actually owns this batch of bonds related to Bitcoin. It is not the original intention of the Fed, but if the Fed does not liquidate these bonds in the later period, will there be a new symbol? What’s the meaning?
Going back to the market, after two days, Bitcoin went from falling below the triangle range to 30,000 US dollars, and successfully flipped back to the triangle range. It seems that the ending is more dreamy, but it is actually in front of us. Included in the two-day analysis. During this period of time, the technical aspects of the market can play a very limited role. Although the market believes that the triangle interval is a more important technical indicator, overall we are still more inclined to the activity range of 30,000 to 40,000 US dollars. This is the investment. For the readers, the pressure and support levels with heavier symbolic significance. There were actually a lot of bad news in the market yesterday, including a lot of certain domestic news, but it was still because the good news from the morning to noon drove the market’s emotional side, so that even if there were bad news in the evening, it didn’t hurt. The market even rose. Today, everyone needs to pay attention to one piece of data, that is, the US consumer price index, which can represent the inflation situation in the United States to a certain extent. If the data differs significantly from the expected data by then, it may have a greater impact on the US stocks and the cryptocurrency market.