Market Overview (Jun 10 – Jun 16): Bitcoin Buys, Billion Dollar Investments, And Rate Cuts

Key Points:

• MicroStrategy to sell bonds for Bitcoin; Tether plans USD 1 billion investment.
• Federal Reserve suggests potential rate cut; SP500 hits new peak.
• Bitcoin stays stagnant; altcoins rebound; potential listings and rate cuts ahead.

Get an in-depth market overview, including macroeconomic updates and key economic events. Stay updated on Bitcoin’s status, altcoin trends, and anticipated listings.

Last week’s highlights big news (Jun 10 – Jun 16)

MicroStrategy has proposed the sale of convertible bonds worth USD 500 million to buy more Bitcoin. These bonds, due in 2032, can be converted into cash or shares.

The bonds’ sale will be organized under Rule 144A of the 1933 Securities Act, exclusively for eligible institutional investors. The bonds are unsecured debts, with interests to be paid biannually, starting from December 15, 2024.

Bloomberg reports that Stablecoin Tether and Tether Investments have revealed plans to allocate over USD 1 billion to various investment opportunities in the next 12 months.

Specifically, Tether is interested in alternative financial infrastructure for new markets, artificial intelligence (AI), and biotechnology. So far, Tether has invested approximately USD 2 billion in these areas.

Japan’s Metaplanet has purchased Bitcoin for the third time, acquiring 23.25 Bitcoin (approx. USD 1.6 million). This acquisition increases their total Bitcoin holdings to 141.07 Bitcoin (USD 9.6 million), with an average purchase price of 10,278,391 yen (USD 65,365) per Bitcoin.

Brazil’s largest bank, Itau Unibanco, has opened a crypto trading service for all its 60 million users.

Russia will soon acknowledge Bitcoin mining as an official economic activity. Once the Bitcoin mining regulation law is passed, companies can get licenses and benefit from the state. This bill was introduced to the Russian Parliament in 2022 and is expected to pass this year.

Canada’s DeFi Technologies has started storing Bitcoin, buying a total of 110 Bitcoin (around USD 7.7 million) to protect their reserve assets from currency depreciation.

South Korea has announced new rules for classifying NFTs. Mass-produced NFTs used for exchange or payment will be considered digital assets and be subject to crypto regulations. Limited edition NFTs primarily for collecting will be regarded as conventional NFTs.

NFTs with characteristics similar to securities will be managed under the Capital Market Act. The Financial Services Commission (FSC) emphasized that they would assess each case based on its actual nature, not its name or technology.

Kraken exchange is raising over USD 100 million in capital and may complete this round by the end of this year. This fundraising round is planned before the initial public offering (IPO).

CoinBase CEO Brian Armstrong has met with over 12 Senators from both parties in Washington DC, USA, in the past 48 hours to discuss the development of clear regulations for the crypto industry and consumer protection.

Ripple has launched a new Sidechain, enabling XRP Ledger (XRPL) to connect more easily with the Ethereum ecosystem. This opens up new opportunities for decentralized finance (DeFi) and the tokenization of real-world assets (RWA).

Macroeconomics (Jun 10 – Jun 16)

The updates for Consumer Price Index (CPI) indicate a slight decrease, with this month’s CPI at 3.3%, down from last month’s 3.4%. The Core CPI remains steady at 3.4%, compared to last month’s 3.6%.

Summary of Federal Reserve Chairman’s Remarks

TLDR;

• The Fed stated that there is still a likelihood of a rate cut this year, and future cuts would compensate for this. If the CPI continues to perform well, the rate cut might occur sooner.
• The timing of this rate cut remains unknown as the Fed is still waiting for more data. The Fed Chairman focused on rent data, suggesting that they are waiting for the rent inflation index to decrease.
• The Fed Chairman emphasized that no one within the Fed is considering a rate hike. The Fed confirmed that if the economic situation worsens, they may cut interest rates sooner. They stated that they would not wait for the situation to worsen before taking action, but will act upon the first signs of trouble.
• The meeting was neutral, neither good nor bad, and at least paved the way for a rate cut by generally discussing the factors of the Fed’s current interest.

As for the Federal Reserve (Fed) Chairman’s statement, the tone was neutral. Despite the favorable CPI results, which might have led to expectations of a more dovish tone, the neutral position remains positive.

The Fed Chairman mentioned the likelihood of a single interest rate cut this year, but also suggested that four cuts might occur next year instead of the previously estimated three. This is due to the persistently high inflation and the Fed’s unpreparedness to react.

A significant contradiction emerged when the Fed claimed that the economy is doing well, unemployment rates are good, and the inflation rate is expected to remain relatively unchanged through the end of the year. So, why would they consider cutting the interest rate? When would this occur? Would one or two cuts significantly impact the overall economy?

Fundamentally, the Fed Chairman reiterated his previous position – they need more data, and they are not confident enough to cut the interest rate yet.

Despite the favorable CPI readings, the Fed Chairman did not mention significant rate cuts, perhaps indicating a more cautious stance.

SP500 Reaches New Peak and Favorable PPI Results

The US stock index SP500 reached a new peak today, following the CPI update and the Fed meeting.

As for the Producer Price Index (PPI), it stands at 2.2%, equal to last month’s figure, and better than the estimated 2.5%. The Core PPI is 2.3%, slightly lower than last month’s 2.4%. In summary, the PPI results are favorable.

Key Economic Events This Week

Unlike the previous week, we do not have any significant economic data this week. However, there are many speeches scheduled by Federal Reserve (Fed) officials.

The press conference held last week by Fed Chairman Powell left several questions unanswered. We look forward to gaining additional insights from other Fed officials’ remarks.

On Monday, June 17th, Fed Governor Lisa Cook is expected to make a statement.

On Tuesday, June 18th, several events are planned:

• A podcast interview with Tom Barkin, the President of the Richmond Fed.
• A speech by Fed Governor Adriana Kugler.
• Remarks from Laurie Logan, the President of the Dallas Fed.
• A statement by Alberto Musalem, the President of the St. Louis Fed.
• A speech by Austan Goolsbee, the President of the Chicago Fed.

Prediction Market Crypto

Bitcoin continues to move sideways, ending the week at around $66k, keeping the market in a period of stagnation.

Some altcoins are experiencing a slight rebound, however, many are still at their new lows as over $28 million in stablecoin were withdrawn from exchanges in the past 24 hours.

Noteworthy capital flows on Binance include:

• The Solana Ecosystem, specifically FIDA, WIF, JUP.
• Real-world assets (RWA), specifically PENDLE, MKR.

Looking ahead, some positive developments are expected:

• Layer Zero is likely to get listed on the exchange in July.
• The ETH ETF is expected to be traded from July.
• Blackrock is rumored to be considering a Sol ETF.
• In September, there’s high probability that the Fed will lower interest rates and CZ is expected to be released from jail.
• The U.S. elections are scheduled for November.
• The listing of EigenLayer and Monad on exchanges is anticipated by the end of 2024 or early 2025.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.