The Bitcoin Boom MicroStrategy's Bold Move Amidst Price Surges

Cryptocurrency

Summary:

Bitcoin's soaring popularity, as MicroStrategy plans to raise funds for purchasing more bitcoins despite declining revenues, underscoring the increasing institutional acceptance of cryptocurrencies.

Cryptocurrency, particularly Bitcoin (BTC), has become the talk of the town worldwide. Its massive price surges are attracting a plethora of investors and financial heads, with its prices soaring to $71,000, surpassing its recent all-time high. The Bitcoin Boom MicroStrategy's Bold Move Amidst Price Surges_1

The Bitcoin Boom MicroStrategy's Bold Move Amidst Price Surges_1

BTCUSD Price Chart

According to news reports today, Thursday, MicroStrategy, the software company, intends to raise capital through convertible bonds for the second time in less than 10 days, with the aim of purchasing more bitcoins. Strong cryptocurrency investors are seeking increased exposure to Bitcoin, which has seen significant gains in recent days.

After the market closed yesterday, Wednesday, the American software company announced that it is offering $500 million in the form of convertible bonds due in 2031 to institutional investors, with the intention of buying more digital bitcoins. This comes despite its previous announcement of a private offering worth $600 million in convertible bonds on March 5th.

The giant company further stated that it will market corporate bonds with yields ranging from 0.375% to 0.875%, with the conversion option when the stock rises by 40% to 45% above current levels.

It's worth noting that MicroStrategy, which began purchasing bitcoins and holding them in 2020, is the largest corporate holder of cryptocurrency. Its software business revenues declined in both 2022 and 2023.

The move by MicroStrategy underscores the growing acceptance and adoption of cryptocurrencies by traditional financial institutions and corporations. As Bitcoin continues to make headlines with its price fluctuations, it remains a focal point for investors seeking both short-term gains and long-term investment opportunities in the ever-evolving landscape of digital assets.

In conclusion

I believe Bitcoin is like the new gold in the digital world. It's pulling in more and more investors because it's becoming this safe haven, just like gold, but with even better perks. if you look at the history of Bitcoin since day one, every four years it shoots up in value like crazy! It's like clockwork. So, I'm betting the next four years are going to be even wilder with prices skyrocketing even more.

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Saif

Economic

In today's transactions, Thursday, the US dollar rose, maintaining its recent strength after the release of data from the Bureau of Labor Statistics, which revealed a positive outlook for the US Producer Price Index (PPI) in February. The index recorded a growth of around 1.6% on an annual basis, surpassing market expectations. The Impact of US Producer Price Index on The Dollar_1

The Impact of US Producer Price Index on The Dollar_1

U.S. PPI YoY (Feb)

On a monthly basis, the Producer Price Index witnessed a 0.6% increase in February, exceeding market expectations of a growth of up to 0.3%. The Producer Price Index measures changes in prices received by domestic producers for their goods and services, excluding food, energy, and trade services. Its importance has recently increased due to its potential to be an early indicator of inflation in the United States, affecting the Federal Reserve's decisions on interest rates.

Earlier this week, the dollar received a boost after the release of the US Consumer Price Index report, which came in stronger than expected, leading to speculation that the Federal Reserve may take a gradual approach to recovery and interest rate cuts.

The US currency experienced a relative decline last month, and particularly last week, it was affected by cautious statements from Federal Reserve Chairman Jerome Powell during his two-day testimony before Congress. Markets interpreted his remarks as a sign of the Federal Reserve's readiness to begin cutting interest rates in the summer.

However, the dollar index remains relatively high this year at 103.36, as US data continues to show ongoing economic strength. The Impact of US Producer Price Index on The Dollar_2

The Impact of US Producer Price Index on The Dollar_2

US Dollar Index

Inflation remains a central issue, and many investors expect inflation concerns to dominate the next Federal Reserve meeting.

In conclusion

The recent performance of the US dollar reflects the intricate dance between economic data, market expectations, and central bank policies. While the dollar has exhibited strength in the face of positive indicators such as the Producer Price Index, uncertainties persist, particularly surrounding inflationary pressures. Federal Reserve Chairman Jerome Powell's cautious remarks have added to market speculation about the direction of monetary policy.

Looking ahead, investors will closely monitor developments in inflation and the Federal Reserve's response, as these factors are likely to shape the trajectory of the US dollar and financial markets in the coming months. Amidst this backdrop, maintaining a vigilant stance and adapting to evolving economic conditions will be crucial for investors navigating the currency markets.

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Alex

Economic

The Statistics Ministry has made a number of proposals that have been discussed by Prime Minister Narendra Modi’s office in the past month, the people said, asking not to be identified as the discussions are private.

These include reviving its survey of businesses, last released in 2014, and publishing the household consumption survey on an annual basis, the people said. It also plans to introduce a uniform base year for key indicators and update the basket of goods for calculating inflation, they said.

Separately, the government is also considering a new population census once elections are completed, the people said. The census is usually conducted once a decade, and was last published in 2011, with the most recent survey delayed because of the pandemic.

Economists have frequently called for an overhaul of India’s statistics, while Modi own economic advisory council has raised concerns about the quality of the data. With India’s economy expanding rapidly and global investor interest growing, official figures are coming under more scrutiny. Relying on outdated surveys also raises the risk of policy errors.

India’s Statistics Ministry and the Prime Minister’s Office didn’t respond to requests for further information.

The census would include training and deploying more than 300,000 government staff to enumerate citizens in the world’s most populous nation, the people said. The survey exercise would likely last about 12 months, one of the people said.

Advisory Panel

The business survey being revived will help officials better understand the economy’s shift away from farming to other industries, the people said.

The survey is expected to help the government tailor its policies to boost manufacturing, which has been steadily declining as a share of gross domestic product over the years. The World Bank estimates the ratio was about 13% in 2022, while the government’s goal was to raise it to 25% by 2025.

The government will also appoint an advisory panel that will make recommendations to the Statistics Ministry regarding changes to the base year in key economic data and revising the weights of categories, the people said. The plans will be put into effect after elections due by May, the people said.

Industrial production and GDP data are currently calculated using a 2011-12 base year, while consumer inflation uses 2012.

Statistics agencies usually adjust base years every few years to better reflect changing spending patterns and economic trends over time.

The consumer price basket will also be revised to reflect consumer spending changes in India, such as less expenditure on food and a higher contribution for digital items like mobile tariffs, the people said.

A recent survey of household consumption showed the proportion of spending on food has dropped in urban and rural households over the past decade.

Source：Bloomberg

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Samantha Luan

Economic

Central Bank

The European Central Bank must lower borrowing costs twice before its August summer break and two more times before the end of the year, without being swayed by the US Federal Reserve, according to Governing Council member Yannis Stournaras.

“We need to start cutting rates soon so that our monetary policy does not become too restrictive,” Stournaras, who also heads Greece’s central bank, said in an interview in London. “It is appropriate to do two rate cuts before the summer break, and four moves throughout the year seem reasonable. Insofar, I concur with the markets’ expectations.”

The ECB left policy unchanged last week for a fourth consecutive meeting with officials converging around June as the appropriate juncture to start easing. They have become more confident that inflation is heading toward the 2% goal, but seek further reassurance before deciding on interest rate cuts.

The Frankfurt-based central bank has monetary policy decisions scheduled for April 11, June 6 and July 18. After that it doesn’t meet again until Sept. 12. Stournaras is a well-known dove in the Governing Council, though he recently aligned with more hawkish members on the need to wait until June. ECB Must Cut Rate Twice Before Summer Break, Stournaras Says_1

ECB Must Cut Rate Twice Before Summer Break, Stournaras Says_1

“We will have only little new information before the April meeting, especially on wages at the start of 2024 — but we will get a lot more data before the June meeting,” Stournaras said, echoing comments by ECB President Christine Lagarde last week. “I think to cut rates already in April we will need to see the economy crashing and I don’t expect that.”

In the wake of the comments, money markets maintained wagers on the scope for reductions in borrowing costs this year, with the first quarter-point move seen by June, followed by two more with a 70% chance of a fourth.

Stournaras said that “economic growth in the euro area is much weaker than expected and risks are to the downside, while inflation has come down significantly and the risks are balanced.”

He also downplayed still strong nominal pay increases by stressing that real wages will reach the pre-pandemic level only in 2025.

“So wages are still catching up, not leading inflation. We should not exaggerate the risk of a wage-price-spiral,” he said. Even more so as “nominal wage growth is moderating and profits are absorbing part of the pay increases.”

Source：Bloomberg

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Warren Takunda

Central Bank

Traders' Opinions

Economic

The UK economy is poised for a significant resurgence in the first quarter of 2024, marking a definitive turnaround from the challenges faced in previous months. With economic output steadily on the rise since October, all indications point towards a strong performance in Q1, exceeding initial forecasts and bringing an end to the nation's shallow recession.

Analysts anticipate a notable 0.3% quarter-on-quarter growth in Q1, a figure that surpasses the projections laid out by the Bank of England. This optimistic outlook is underpinned by several key factors, including the rise in real incomes and the steady improvement in consumer spending. These positive developments paint a promising picture for the near-term trajectory of GDP growth in the UK.

January's GDP data provided a glimpse of this budding recovery, with a noteworthy 0.2% month-to-month rebound. This rebound, particularly driven by a remarkable 3.4% month-to-month surge in retail volumes, underscores the resilience of the UK economy and its ability to bounce back from adversity.

Is the UK Economy Primed to Exceed Q1 Growth Forecasts?_1

Despite some volatility in recent monthly GDP figures, the underlying trend unmistakably points towards a gradual and sustained recovery. Illustrated by a chart depicting the monthly level of GDP and its smoothed trend, the upward trajectory in economic output since hitting a low point in October instills confidence in the resilience of the UK economy.

Reflecting on the challenges encountered in 2023, including stagnation and a shallow recession, there are encouraging signs of improvement on the horizon. Forecasts suggest a reduction in inflation levels alongside wage settlements that continue to outpace long-term trends. Household real disposable income is projected to see a robust 2.2% year-over-year increase in 2024, bolstering expectations for an uptick in real consumer spending.

Further reinforcing the positive sentiment are business and consumer confidence surveys, which indicate a growing optimism about economic prospects in early 2024. January's GDP rebound serves as a catalyst for a solid first quarter performance, poised to surpass the Bank of England's modest forecast of 0.1% quarter-on-quarter growth.

Is the UK Economy Primed to Exceed Q1 Growth Forecasts?_2

Anticipated growth of 0.3% in Q1 presents a compelling narrative for policymakers, who will likely keep a close eye on developments as they navigate monetary policy decisions. While a slight slowdown in wage growth has been observed, expectations of the first Bank Rate cut in June loom large, signaling potential adjustments on the horizon.

In summary, the UK economy is on track for a robust recovery in Q1, fueled by improving consumer spending and growing confidence levels. With forecasts surpassing expectations, policymakers face the challenge of balancing monetary policy decisions amidst evolving economic conditions. However, the prevailing optimism suggests that the UK economy is well-positioned to weather the challenges ahead and emerge stronger in the quarters to come.

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Alex

Political

Palestinian-Israeli conflict

Economic

Persistent missile attacks by Houthi rebels on ships plying the Red Sea route have led to soaring emissions liabilities for shipping companies under the EU ETS as lengthy voyage diversions for Europe-bound vessels have multiplied fuel consumption, according to OceanScore.

An increasing number of commercial ships have been taking the alternative route to Europe via the Cape of Good Hope – adding around 9000 nautical miles, or 80%, to the distance sailed – to avoid the Houthi threat as over 50 vessels passing through the Bab-el-Mandeb strait have so far been targeted by the Iran-backed militant group despite protective measures by a broad multi-national coalition.

The latest figures from Clarksons Research show that container ship transits via the Gulf of Aden to the Mediterranean have dropped 91% from the first half of December as around 620 vessels have been diverted, while bunker and crude tanker transits are down 37% and 31%, respectively. Conversely, Cape of Good Hope tonnage arrivals have risen 81% since December.

Higher emissions fuel voyage costs

The consequent disruption to critical trade routes has resulted in spot freight rates increasing by two to three times versus pre-disruption levels, while charter rates are up 28% from December, according to Clarksons.

Furthermore, Hamburg-based maritime technology firm OceanScore has calculated that the widescale diversion of marine traffic is fuelling shipping companies’ costs due to significantly higher exposure to the EU Emissions Trading System (EU ETS), which imposes liability for 50% of emissions for voyages to and from the EU and 100% for port calls and transits within the bloc.

OceanScore has estimated the route via the Cape has tripled bunker consumption due to the longer distance and an approximate 25% increase in sailing speed from 16 to 20 knots, based on its AIS tracking of mainly container vessels.

“We have observed increased speeds to compensate for at least some of the longer distance – to keep sailing times and the need for additional tonnage to be deployed at acceptable levels – and this has an inevitable impact on fuel consumption and emissions,” OceanScore’s co-Managing Director Albrecht Grell says.

Rising EUA requirement for boxships

Modelling analysis conducted by the firm, based on the case of a 14,000-TEU container ship, has shown the number of EU Allowances (EUA), or carbon credits, necessary to cover emissions would rise from 1800 per voyage to 5200 per voyage with the current 40% liability requirement under the three-year phase-in of the EU ETS from 1 January 2024, rising to 70% next year and 100% in 2026.

This would translate into a near-threefold increase in EUA costs from €98,000 to €285,000 per voyage this year, based on the current carbon price of around €55 per tonne of CO2, or a hike of €18 per twenty-foot equivalent unit (TEU), according to OceanScore, which is supporting companies with its web-based ETS Manager application for tracking, accounting and allocation of EUAs.

Grell points out that, if the volatile carbon price returns to the level of around €100 that it reached a year ago, these costs would nearly double. “With complete phase in of the EU ETS to 100% of emissions, we would see another 250% increase that would bring the cost mark-up per box to around €80,” he says.

“It goes without saying that changes in sailing speeds, different vessel sizes, utilizations and the overall energy efficiency of the vessel used will all have a significant impact on the above analysis – but the general trend will be the same,” Grell adds.

Uncertain outlook for ocean freight

While €80 per box “sounds like a lot of money”, he underlines that EUA liabilities are still not the major cost driver for current high freight rates that reflect increased bunker expenses and tonne-miles sailed with the Cape route.

“The threat level to Red Sea shipping remains high, and it is uncertain how long this situation will persist for ocean freight given the Houthi attacks continue unabated. Shipping companies must, therefore, prepare and take account of higher emissions liabilities for the foreseeable future,” Grell says.

“Ultimately, however, the issue of EUA and other costs is secondary to ensuring the safety of crews and ships, which, of course, is the primary consideration and must remain paramount.”

Source：seanews

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Warren Takunda

Economic

Traders' Opinions

Stocks

Surprise Decline in US Jobless Claims Boosts Market Optimism_1

In a surprising turn of events, the number of individuals filing for unemployment benefits in the United States fell by 1,000 to 209,000 for the week ending March 8, 2024, defying market expectations which had anticipated a figure of 218,000. This unexpected decline follows a downward revision of the previous week's claims by 7,000 to 210,000, providing a positive signal for the labor market.

However, continuing jobless claims saw a slight uptick, rising by 17,000 to 1,811,000 in the previous week, slightly above market expectations of 1,900,000. The 4-week moving average, which provides a more stable indicator of labor market trends, decreased by 500 to 208,000, reflecting a consistent level of jobless claims over the past month.

Surprise Decline in US Jobless Claims Boosts Market Optimism_2

Market reaction to this data was mixed, with US stock futures initially paring early gains before rebounding on Thursday. Contracts on the S&P 500 and Nasdaq 100 rose by 0.3%, while the Dow Jones gained 140 points as investors assessed the implications of the latest economic data. The unexpected decline in jobless claims was accompanied by stronger-than-expected producer prices, signaling potential inflationary pressures, while retail sales figures fell short of expectations.

Surprise Decline in US Jobless Claims Boosts Market Optimism_3

The likelihood of a 25 basis points cut in the Federal Reserve's funds rate by June now stands at 59%, slightly lower than the 61% probability prior to the data releases. Investor sentiment remains cautious as they weigh the impact of these developments on the Fed's monetary policy trajectory.

On the corporate front, premarket trading saw tech giants such as Microsoft, Apple, Amazon, Meta, and Alphabet posting gains, while Nvidia and Tesla experienced declines following a Wells Fargo analyst's bearish outlook on Tesla's sales volumes for the year.

Surprise Decline in US Jobless Claims Boosts Market Optimism_4

Meanwhile, the US dollar index held steady at 102.8 as market participants analyzed the mixed economic data and its potential implications for Fed policy. The latest Producer Price Index (PPI) report revealed a significant increase in factory gate prices, exceeding market expectations and adding to the case for inflationary concerns. Despite the unexpected decline in jobless claims, weaker-than-anticipated retail sales growth for February suggests potential headwinds for consumer spending.

Surprise Decline in US Jobless Claims Boosts Market Optimism_5

In the bond market, the yield on the US 10-year Treasury note rose for the fourth consecutive day, reaching over 4.2%, its highest level since the beginning of the month. This upward movement reflects investors' confidence in the Fed's stance on interest rate cuts, with expectations now leaning towards a reduction in June.

Overall, while the unexpected decline in jobless claims provides a positive signal for the labor market, investors remain cautious amidst mixed economic data and uncertainties surrounding the Fed's monetary policy outlook.

To stay updated on all economic events of today, please check out our Economic calendar

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