U.S. Central Bank or Fed Reserve is holding a very small percentage of Bond ETFs that has exposure to the corporate bonds that Bitcoin titan MicroStrategy is willing to sell to buy more of the digital asset.
U.S. Fed Reserve Indirectly Contributed to MicroStrategy Buying Bitcoin
Bloomberg’s latest report suggests that the U.S. Federal Reserve bought a tiny portion of bond exchange-traded funds (ETFs) in an effort to stabilize the economy during the COVID-19 pandemic of last year.
The Fed Reserve holds exposure to two such bond ETFs such as JNK and USHY. In fact, as of March, the central bank was the fourth-biggest holder of the SPDR Bloomberg Barclays High Yield Bond ETF (JNK).
JNK includes bonds from Carnival cruise line, Caesar Entertainment, American Airlines. Interestingly, a very small percentage of JNK share is also dedicated to the business intelligence firm, MicroStrategy.
Earlier this week, the country’s largest corporate holder of BTC (MicroStrategy) had announced on raising $400 million by selling its corporate bonds to buy more Bitcoins.
With the U.S. central bank still holding the ETF, this signifies that the Fed had indirectly contributed to MicroStrategy buying those Bitcoins.
Commenting on this, Athanasios Psarofagis, ETF analyst for Bloomberg Intelligence, said:
“It’s a pretty small amount, but to be honest I’m surprised to see it in there so soon. Fixed-income portfolio managers have a bit of discretion of which bonds they can have in the portfolio, so they could be adding a small potion ahead of a possible index inclusion.”
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It’s not just JNK, the Fed also holds the iShares Broad USD High Yield Corporate Bond ETF (ticker USHY) which also owns a small portion of the MicroStrategy debt.
MicroStrategy is already holding 92,079 BTC worth $3.4 billion at today’s valuation. The recent announcement for the sale of secured notes could potentially fund the company for buying additional 13,411 more Bitcoins as of today.
Interestingly, U.S. policy makers have taken on cryptocurrencies with no esteem. For instance, in April, Fed Chair Jerome Powell said that cryptocurrencies are nothing more than just vehicles for speculation.