Weekly Update: 18th of September
What happened between the 11th and 18th of September?
- Business intelligence firm MicroStrategy buys an additional 18,300 Bitcoin for $1.1 billion, increasing its holdings to 244,800 Bitcoin, worth approximately $14.6 billion. Read more
- Alternative asset management and technology firm ParaFi Capital will tokenize part of its $1.2-billion portfolio using the Avalanche blockchain and tokenization platform Securitize. Read more
- The Federal Reserve (Fed) is about to follow the trend among major central banks and start cutting its interest rates as inflation continues to cool down. Read more
MicroStrategy acquires an additional 18,300 Bitcoin
On the 13th of September, business intelligence firm MicroStrategy announced that it had acquired an additional 18,300 Bitcoin for $1.1 billion. Since August 2020, MicroStrategy has aggressively acquired Bitcoin and issued debt to finance its acquisitions. Since then, it has acquired 244,800 Bitcoin, worth approximately $14.6 billion and ~1.16% of the total Bitcoin supply. The strategic investment has paid off, as MicroStrategy has generated an unrealized profit of $5.39 billion while effectively acting as an indirect Bitcoin ETF for investors. This is also reflected in the MicroStrategy stock performance, which has risen by around 1,000% since August 2020, equating to over 16.25x the returns of the SPX over the same period.
ParaFi Capital plans to tokenize part of its 1.2 billion portfolio
According to a September 12th Bloomberg report, US alternative asset manager and technology firm ParaFi Capital has taken its first step towards partially tokenizing its latest venture capital fund using the Avalanche blockchain and the tokenization platform Securitize. Conveniently, ParaFi Capital has previously invested in both Securitize and Avalanche, making them logical partners for this endeavor. ParaFi is just one example from a growing list of asset managers exploring and implementing tokenization, with the most notable example being BlackRock’s BUIDL fund, launched in March on Ethereum. This trend has become unstoppable, and we expect more asset managers to follow suit. Furthermore, global bank Citi forecasts that the tokenization market will reach $5 trillion by 2030.
Fed to join other major central banks in easing interest rates
On the 12th of September, the European Central Bank cut its interest rate to 3.65% from 4.25%. It’s the second interest rate cut by the ECB this year, following a 25-basis-point reduction at its June meeting. During the past quarter, major central banks across the globe began their monetary easing cycles; however, the most important central bank, the Fed, chose to abstain this past June. Later today, the Fed is expected to follow this trend as it delivers its rate decision at the Federal Open Market Committee (FOMC). In recent days, traders have become increasingly confident that the Fed will cut interest rates by 50 basis points, potentially allowing for some upside growth in Bitcoin.
In other digital assets news
- Digital asset manager Grayscale launched its new XRP closed-end fund, on publication of the news, the XRP token jumped over 8%.
- Consumer protection group Consumer’s Research warns about Tether's reserves due to a lack of transparency and the absence of an independent audit.
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