At 3 o’clock in the morning Beijing time today, the US Federal Reserve announced that it would maintain the target range of the federal funds rate between zero and 0.25%, in line with market expectations. In today’s session, the US stocks “jumped up and down”, with a rapid dive and a rapid rise, showing that investors’ hearts are hanging high. As of the close, the Dow fell 0.15%, the Nasdaq rose 0.5%, and the S&P 500 rose 0.18%.
Unlike US stock investors, virtual currency investors ushered in a carnival today. Before the U.S. stock market, Bitcoin rose instantly, rising by about $1,000 in about an hour, rising above $20,000 for the first time in history. As of press time, Bitcoin has risen 9.43% against the U.S. dollar to reach 21,331 U.S. dollars, a sharp increase of more than 2,000 U.S. dollars from the day low.
Bitcoin price doubled in nearly three months
2020 is about to pass. In the global capital market, the most profitable is undoubtedly Bitcoin, the “originator” of encrypted digital currencies. Starting from the beginning of this year, Bitcoin has increased by about 200%. If the price of Bitcoin was at its lowest point in March at the beginning of the year at 3,783 dollars per coin, to now it is calculated at 21,000 dollars, the increase is about 460%.
Bitcoin’s recent rise has been particularly rapid, having doubled in the past three months.
Due to the scarcity of total amount (Bitcoin has a total limit of 21 million pieces), stable output (Bitcoin needs to be produced through “mining”) and similar settings to gold, Bitcoin is also regarded by its followers as “digital “Gold” and regarded as “safe-haven assets.”
On the news, British media reported that Ruffer Investment Management, a British investment agency, would switch 2.5% of its assets under management to Bitcoin to diversify its investment in anti-inflation bonds such as gold.
Ruffer Investment Management was established in 1994. According to public market information, it currently manages approximately US$20 billion in assets for 6,600 clients.
In the statement, Ruffer Investment Management stated that investing in Bitcoin is a small but effective insurance policy against the continued depreciation of major global currencies. Bitcoin diversifies the company’s investment in (larger) gold and inflation-related bonds, and can hedge some currency and market risks.
Although this is another good thing for institutional investors to enter Bitcoin, the company’s announcement has triggered controversy in the market. According to media reports, the “2.5% asset portfolio” stated by Ruffer Investment Fund in its announcement refers to a multi-strategy fund, not the entire asset portfolio, but a sub-fund with a total value of $600 million.
But as the doubts fermented, the spokesperson of Ruffer Investment Fund responded to the media interview and stated that the company announcement refers to “2.5%” of the 20.3 billion pounds (approximately 27.3 billion US dollars) fund, and the current holdings of Bitcoin are worth about 550 million pounds. (About 745 million US dollars), this configuration has been completed at the end of November.
In addition, JP Morgan Chase strategist headed by Nikolaos Panigirtzoglou pointed out in a report last week that the trend of investing in Bitcoin is gradually shifting from family financial institutions and wealthy investors to insurance companies and pension funds, although these insurance companies and pension funds Funds are unlikely to over-allocate Bitcoin, but even a small amount of funds entering the market can have a major impact.
Earlier, the American insurance company Massachusetts Mutual Life Insurance announced that its investment fund would purchase $100 million in Bitcoin, becoming the latest mainstream company to set foot in cryptocurrency assets.
Analysts said that this move by Vantone Mutual Finance will be a milestone for institutional investors to invest in Bitcoin. “As other insurance companies and pension funds follow suit, it can be expected that the potential demand for Bitcoin will rise in the next few years.”
Analysts predict that if pension funds and insurance companies in the United States, the Eurozone, the United Kingdom, and Japan allocate 1% of their assets to Bitcoin, the demand for Bitcoin will increase by $600 billion.
This month, Dalio, the founder of the world’s largest hedge fund Bridgewater, said that in the past decade, Bitcoin and other digital currencies have become a substitute for gold-like assets. Bitcoin and gold and other liquid wealth storage methods with limited supply have similarities and differences, so they can be used as a diversified investment in gold.
However, industry insiders have always reminded that no matter what direction the bitcoin price makes in the future, it is best for individuals not to participate in the futures trading of encrypted digital currencies without the participation of large institutions.
Today, U.S. block chain stocks rose sharply. Canaan Technology rose 6.74%, Marathon Patent rose 16.41%, and Riot Blockchai rose 5.70%.
The Fed staged the year-end “final drama”
At 3 a.m. Beijing time on December 17, the Federal Reserve announced its last interest rate decision in 2020.
According to Xinhua News Agency, the Federal Reserve announced that it will maintain the target range of the federal funds rate between zero and 0.25%, in line with market expectations.
Although the Fed did not directly adjust the scale of QE bond purchases today, it has strengthened its goal of maintaining bond purchases. The statement stated that it will continue to purchase at least US$120 billion in bonds each month until “maximum employment and price stability goals are achieved” substantive progress, while the previously stated period is “the next few months.”
Fed Chairman Powell said at a press conference after the interest rate decision that the Fed will not give precise indicators for “substantial progress” and will issue a warning before reducing bond purchases. Powell also reiterated that the Fed can expand bond purchases.
It is worth noting that Powell also commented on the current market, thinking that considering the current low interest rates, the current stock price is not necessarily high.
At the same time, the Federal Reserve raised its economic growth forecasts for the last three years and extended the period of temporary support for US dollar liquidity tools launched during the epidemic for six months. The median value estimated by Fed officials is: US GDP will fall by 2.4% in 2020, and the expected decline announced last September is 3.7%; the expected growth rate in 2021 will rise from 4.0% to 4.2%, and the growth expected in 2022 will rise from 3.0% To 3.2%; the expected growth rate in 2023 will drop from 2.5% to 2.4%, and the expected growth rate will drop from 1.9% to 1.8% in the longer term after 2023.
After the meeting, the Federal Reserve also announced that it would extend the validity period of the FIMA Repo Facility, a mechanism for US dollar liquidity swaps and repurchase agreements for overseas central banks, until September next year. These are all temporary tools introduced by the Federal Reserve after the outbreak of the epidemic in March this year. The Federal Reserve has previously extended the deadline to March next year.
In today’s session, US stocks “jumped up and down”, showing that investors’ hearts are hanging high. After the announcement of the Fed’s resolution, the three major US stock indexes briefly rose and then fell.
As of the close, the Dow fell 0.15%. The Nasdaq rose 0.5%, setting a new closing high. The S&P 500 index rose 0.18%.
US stocks of large technology stocks rose and fell mixed, Apple fell 0.05%, Amazon rose 2.4%, Netflix rose 0.97%, Google fell 0.22%, Facebook rose 0.04%, Microsoft rose 2.41%.
Anti-epidemic concept stocks fell across the board, Moderna fell 6.92%, Gilead Sciences fell 0.82%, Novavax Pharmaceuticals fell 4.23%, BioNTech fell 4.87%, and Pfizer fell 2.22%.
