● Insurance Giant Mass Mutual purchases $100 million in Bitcoin
● Saylor, MicroStrategy lead $650 million debt offering
● Forex Markets Slump as Stimulus Money Continues to Come up Short
As always, welcome again to this week’s edition of Overbit Insights, where we try and highlight some of the more prominent trends in the markets. With what appears to be a recurring trend now, one of our most significant themes is the continued, massive bets on Bitcoin made by institutional names.
Today’s edition starts off with just one of these stories. On Thursday, Dec. 10, it was reported that Massachusetts Mutual Life Insurance Co. had purchased $100 million in Bitcoin for its general investment fund.
With this move, Mass Mutual becomes the latest to throw their hat into the cryptocurrency investment ring, perhaps one of the more unlikely as well. Most would imagine that insurance companies would be incredibly conservative and orthodox with their fund management, so a move of $100 million speaks volumes to their conviction.
On top of this investment, Mass Mutual made another inroad at the cryptocurrency space - acquiring a $5 million minority stake in NYDIG, a subsidiary of Stone Ridge that provides cryptocurrency services to institutions. According to their statement, NYDIG will provide custodial services for Mass Mutual, adding to NYDIG’s more than $2 billion in assets under management. According to Bloomberg, “The investment in Bitcoin will represent 0.04% of the general investment account of nearly $235 billion as of Sept. 30, MassMutual said.” Their spokeswoman said in an email, “We see this initial investment as a first step, and like any investment, may explore future opportunities,” indicating that although it’s early, this might just be the first step for the insurance giant.
Keeping on with the theme of massive, institutional bets, we switch our focus to MicroStrategy. The company made waves these past few months when it was revealed they moved $250 million of their treasury into Bitcoin back in August. They followed this up with another $175 million in September, bringing the total up to a staggering $425 million in Bitcoin bought.
Even with these massive moves, it seems MicroStrategy cannot get enough exposure to Bitcoin. On Monday, Dec. 7, the company announced they would be raising $400 million in debt instruments to buy Bitcoin. Just two days later, they upped the raise to $550 million. All in all, this would represent Bitcoin purchases of nearly $1 billion by a publicly-traded company in the United States. Even more compelling is at what levels these purchases are coming in at. This isn’t sub-$1000 purchases back in 2014. These are multi-million-dollar buys coming within a few percentage points from all-time highs. Looking at these two stories, it certainly seems there are some bullish tailwinds at play for Bitcoin in the future, which sits at $18,760 at the time of writing.
We close out today’s edition of Overbit Insights by taking a look at the traditional markets. Starting with the U.S. economic situation, it seems that stimulus negotiations continue to go nowhere. House Majority Leader Nancy Pelosi has expressed optimism in recent days for the nearly $900 billion stimulus plan up for debate. However, in recent days Senator Leader Mitch McConnell has said that Senate Republicans have no intention of signing this bill, presumably for partisan reasons. This statement left investors feeling risk-on markets and into safe-havens, primarily the U.S. dollar, which pushed the greenback up against its major rivals like the EUR and GBP.
In contrast, we see the European Central Bank (ECB) continues to show receptiveness towards stimulus money for the Eurozone economy. They have further expanded their so-called “Pandemic Emergency Purchase Program” by more than €500 billion. Their hope is that this money will serve as one of the final bulwarks before vaccine distribution ramps up in the coming months.
Hopes are certainly high for a rebound given the recent vaccine developments, but it seems undeniable that countries are at the whim of the bailout money (or lack thereof) offered by the central banks. To us, this seems like COVID-19 has exacerbated the trend of fiat money and cryptocurrencies like Bitcoin being differentiated. These massive funds moving real, U.S. dollars into Bitcoin are pretty easy to spot as definitive proof of this trend.
Thanks as always for reading this edition of Overbit Insights. Overbit.com will always keep you updated on the latest happenings going around in emerging and traditional markets.