Crypto Mining Stocks Could Keep Beating Bitcoin in ‘Modern-Age Digital Gold Rush’

Crypto Mining Stocks Could Keep Beating Bitcoin in ‘Modern-Age Digital Gold Rush’

Bloomberg

(Bloomberg) – The Bank of Russia increased interest rates for the first time since 2018 and said further hikes are likely after inflation accelerated faster than expected.The benchmark rate was raised 25 basis points to 4.5% on Friday. Just three analysts in a Bloomberg survey of 41 economists forecast the move, with the rest predicting a hold. Bloomberg reported earlier this week that the rate could be raised to 5.5% by the end of the year.The central bank considered a bigger increase on Friday, but decided that policy changes should be gradual, Governor Elvira Nabiullina, who was wearing a brooch in the shape of a hawk, said at a news briefing after the decision.“Time is of the essence,” she said. “If you postpone a rate hike, inflation may accelerate and inflation expectations won’t decrease. This will move inflation further from the target and that will require a more significant rate hike in the future.”The ruble climbed and 10-year bond yields rose to their highest level in a year.The move follows big hikes in Brazil and Turkey this week, highlighting how inflation and rising Treasury yields are becoming a problem across emerging markets. In Russia, food prices in particular have shot up, adding to a decline in living standards during the pandemic.“I think another 25 basis-point hike is coming in April or June, but April is a bit more likely,” said Tatiana Orlova, an analyst at Emerginomics in London, who correctly forecast Friday’s decision. “Then the central bank might take a pause to take stock of the impact of the hikes on the economy.”Annual inflation accelerated 5.8% as of March 15, the fastest pace in more than four years, but the central bank expects it to peak this month, according to the statement. Inflation is running above forecast and is expected to return close to the target of 4% in the first half of 2022, it said.A return to neutral policy, which would imply a rate of 5%-6%, could be reached this year, but it’s not a given, Nabiullina said.What Our Economists Say:“The central bank’s next move depends on the data, but this tightening cycle is likely to be front loaded to contain inflation. Two more hikes in April and June would provide room to maneuver in the second half of the year.”– Scott Johnson, Bloomberg Economics. Here’s the full INSIGHTA government plan to increase spending in the first half of the year to help revive the economy from the pandemic may also propel inflation. Growth is recovering quicker than expected and will be supported by the improved global outlook, the central bank said.The threat of new U.S. sanctions has clouded the outlook for the ruble, which could add new inflationary pressures in coming months. Relations between Russia and the U.S. reached a new low this week after U.S. President Joe Biden vowed to make the Kremlin “pay a price” for election interference.Nabiullina downplayed the risk of penalties on ruble sovereign bonds, a measure being considered in Washington, saying it wouldn’t create a systemic risk because the level of outstanding debt is low. The move could cause short-term liquidity problems, she added.“The surprising rate hike not only reflects concerns about inflation, but also about the rising risk that the U.S. may impose another round of sanctions,” said Piotr Matys, a strategist at Rabobank in Moscow. “The main objective is to provide the ruble with support.”(Updates to add comments from central bank governor from third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

Morgan Stanley to Offer Crypto Access to Some of its Most Affluent Clients

Crypto Morgan Stanley to Offer Crypto Access to Some of its Most Affluent Clients

The rich wanted in on the crypto action. Banks want happy customers. So, it’s perfectly natural that the wheels have been put in motion for Morgan Stanley to offer crypto access to its clients.

But the plan does come with some interesting stipulations. The Morgan Stanley crypto investors have to meet a litany of qualifications to be able to gain access to Bitcoin.

For starters, no newbies. Account holders must be clients for at least six months to be able to gain crypto exposure. This seems odd because the big bank won’t be able to use crypto access to draw in new customers. But because Morgan Stanley (BYSE: MS) is the first major U.S. bank to grant access to clients, they’re treading lightly at first.

Secondly, the plan is for Morgan Stanley to offer crypto access only to those with “an aggressive risk tolerance.” It’s almost as if the bank is warning its clients to stay away from cryptocurrencies. Even those that fit the bill will only be allowed to invest 2.5% of their total net worth in crypto.

Lastly, here’s the big catch… Only those with at least $2 million in assets held by the bank will be allowed to invest in crypto. The rich folks either too busy or too incompetent to venture into the world of crypto on their own finally got their bankers to do it. As funny as all of this is, it’s actually good news for Bitcoin bulls.

Behind the Decision for Morgan Stanley to Offer Crypto

Morgan Stanley has been crypto curious for a while now. Back in 2017 when initial coin offerings were happening by the hour and cryptocurrencies were on the tip of everyone’s tongue, Morgan Stanly floated an idea. The bank wanted to launch an investment tool that would be tied to Bitcoin. But the plan was scrapped. And the bank’s interest in crypto appeared to fade for a spell.

This announcement for Morgan Stanley to offer crypto access came shortly after another announcement. Counterpoint Global, which is a unit of Morgan Stanley, was exploring whether and how it could make a bet on Bitcoin.

At the time, it seemed unlikely considering the regulators and the bank as a whole would need to sign off on it. But it signaled an increasing desire for Wall Street to get into cryptocurrencies. And that desire appears to be on the cusp of being fulfilled.

According to the memo, Morgan Stanley will enable ownership of Bitcoin to its clients through three funds. Galaxy Digital, which was founded by former hedge fund manager Michael Novogratz, runs two of the funds. The third is overseen by a partnership between FS Investments and NYDIG – two alternative investment outfits.

Galaxy Digital was established for the purpose of offering diversified financial services in digital assets, cryptocurrencies and blockchain technology. Created in 2018, the firm touts itself as “the bridge between crypto and the institutional worlds.” This move by Morgan Stanley firmly cements Galaxy as doing just that.

The FS Investments and NYDIG partnership fund is another strong way into the crypto world. NYDIG is known for its secure Bitcoin ownership and management platform. And FS Investments’ well-known for its ability to streamline crypto investing. Together, the duo will allow Morgan Stanley clients an easy point of entry to crypto.

Crypto’s Push into the Mainstream

The move by Morgan Stanley to offer crypto is merely the latest in a list of institutions entering the crypto space. Mastercard (NYSE: MA) announced it would be bringing crypto onto its network. Crypto exchange-traded funds (ETFs) are a thing now. Tesla (Nasdaq: TSLA) went in big on Bitcoin and plans to accept it as payment for its vehicles. Despite digital currency derision from CEO Jamie Dimon, JPMorgan Chase launched a digital coin of its own not long ago. The Dallas Mavericks recently announced they would accept Dogecoin for ticket and merchandise purchases.

On top of all of this widespread crypto adoption, there are the increasingly popular crypto-adjacent non-fungible tokens (NFTs). And here’s an explanation of NFTs. These works of digital art operate on blockchain technology. And they’re minting new millionaires all over the place. Legendary auction house Christie’s has even got in on the action. They’re becoming a popular asset class in their own right. And that’s only helping push crypto as a whole further into the mainstream.

As NYDIG CEO Robert Gutmann pointed out in a press release, institutional adoption of Bitcoin is expanding. Despite this, financial advisors don’t have many options to add cryptocurrency to their clients’ portfolios. But Morgan Stanley is looking to change that. This could be a watershed moment for crypto – or more specifically Bitcoin. If and when other big banks start granting crypto exposure to everyday investors, regulators are going to come knocking. Maybe then government agencies will finally come up with a cohesive classification of crypto…

The Financial Crimes Enforcement Network doesn’t consider crypto to be legal tender. The SEC considers crypto to be a security. And The IRS views crypto as property. But at the same time, that’s kind of perfect for a decentralized digital token.

The Bottom Line on the Plan for Morgan Stanley to Offer Crypto

This news doesn’t mean much for most Investment U readers. At least not yet… But it could (should?) be just the impetus for those on the crypto fence to consider getting in on their own. The beauty and the blemish of Bitcoin is that most institutions didn’t want to have anything to do with it. That’s led to a lot of volatility (both up and down). And it’s scared investors away.

On top of that, there is a bit of a learning curve. Crypto novices have to navigate exchanges. Then they need to figure out the best crypto wallet to store their digital currency. But the learning curve is proving to be worth it. And it’s not a bad idea to get over that learning curve before the rest of the institutional money starts pouring in.

If you’re looking for latest crypto news while getting the tips and tricks needed to navigate these tricky waters, we suggest signing up for our free Manward Press e-letter. It has helped countless subscribers overcome these obstacles and start building significant wealth… Via investment strategies of every stripe.

The world’s largest crypto fund manager is offering new trusts that invest in 5 different cryptocurrencies

Yuriko Nakao/Getty Images

Grayscale Investments is offering new trusts that invest in five different cryptocurrencies.

The new trusts will invest in Basic Attention and Decentraland tokens, Chainlink, Filecoin, and Livepeer.

Investor demand for digital currencies has never been higher, Grayscale CEO Michael Sonnenshein said.

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Digital currency asset manager Grayscale Investments announced Wednesday that it is offering five new investment trusts, bringing its single-asset lineup to 13.

The new trusts are launching into fairly niche segments of the crypto space, with three investing in Chainlink, Filecoin, and Livepeer, which are blockchain-based digital payment systems. One will invest in Ethereum-based Basic Attention tokens, while the fifth will hold coins in the virtual reality platform Decentraland. These trusts are among the first of their kind to solely invest in the digital currencies underlying each investment product.

“Digital currencies have reached an inflection point,” Grayscale CEO Michael Sonnenshein said in a statement. “Investor demand has never been higher, and every day we’re seeing new entrants to what has surely become a bona fide asset class.”

Decentraland is an Ethereum-based blockchain platform where users can operate VR applications. Decentraland

Grayscale said all five trusts are open for subscription by eligible individual and institutional accredited investors. The decision to launch them was based on assessment of investor demand and the integrity of each cryptocurrency, Sonnenshein told Bloomberg in an interview. The asset manager’s biggest product is still its $34 billion Grayscale Bitcoin Trust.

The new cryptocurrencies it has chosen have much smaller market values in comparison to bitcoin. Basic Attention tokens are known to track consumers' time and attention on websites, with the goal of understanding how to efficiently distribute advertising money.

Chainlink runs on the Ethereum blockchain, with a technology that enables delivery of price feeds into decentralized finance applications. Filecoin is a storage service provider that enables anyone to rent spare storage space on their computer, creating a huge source of data storage.

Livepeer is a decentralized video-streaming network for those who wish to add live or in-demand video to their networks. Meanwhile, Decentraland tokens can be used to buy up virtual plots of land and goods and services within its virtual-reality space.

Grayscale said it plans to continue a tradition of creating “novel pathways” for investors to access the opportunities that digital currencies may offer.