The Federal Reserve's interest rate cut, Microsoft's review of Bitcoin investment proposals, and MicroStrategy potentially being included in the S&P 500 index.
Written by: 1912212.eth, Foresight News
Recently, the price of Bitcoin has surpassed $93,000, setting a new all-time high and coming within reach of $100,000. Google Trends data shows that Bitcoin's popularity has reached its highest point since 2021.
Additionally, CryptoQuant CEO Ki Young Ju released data indicating that the trading volume of retail-level Bitcoin (under $100,000) has reached a three-year high, signaling the entry of retail investors.
After the Bitcoin rally stalled and began to consolidate, some funds have flowed into meme coins, while some altcoins continue to show weakness.
What are the catalysts for the bullish price momentum in the future?
MicroStrategy Potentially Being Included in the S&P 500 Index
The S&P 500 Index, officially known as the Standard & Poor's 500 Index, is a stock market index compiled by Standard & Poor's that aims to reflect the performance of 500 publicly traded companies in the United States. The constituent stocks of the S&P 500 Index are selected based on a series of strict criteria, including market capitalization, liquidity, and profitability standards. The S&P 500 Index is one of the key indicators for global investors to measure the performance of the U.S. stock market and the health of the U.S. economy.
According to CCN, its new accounting standards may allow MSTR to be included in the S&P 500 Index.
If this comes to fruition, not only will the company's importance in the U.S. stock market be elevated, but its leading position in the industry and sustained profitability will also gain widespread recognition.
The latest MicroStrategy holding report shows that it currently holds 331,200 BTC at an approximate value of $16.5 billion, with an average holding price of $49,874. Based on a Bitcoin price of $90,000, MicroStrategy's Bitcoin holdings currently have an unrealized profit of over $13 billion.
MicroStrategy founder Michael Saylor is a staunch Bitcoin bull. According to crypto KOL Remo Uherek's analysis, MicroStrategy's most recent purchase of 51,780 Bitcoins was funded by the $21 billion it previously raised through stock financing, leaving it with $15.3 billion still available for Bitcoin purchases. If this pace of accumulation continues, the funds could last until the end of this year.
Based on this, MicroStrategy plans to privately place $1.75 billion in 0% convertible senior notes, maturing in 2029. These notes are unsecured and interest-free, convertible into cash or stock. The proceeds will be used to purchase Bitcoin and for general corporate purposes.
Market data shows that MSTR has performed exceptionally well in the U.S. stock market, with returns exceeding 450% this year.
If MicroStrategy is included in the S&P 500, it may lead to more qualifying companies being added to the index, thereby gaining greater attention and influence from traditional funds. This would undoubtedly be a significant positive for the crypto market.
Microsoft Reviewing Bitcoin Investment Proposal
On October 24, Microsoft submitted an A-form filing to the U.S. Securities and Exchange Commission (SEC), listing issues to be discussed at the next shareholder meeting. One proposal suggests that the tech company should explore Bitcoin as a hedge against inflation and other macroeconomic impacts. On October 30, Microsoft shareholders began preliminary voting on whether the company should invest in Bitcoin.
The document also indicates that Microsoft will vote on the topic of "evaluation of Bitcoin investment" at the shareholder meeting on December 10. Although the board has proposed to oppose this proposal, shareholders have differing opinions. Vanguard and BlackRock are currently Microsoft's largest institutional shareholders, holding 8.95% and 7.30%, respectively.
BlackRock is not a stranger to the crypto space, as it has a substantial Bitcoin spot ETF fund, and its chairman, Larry Fink, is also a proponent of Bitcoin. Another major shareholder, Vanguard, holds an opposing view, focusing solely on assets like stocks, bonds, and cash.
Currently, the voting results are difficult to predict, and the final answer may be revealed on December 10.
In the past two months, Japanese listed company Metaplanet, German listed company Samara Asset Group plc, U.S. company Solidion Technologies (battery materials supplier), Unitronix, Semler Scientific, Genius Group Limited, and Cosmos Health (healthcare group) have all included Bitcoin and other assets in their reserve assets.
If the vote passes, as a publicly traded company with significant influence, it could affect and encourage more listed companies to purchase Bitcoin.
Federal Reserve May Cut Rates by 25 Basis Points in December
Cryptographic assets, represented by Bitcoin, are increasingly influenced by macroeconomic factors, and the Federal Reserve's interest rate cut policy still holds significant sway over the inflow of funds into crypto assets.
On November 15, Federal Reserve Chairman Jerome Powell stated that due to the strong U.S. economy, the Fed does not need to "rush" to lower interest rates and will "carefully observe" to ensure that certain inflation indicators remain within acceptable ranges. Powell reiterated that the Fed's policy interest rate path will depend on upcoming data and the evolution of the economic outlook. He noted that the inflation rate is approaching the Fed's 2% target but has not yet been reached. The Fed will closely monitor core inflation indicators for goods and services excluding housing, which have been declining over the past two years. "We expect these indicators to continue to fluctuate in the near term, and the path to the Fed's 2% target may be bumpy at times. However, we still believe we are on track regarding inflation."
That evening, U.S. retail sales for October recorded a month-on-month increase of 0.4%, higher than the expected 0.3%, with the previous value revised from 0.4% to 0.8%. Due to the sustained consumer spending willingness, retail sales steadily grew in October. After the data was released, spot gold briefly dipped before rising, with a short-term fluctuation of $6; the U.S. dollar index's short-term increase expanded to over 30 points. The better-than-expected retail sales data led traders to reduce bets on a Federal Reserve rate cut in 2025.
According to CME's "FedWatch": The probability of the Federal Reserve cutting rates by 25 basis points in December is 61.9%, while the probability of maintaining the current rate is 38.1%.
BlackRock's Chief Investment Officer (CIO) Rick Rieder stated that he still expects the FOMC to cut rates by 25 basis points in December. Rieder noted that the current target range of 4.5% to 4.75% for the federal funds rate is restrictive. After a rate cut in December, the Fed is expected to pause further cuts, and the FOMC will assess the frequency and pace of rate cuts. By 2025, the Fed is expected to cut rates at least twice.
Additionally, Goldman Sachs Chief Economist Jan Hatzius still expects "the Fed to cut rates consecutively in December, January, and March, followed by one cut each quarter in June and September, but he believes the FOMC may slow the pace of rate cuts more quickly, possibly as early as the December or January meetings." However, unless the employment or inflation report for November is unexpectedly strong, the likelihood of the FOMC skipping a rate cut in December is low.
The next Federal Reserve meeting will take place from December 17 to 18.
Summary
In addition to the three catalysts mentioned above, Gary Gensler, the SEC chairman who has often been criticized for being too harsh on the crypto industry, may announce his resignation after Thanksgiving. Trump is also set to take office as the new U.S. president in January, which could lead to more lenient and friendly crypto regulatory policies. Bitwise Chief Investment Officer Matt Hougan has stated, "Every year, we survey hundreds of financial advisors and ask them what is hindering their investment in cryptocurrencies. Every year, they tell us that 'regulatory issues' are the number one reason. This is one of the reasons this election could change the game for cryptocurrencies. We will see a wave of institutional capital in the coming months."
The future market performance is worth watching.
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