The U.S. Federal Reserve Holds a Tiny Portion of MicroStrategy’s Bitcoins. Here’s How!

Published June 10, 2021 | Updated June 10, 2021

In Brief
  • It turns out that the Fed buying one of the bond ETFs last year has little exposure to the corporate bonds that MicroStrategy is willing to sell to buy Bitcoins.
  • The Fed holds exposure to two such bond ETFs – JNK and USHY.

The U.S. Federal Reserve Holds a Tiny Portion of MicroStrategy’s Bitcoins. Here’s How!

  • It turns out that the Fed buying one of the bond ETFs last year has little exposure to the corporate bonds that MicroStrategy is willing to sell to buy Bitcoins.
  • The Fed holds exposure to two such bond ETFs – JNK and USHY.

A recent report from Bloomberg suggests that the U.S. central bank aka Federal Reserve has been one of the early adopters of the Bitcoin-linked junk bonds. During the economic shifts taking place amid the COVID-19 pandemic last year, the Federal Reserve started buying the bond exchange-traded funds (ETFs) to get the economic activity going.

Interestingly, it turns out that a very small percentage like 0.01 of this ETF, commonly referred to as the JNK ticker, has been dedicated to MicroStrategy junk bonds issued earlier this week on Tuesday. The business intelligence firm is looking forward to raising $400 million by the sale of its corporate bonds to buy Bitcoins.

Now, with the Fed still holding the ETF, it technically means that it has contributed to MicroStrategy buying those Bitcoins. Bloomberg Intelligence’s ETF Analyst Athanasios Psarofagis said:

“It’s a pretty small amount, but to be honest I’m surprised to see it in there so soon. Fixed-income portfolio managers have a bit of discretion of which bonds they can have in the portfolio, so they could be adding a small potion ahead of a possible index inclusion.”

Interestingly, Fed’s tiny exposure to the BTC isn’t just limited to the JNK ticker. Bloomberg notes that one Fed’s another holding – the iShares Broad USD High Yield Corporate Bond ETF (ticker USHY) – also has a small part of Microstrategy’s debt.

Bitcoin (BTC) Bashing from Lawmakers Continue

Interestingly, it turns out that the Fed which has been the biggest critic of crypto has its own feet into it. In another development on Wednesday, June 9, Massachusetts Democratic Senator Elizabeth Warren said that the U.S. government should step up the oversight of the crypto market and thus protect consumers from rapid scams popping out recently.

In her interview with Bloomberg TV, Warren called cryptocurrencies the “wild-west” and said that cryptos are “not a good way to buy and sell things and not a good investment and an environmental disaster.”

Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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Bhushan Akolkar 541 Articles
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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