Bond

Bernstein: Possible sources of funding for crypto reserves include revaluing and reallocating gold reserves, issuing government bonds, etc

ChainCatcher news, according to The Block, analysts from research and brokerage firm Bernstein pointed out that President Trump's statements regarding cryptocurrency reserves have evolved from "Bitcoin as a national reserve" during the campaign to "national digital asset reserves," and recently to "cryptocurrency strategic reserves." Analyst Gautam Chhugani stated in a client report released on Monday: "It is currently unclear whether a strategic reserve can be created solely through a presidential executive order. If it involves the Federal Reserve's balance sheet, specific legislation would be required from Congress."While there are views that the U.S. Treasury's Exchange Stabilization Fund could be used to purchase cryptocurrencies without the need for immediate congressional approval, the fund's primary responsibilities are managing foreign exchange and maintaining financial stability, and using it for crypto reserves may face legal and political challenges. If crypto reserves are approved by Congress, Bernstein analysts proposed several potential sources of funding, including re-evaluating and reallocating gold reserves, issuing government bonds, reallocating Federal Reserve balance sheet funds, or collaborating with U.S. institutional asset managers.Regarding asset allocation methods, analysts suggested a market-cap weighted distribution: 75% allocated to Bitcoin, 11% to Ethereum, 4% to Solana, and the remaining 10% to other assets. Bernstein analysts believe: "A realistic path may be for the U.S. government to persuade Congress to accept Bitcoin as a new form of digital gold/global store of value and to conduct a gold re-evaluation/gold reserve reallocation."

U.S. bond investors expect a shift in Federal Reserve policy, and the yield on 10-year U.S. Treasuries may fall below 4%

ChainCatcher news, according to Jinshi reports, U.S. Treasury investors are beginning to bet that the Federal Reserve's policy focus will shift from curbing inflation to addressing the slowdown in economic growth. Under this expectation, U.S. Treasuries have risen for six consecutive trading days, with yields falling to their lowest level of the year.Morgan Stanley strategists indicate that if the market's expectations for Federal Reserve policy shift slightly, the 10-year U.S. Treasury yield could potentially fall below 4%. Currently, traders have resumed expectations for two rate cuts by the Federal Reserve this year (each by 25 basis points) and anticipate further cuts next year to around 3.65%. The bank believes that if market expectations for rates drop to 3.25%, the 10-year U.S. Treasury yield could fall below 4%.Recently, U.S. Treasury auctions have performed strongly, with Wednesday's auction of $44 billion in seven-year Treasuries yielding 4.194%, lower than the pre-auction market close of 4.203%, indicating demand exceeded expectations. Analysts point out that investors see reasons for rate cuts not only from economic growth indicators but also from U.S. fiscal and immigration policies, including Trump's threats to impose tariffs on major trading partners.So far this year, U.S. Treasuries have risen 2.3%, surpassing the S&P 500 index's increase of 1.3%. The personal consumption expenditures price index for January, to be released on Friday, may become a key data point influencing market expectations.
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