In the context of a global mood of fiat currency rate cuts, should one buy gold, stock indices, or Bitcoin?
The trading for March 18th to March 22nd ended with a loss of $25,786.
It was a week marked by significant announcements, including the Bank of Japan's first interest rate hike in 17 years and the Swiss National Bank's first rate cut in nine years.
We managed to follow the movements of the Japanese yen and the Swiss franc relatively well. However, we once again incurred significant losses in cryptocurrencies, resulting in a break-even overall performance.
Due to the ongoing losses in cryptocurrencies, we will tighten our focus and trade more cautiously in this area.
Looking forward, the key points of interest are as follows:
- Eisuke Sakakibara, known as "Mr. Yen", predicts the Bank of Japan will maintain its current stance within the year, with potential intervention at 155 to 160 yen to the dollar.
Eisuke Sakakibara, a former Finance Ministry official known as "Mr. Yen", has stated that it's highly likely the Bank of Japan will not introduce additional rate hikes this year, given the current inflation trends. He mentioned, "I do not expect additional rate hikes this year. They have accomplished what they set out to do and will likely stay put for a while, watching how the situation develops." He also predicted that if the yen-to-dollar exchange rate rises to between 155 and 160 yen, the government and the Bank of Japan might intervene in the currency market, depending on the cause of such a shift, noting that "intervention can sometimes be necessary and effective."
(Source: Bloomberg)
We had anticipated buying pressure on the yen due to the Bank of Japan's rate hike, but the continuation of a weak yen suggests that intervention might be the only cap on the dollar/yen rate. The realistic intervention level, according to Mr. Sakakibara, would be between 155 and 160 yen.
- Unexpected rate cut by the Swiss National Bank, leading ahead of the ECB and the Fed
On the 21st, the Swiss National Bank unexpectedly cut its policy rate by 0.25 points, taking a lead over other global central banks by making a move to curb the rise of the Swiss franc.
The policy rate was reduced to 1.5%. This marks the first rate cut by a central bank among the ten most frequently traded currencies since the pandemic's subsidence. Most economists had predicted the rate would remain unchanged at least until June.
(Source: Bloomberg)
The outlook for the Swiss franc is bearish. However, as other currencies are expected to see rate cuts going forward, selecting currency pairs becomes challenging. Despite the Bank of Japan showing a continued easing stance, the global trend of currency devaluation makes it appear that the best assets to buy are not fiat currencies but gold, U.S. stock indices, and cryptocurrencies.
- U.S. SEC delays decision on Grayscale's Ethereum futures ETF
The U.S. Securities and Exchange Commission (SEC) has once again extended the deadline for approving Grayscale's Ethereum futures-based exchange-traded fund (ETF). A document released on March 22 stated that the SEC has pushed back the deadline from March 31 to May 30 to decide on the approval of Grayscale's Ethereum futures ETF. "The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein," the statement read.
Bloomberg ETF analyst James Seyffart suggested that Grayscale might use its futures ETF application as a "Trojan horse" to force the SEC's hand in approving a spot Ethereum ETF. "If the SEC approves Grayscale's application, it could serve as a basis for Grayscale to argue for approval of its own spot Ethereum ETF application," Seyffart explained.
(Source: Cointelegraph)
There was some anticipation of approval, and a significant sell-off occurred upon non-approval. Since the approval of Bitcoin, the SEC has indicated it will apply stricter scrutiny to future cryptocurrency-based ETFs, suggesting immediate approval is unlikely. However, approval years down the line could lead to a significant price surge and further capital influx into the cryptocurrency market.
P.S.
There was a terrorist attack at a concert venue in Russia, resulting in the death of over 115 people, with ISIS claiming responsibility.
This incident was attributed to ISIS, but direct terrorist attacks from Ukraine wouldn't be surprising in the future. Of course, it's also possible that some country indirectly supported ISIS in this act.
Surprise attacks as a strategy for smaller nations against larger ones are common. Even if Russia claims victory in the war against Ukraine, such terrorist attacks are likely to increase.
Relying on brute force for resolution at an individual level can lead to unforeseen repercussions and ultimately losses.
As Sun Tzu's Art of War states, the best strategy is to avoid conflict altogether
