Recently, the Federal Reserve completed a 'covert operation'—silently purchasing $43.6 billion in U.S. Treasury bonds. On May 8 alone, it bought $8.8 billion in 30-year long-term Treasuries, with another $34.8 billion purchased earlier last week.
Some analysts have offered a more cautious interpretation: the Federal Reserve has not officially called this QE; they are simply reinvesting the principal of maturing bonds to avoid a rapid shrinkage of their balance sheet. Do you understand QE? Quantitative easing means flooding the market with money, although this time it is not as obvious as in the previous cycle! But it’s coming soon!!
In this regard, analysis points out that technically, this is not wrong, but buying bonds is buying bonds, regardless of what label is attached. Quietly returning to quantitative easing (QE) is not a usual operation for the Federal Reserve, and the scale of U.S. Treasury purchases is not small. The Federal Reserve's actions represent a form of 'invisible easing.'
Some traders have already noticed this, and savvy investors should too; commodity traders are particularly sensitive to this monetary 'sleight of hand.'
Bitcoin is that 'back-alley asset that decent investors pretend not to go to.' The reasons for Bitcoin's rise include: skepticism towards central banks and their fiat currencies; having undergone a halving a year ago and entering the typical upward phase of a four-year bull market cycle; a notable shift in the Trump administration's attitude towards cryptocurrencies; and the influx of institutional and retail funds into Bitcoin ETFs, further solidifying Bitcoin's status as a mainstream financial asset.
Analysis points out that if the Federal Reserve continues to 'sneakily' press the QE button, Bitcoin may become the 'midnight convenience store burrito' of the investment world—highly volatile but satisfying.
Are major actions approaching?
Analysis states that the Federal Reserve's 'quiet actions' may signal that major movements in the market are about to come. Although gold, Bitcoin, and Latin American markets have seen decent gains, the Federal Reserve's silent return to QE signals that these upward trends may still accelerate further.
Although QE typically boosts U.S. stocks, in the current context of declining trust in the dollar and escalating geopolitical tensions, gold, Bitcoin, and Latin American markets may represent the true 'storm shelters' with greater safe-haven value and profit potential.
