2024-03-05 18:08
March 5 (Reuters) - As traditional institutions pour money into bitcoin, the cryptocurrency's latest meteoric rally to a record high may have more legs than in 2021, experts say. The world's largest cryptocurrency, notorious for its volatility, touched $69,202 on Tuesday, driven by excitement over new U.S. spot bitcoin exchange-traded funds (ETFs) and expectations the Federal Reserve will begin cutting U.S. interest rates this year. Since bitcoin has less than two decades as a financial asset, predicting its price trajectory remains extremely challenging. Just months after retail exuberance helped drive bitcoin to its previous record in November 2021 the cryptocurrency crashed, taking half the crypto industry with it. But more institutions committing long-term money could help the token sustain its high levels this time around, analysts and executives said. "Traditional institutions were once sitting out; today, they are here in full force as the principal drivers of the crypto bull market," said Nathan McCauley, CEO of Anchorage Digital, a crypto platform. In February, for example, software firm MicroStrategy (MSTR.O) , opens new tab said it had bought about 3,000 bitcoins for $155 million, while social media platform Reddit disclosed it had bought small amounts of bitcoin and ether. "The market is getting pushed around by some of the crypto industry whales," said Steve Sosnick, chief strategist at Interactive Brokers, adding he expected a short-term pullback in bitcoin's price as investors take profits. Another driver of sticky money are 10 new U.S. bitcoin ETFs, which provide a regulated option for traditional institutions or other buyers who may now feel safer investing in the cryptocurrency. Bitcoin has jumped more than 50% this year alone, with most of those gains coinciding with inflows into the new ETFs. Net flows into the products reached $7.9 billion as of Monday, according to BitMex Research. Sui Chung, CEO of CF Benchmarks, which is providing the index for six of the ETF, said he knew of some registered investment advisors and other big institutions that were buying into the ETFs, although he declined to name them. "For institutions, bitcoin’s core appeal is the diversification potential it offers," he added. Wealth manager Gerber Kawasaki has invested in BlackRock's spot bitcoin ETF via its AdvisorShares ETF (GK.P) , opens new tab, crypto outlet The Block reported , opens new tab last month. Such investors are typically less price sensitive, Bitfinex analysts wrote. "Any decline following the top of the current cycle could be less drastic than previous downturns. We saw a similar stable trajectory in price after a huge increase following the launch of gold ETFs," they added. Indicators that other analysts have used to gauge retail interest in cryptocurrencies, like Google searches, have remained muted compared to 2021 and 2022, according to Google trends. Trading in CME Micro Bitcoin futures, which at 1/10th of a bitcoin are affordable to wealthier retail investors, jumped from 32,007 on Feb. 27 to nearly 87,000 on Feb. 28, CME data shows. "If there is a retail frenzy, it started on Feb. 27th," said Chung. SUPPLY DYNAMICS To be sure, Bitcoin just came into existence in 2008 and remains a speculative asset dominated by retail investors. Its short track record makes it hard to predict how it will trade over multiple economic cycles. In contrast to commodities like gold, it has no economic fundamentals, so there is no reliable way to forecast its price, European Central Bank analysts warned last month. Still, as with commodities, supply factors are at play. One unknown is the potential price overhang from bitcoins trapped in bankruptcies that could be liquidated in coming months. As much as $35 billion worth of crypto was locked up in bankruptcies last year, although Reuters could not ascertain how much was in bitcoin. On the other hand, the upcoming bitcoin "halving" is set to further reduce supply, ultimately capped at 21 million bitcoins. That process last occurred in 2020, meaning there is more pressure on bitcoin's supply compared to the rally in 2021. That could push prices higher, said Zach Pandl, managing director of research at Grayscale Investments, which operates one of the spot bitcoin ETFs. "Bitcoin demand is colliding with increasingly tight supply," he added. https://www.reuters.com/technology/institutional-investors-may-help-bitcoin-sustain-new-heights-2024-03-05/
2024-03-05 17:38
WARSAW, March 5 (Reuters) - The European Commission has agreed to work on changes to European Union's agreement with Ukraine on the road transport of goods demanded by Polish truckers, the Polish infrastructure ministry said on Tuesday. A revision of the agreement which removed most restrictions for drivers transporting goods between Ukraine and the European Union was among key demands of Polish truckers who blocked some border crossings with Ukraine for several weeks around the turn of the year. "The European Commission has started the procedure for revising the European Union-Ukraine Agreement on the transport of goods by road," the ministry said in a statement. In November, Polish hauliers blocked border crossings with Ukraine protesting over what they said was unfair competition from their Ukrainian counterparts. They were demanding that the EU reinstate permits for Ukrainian transportation companies to operate in the bloc and for European truckers entering Ukraine, which were suspended in 2022 along with customs duties in a bid to help Kyiv following Russia's invasion. The protest was suspended in January after the government in Warsaw pledged to back their demands in talks with Brussels and discuss EU financial support for the affected Polish transportation companies. "We managed to convince our partners of the need to work on the revision of this agreement, which has become one of the main reasons for protests by Polish carriers," the statement quoted Infrastructure Minister Dariusz Klimczak as saying. The EU executive's proposals for changes in the agreement were sent for further negotiations by member states, the ministry said. https://www.reuters.com/world/europe/poland-says-eu-executive-agrees-revise-transport-agreement-with-ukraine-2024-03-05/
2024-03-05 17:30
PARIS, March 5 (Reuters) - Nicholas Kennedy, Euronext's (ENX.PA) , opens new tab head of commodities for the past six years, is to leave the European exchange, Euronext said on Tuesday. Kennedy will be succeeded by Robin Maisonneuve, who will take up the role of head of agricultural commodities on April 1 after joining Euronext last year as chief of staff to the CEO and head of special projects, Euronext said in an emailed statement to Reuters. Kennedy took charge of Euronext's commodity business, whose flagship product is its wheat futures contract , in late 2017 having already spent several years at the division. "Nicholas Kennedy decided to leave Euronext to pursue other professional projects," Euronext said, without giving further details on his departure. Kennedy declined to comment when contacted by Reuters. An automatic response from his Euronext email stated that he was leaving the company and had been on "gardening leave" since Feb. 21. Market participants noted that Maisonneuve was coming in without specific commodities experience. Before joining Euronext, Maisonneuve was a consultant and manager at McKinsey & Company and also worked at artificial intelligence startup Preligens, Euronext said. Euronext's main commodity products are its wheat, rapeseed and maize (corn) futures contracts. Kennedy oversaw the launch of cash-settled futures for durum wheat two years ago, though like other new commodity contracts it has struggled to attract participants. He also studied expanding Euronext's contracts into the Black Sea region, an increasingly important production and export zone for the global grain market. Euronext has looked at adding Romania as a physical delivery zone for its maize futures, Kennedy told Reuters last year. He had also worked on a Ukrainian wheat contract with Argus Media but those plans were stymied by Russia's invasion of Ukraine. https://www.reuters.com/markets/commodities/euronext-names-new-commodities-head-kennedy-leaves-2024-03-05/
2024-03-05 17:30
BRUSSELS, March 5 (Reuters) - Scepticism towards climate change and the green transition is greater in many European Union members than in neighbouring countries, the European Bank for Reconstruction and (EBRD) has found. The EBRD's survey for its 2023/2024 transition report shows sceptics and disengaged people were most common among a number of eastern European EU member countries on which it focuses than in the likes of non-members Tunisia, Moldova and Azerbaijan. "Our expectation was that there would be greater support for the green transition in the EU, but what we see is the opposite," Chief Economist Beata Javorcik told Reuters in an interview on Tuesday. EBRD defines sceptics as people who do not see climate change as a problem and disengaged people as those who accept it is, but are unwilling to bear the cost. These two groups made up well over half of those surveyed in EU members Lithuania, Estonia, Czech Republic, Germany and Latvia. Far-right parties are expected to profit from this growing scepticism in EU parliamentary elections in June. Javorcik reasoned that, in EU neighbours from North Africa to Central Asia, green policies seemed more distant, while in many EU countries the trade-offs for people were more visible. Javorcik said the higher energy costs, sparked by Moscow's cutting of gas supplies to the European Union after Russia's 2022 invasion of Ukraine, had made EU consumers more aware that a greener future would require increased energy prices. "Consumers are also workers and they are seeing how high energy prices are making European industry less competitive," she said. She said the EBRD had learnt by working in transition countries that reforms need broad-based support to succeed. A green future might offer more jobs, but people needed to be taken care of in the transition period. Javorcik said Europe should draw lessons from the U.S. backlash against globalisation, with losers not compensated by winners and a lower welfare safety net. "If you do not take care of people who lose as a result of the shock, there will be a backlash," she said. https://www.reuters.com/world/europe/green-scepticism-greater-eu-than-neighbours-ebrd-finds-2024-03-05/
2024-03-05 17:26
Tether's stablecoin reaches $100 bln in circulation Milestone comes as bitcoin's price hits record high Regulators, analysts concerned about opacity, size Tether says committed to stability, transparency LONDON/NEW YORK, March 5 (Reuters) - As Tether toasts $100 billion in circulation this week, the rapid rise of the world's biggest stablecoin has highlighted concerns about potential risks to wider financial markets. The digital dollar-pegged token is designed to keep a constant value, something Tether says that it does by holding dollar-denominated reserves for every token it creates. Crypto traders say the tokens are essential for moving funds in crypto quickly, without using the regulated banking system. "Tether plays a pivotal role in our day-to-day operations, primarily serving as a mechanism for moving funds swiftly between trading venues," said Michael Hall, founding partner of London-based crypto asset manager Nickel Digital. Regulators, however, have long-standing concerns that growing stablecoin reserves expose the broader financial system to bigger risks, because they act as a bridge between the crypto universe and mainstream financial markets. James Butterfill, head of research at asset manager CoinShares, said that Tether's dominance increases systemic risk within crypto. "If Tether fails for some unlikely reason, it would lead to a dramatic decline in trading volumes," he said. U.S. regulators have warned banks that stablecoin reserves could be subject to rapid outflows, for example if holders rushed to exchange such tokens back into traditional currency. A spokesperson for Tether said its "products provide real-world value by enabling the billions of unbanked people across the globe to access the global financial system when they couldn’t before." The spokesperson also said Tether "proactively works with law enforcement and regulatory agencies across the globe to halt the illicit use of stablecoin technology, having frozen several hundreds of millions in USDT connected to illicit activities." CEO Paolo Ardoino said in a statement in January that Tether is committed to "transparency, stability, and responsible financial management". Crypto markets have mostly recovered from the collapses that saw prices plunge in 2022. Bitcoin jumped more than 20% last week and on Tuesday hit an all-time high, driven by excitement around inflows into U.S. spot bitcoin ETFs . Tether is also growing fast. Around $29 billion worth was created in the last year, it said in a statement on Tuesday. WIDER IMPACT The crypto lobby has previously said that asset-backed stablecoins do not pose a systemic risk. But with Tether now holding nearly $100 billion worth of reserves in traditional banking institutions, Rajeev Bamra, Head of DeFi and Digital Assets Strategy at Moody's Investors Service said "anything going wrong with Tether is going to impact those banking institutions at the end of the day". "I think the concentration risk in Tether is huge," Bamra added, referring to Tether's dominance within the crypto world. S&P Global Ratings ranked Tether as a 4 in a stablecoin stability assessment last year, the second lowest on a scale of 1 to 5, citing a lack of information on custodians, counterparties or bank account providers of its reserves. Tether agreed to quarterly reserve reports under a 2021 settlement with the New York Attorney General's office. At the end of 2023, Tether's latest report says, its reserves held $63 billion of U.S. Treasuries, $3.5 billion of precious metals, $2.8 billion of bitcoin, $3.8 billion of "other investments" and $4.8 billion of "secured loans". Paul Brody, global blockchain leader at Ernst & Young, said that a reserve report does not constitute a full financial statement audit. Although various jurisdictions are developing stablecoin legislation, Tether is not currently subject to specific supervision by an authoritative body or rules about how or where it can invest its reserves, S&P Global Ratings analyst Rebecca Mun said in an interview late last month. Tether Holdings Ltd, which is registered in Hong Kong and owned by a company registered in the British Virgin Islands, says on its website it is "fully transparent", but it does not give details about where its reserves are held. Hall said Nickel uses Tether "cautiously", balancing the convenience with the downside risk of it losing its dollar peg. Crypto traders who rely on Tether say they draw confidence from it having previously maintained its peg and processed billions of dollars worth of redemptions during periods of crypto market turbulence, such as in 2022. "While no asset is without risk, especially in the volatile crypto market, Tether's track record positions it as a comparatively lower-risk option within the spectrum of digital assets," Hall said. https://www.reuters.com/technology/tethers-100-bln-stokes-stablecoin-stability-concerns-2024-03-05/
2024-03-05 17:25
March 5 (Reuters) - A coalition of labor unions said on Tuesday it is ending its boardroom fight at Starbucks (SBUX.O) , opens new tab after the coffee chain last week agreed to work toward reaching labor agreements. The Strategic Organizing Center (SOC), a coalition of North American labor unions, is withdrawing its three director candidates for the coffee chain's 11-member board one week before Starbucks investors were slated to elect directors to oversee corporate strategy at the company's March 13 annual meeting. The union confirmed what Reuters had reported earlier. Many large investors told the coalition, which includes the parent of Workers United, which represents Starbucks workers, they are optimistic Starbucks is committed to changes and plans to repair its relationship with employees, the sources said. "Investor concern with the board and management response to ongoing unionization efforts at Starbucks has been loud and clear, but last week's joint announcement from the company and Workers United of a settlement framework was welcome news that we hope means a fundamental change in direction," New York City Comptroller Brad Lander told Reuters. Starbucks on Tuesday said it appreciates the coalition's decision and added that its board is focused on "driving long-term value for all stakeholders, including partners, shareholders, customers, and farmers." "Starbucks has always been committed to doing the right thing – importantly, for our partners who are the heart of our business," the company said in a statement. The fight was closely watched on Wall Street because it marked the first time a labor union used tools traditionally employed by hedge funds to push for board seats at a corporation. The union coalition argued Starbucks' resistance to unionizing that began in 2021 tarnished the brand and hurt shareholders by weighing on the share price. This year's other big boardroom fight is between Disney (DIS.N) , opens new tab and two activist investors, Trian Fund Management and Blackwells Capital. The coalition hired lawyers, a proxy solicitor and a communications firm who usually work with large activist hedge funds on big campaigns. It nominated three candidates with White House, National Labor Relations Board and economic policy expertise and was pushing ahead in trying to convince shareholders, including big index funds, that Starbucks needs better oversight as it works to repair labor relations. "SOC Investment Group led an effective campaign with qualified candidates committed to preserving fundamental workers' rights and increasing long-term value, and the announced suspension of a contentious proxy fight is a win for workers and shareholders," Lander added. He said Starbucks' investors now expect the company "to continue investing in their workforce, and we will continue to be engaged." The city owned $157 million worth, or 1.64 million shares, of Starbucks at the end of December. While only about 370 U.S. Starbucks stores are unionized, the movement, as well as the proxy fight launched in November, tapped into growing support for organized labor after unions last year won concessions for Hollywood writers and autoworkers. Now the coalition, which did not obtain any concessions from the company, is pinning its hopes on last week's news that Starbucks and the union that represents its workers will work to create a "foundational framework" that could lead to collective bargaining agreements and the resolution of lawsuits. With this news now public, the coalition may claim victory, said Lawrence Elbaum, co-head of law firm Vinson & Elkins' shareholder activism defense practice. "With the group having achieved some of the changes it was pushing for, it may be a moment that will inspire others to mount copycat campaigns." The coalition's decision, follows last week's recommendations by the two main proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis that urged Starbucks shareholders to back all 11 company directors, arguing the coalition had not sufficiently made its case to win seats. But ISS wrote that the coalition, "has achieved at least a portion of what it ostensibly set out to accomplish." https://www.reuters.com/business/retail-consumer/labor-unions-end-starbucks-boardroom-fight-after-progress-bargaining-2024-03-05/
