章魚同學Nikki

Why has non-yielding gold suddenly become appealing?

In the past, everyone looked down on gold because it doesn’t earn interest, and storing it in US or UK vaults incurs an annual storage fee of 0.05% to 0.1%. In contrast, US Treasuries have been the go-to asset for global central banks for decades.

However, in the last two years, the game has changed, and the US has shattered the rules. After the outbreak of the Russia-Ukraine conflict, the US ordered the freezing of about $300 billion in assets from Russia's foreign exchange reserves.

Now, central bank governors worldwide are losing sleep, realizing that money held in the US can be just a string of numbers that can be wiped out at any moment if the US is unhappy.

Despite the US having high interest rates, with the benchmark hitting 5.25% - 5.5%, why are central banks still cutting losses and selling off US debt?

The US fiscal situation has turned into a massive black hole of refinancing. By 2024, the total US national debt will exceed $34 trillion.

Currently, the interest on the debt alone exceeds $1 trillion annually. The US government can magically print $2.7 billion a day just to pay the interest.

You chase after its 5% interest, but it dilutes your principal with crazy money printing. After accounting for inflation, the actual purchasing power of holding US debt is shrinking. At this point, gold, which doesn’t yield but is limited in supply and will never depreciate, has become the only remedy for hedging against the dollar's bad debts.

So, who is buying?

Global players have split into two distinct camps:

1. Europe’s Defensive Camp: France, Germany, Italy
They have solid foundations; although they haven’t been buying much in the last two years, they are tirelessly bringing the gold stored abroad back home.

2. Asia’s Offensive Camp: China, India, Turkey, Poland
Poland has increased its gold reserves to 20%. China has reduced its US debt holdings to the lowest level in over a decade.

Established European nations are preparing for potential political fallout with the US, while emerging Asian markets are using physical gold to build an independent trade circle that can withstand dollar sanctions.

$TSLAB $SPCX #USDT

What's the key shift today?

1. SpaceX IPO has reignited the entire space sector.
Funds are rushing into comparable companies following SpaceX's listing. Names like RKLB, SPCE, ASTS, and LUNR naturally surged first.

2. Rocket Lab has its own independent bullish factors.
RKLB joining the Nasdaq 100 will bring expectations of passive fund inflows, so it’s not just driven by SpaceX sentiment.

3. Some stocks are climbing due to short-term sentiment, not fundamentals.
For something like SPCE, if it jumps over twenty points in a day, it's more about sector speculation and short covering, rather than a sudden major improvement in the company's fundamentals.

4. SpaceX may also compress valuations of its peers.
If SpaceX's official listing sets a benchmark for valuations, companies like RKLB, ASTS, and RDW, which have already surged and are considered pricey, may face a market revaluation.

Today, space-themed stocks are broadly up/strong, but this is driven by the SpaceX IPO theme, which is hot in the short term with significant volatility. If SPCX opens strong, the sector could continue to rally; if SPCX opens below gray market expectations, names with high elasticity like SPCE, LUNR, and RDW are likely to pull back first.

How's the closed-end fund holding SpaceX performing right now?

SpaceX hasn't officially made its first trade yet, so the market reference price is mainly from the grey market/pre-IPO crypto contracts:
On Hyperliquid, SpaceX pre-IPO futures are pointing around $175-$176, which is about 30% higher than the $135 IPO price, but this isn't the Nasdaq stock price.

The main closed-end/investment trust products holding SpaceX are:
1. Scottish Mortgage Investment Trust, SMT.L, a large UK investment trust
SpaceX is a core holding, making up about 19-21% of its NAV, with a holding value close to $4 billion. It fell 1.7% last week because the S&P 500 didn't adjust rules for SpaceX.

2. Destiny Tech100, DXYZ, a US-listed closed-end fund
Invested in private tech companies like Anthropic, SpaceX, OpenAI/xAI, etc. As of March 31, SpaceX accounted for 14.5% of the portfolio. This fund is very volatile, spiking about 30% in one day in May, followed by a drop of over 25% the next day.

3. Fundrise Innovation Fund, VCX
Also a product giving retail investors exposure to private tech stocks, holding Anthropic, OpenAI, SpaceX, etc. It previously surged due to expectations of SpaceX/AI IPO, then sharply corrected, having fallen about 64% from its peak and even dropped 45% in one day.

4. RIT Capital Partners, RCP.L, a London-listed investment trust
Holds SpaceX, with its SpaceX holding expected to rise to about £102.3 million by the end of 2025, becoming its eighth-largest holding.

5. Schiehallion Fund, MNTN.L
An investment trust under Baillie Gifford, focused on late-stage private companies, also reportedly holding SpaceX, though the latest exact weight isn't available.

Why is SpaceX so hot, yet some funds are dropping?
These funds aren't buying SpaceX's actual shares; they are a mix of “SpaceX exposure + fund premium/discount + liquidity + valuation update timing.” Many of these funds had already been pumped up due to expectations of the SpaceX IPO, leading to significant premiums over NAV. Once the IPO is actually priced, the market will recalibrate. If you could directly buy SPCX, why pay a high premium for an indirect fund?

Additionally, the SpaceX equity held by these funds might have lock-up periods, meaning they can't sell immediately; NAV might also be updated quarterly, not reflecting the IPO price in real-time. DXYZ, VCX, and others face issues with SPV transparency, private equity authenticity, and valuation discounts, so when they drop, they do so much harder than regular funds.

Is BTC really in trouble?

First off, let's stress that over-focusing on the short-term doesn't do us any favors for our long positions.

As we probe the 61,100 USD level again, let's see what happened in the market this week:

1. Continuous net outflows for 12 trading days.
2. Net outflows for the US spot BTC ETF reached a whopping 3.4 billion USD.
3. IBIT saw nearly 980 million USD in net outflows this week, including a massive dark pool block trade of 1.26 billion USD on May 26, which shattered institutional confidence in the market.
4. MSTR rarely sold coins.

Why did MicroStrategy sell 32 BTC?
It's because they need to pay interest on their preferred shares and had to use BTC as a cash machine to support their cash flow. The market immediately realized that even the big players are feeling the pinch of long-term high interest rates. This week, BTC went straight to test MicroStrategy's average holding cost.

Where did the money go?

In the same week, the Nasdaq 100 and S&P 500, dominated by tech stocks, were on a crazy money-raising spree. The biggest money-sucking black hole this week was the SpaceX IPO, targeting a valuation of 1.75 trillion USD. This epic tech project linking primary and secondary markets has lured all the high-risk speculative funds from top family offices and hedge funds around the globe. AI and semiconductors are fiercely intertwined: leading AI stocks like NVIDIA, Microsoft, and Broadcom saw over 4.5 billion USD in inflows during the latest earnings season and AI summit hype.

This drop actually serves two core purposes for the smart money:

1. De-leverage!
During May, as BTC surged towards 80,000 USD, retail and high-leverage traders jumped in, pushing long positions to historic highs. The key point is that this group isn't buying spot; they're just trading contracts and leeching off the spot price. For institutions to ignite the next real bull market, they first need to smash the price and completely clear out these long positions operating with 20x or 50x leverage.

2. Malicious testing
When the price approaches MicroStrategy's cost basis, even nearing 60,000, the smart money is actually testing. When the price gets cheap enough, will the previously exited ETF funds re-enter for arbitrage in the 57,500 - 60,000 range?

This is a malicious test of price discovery.

$BTC $USDC

The bullish trend has been pretty much washed out, and the love-struck mentality is back on.

This time, the big dog raked in over $1.8 billion in coins from June 2nd to 3rd, with the vast majority (over $1.5 billion) all in long positions. In the past 10 days, BTC spot ETF has seen a net outflow of over $3 billion...

And the source of it all might just be someone intentionally dropping the news: the dead bulls at MicroStrategy actually sold BTC, but here’s the kicker: just 32 coins ($2.5 million)... For their $59 billion valuation, that’s just a drop in the bucket. I get it, it’s definitely a smokescreen from other competitors. I’m going to go against the grain here and throw them a lifeline. I’m going to keep buying, heehee, now they’ll surely love me even more.

However, I’ve noticed that the big dog is more crisis-aware now, as a lot of suitors have run off to flatter tech stocks, even getting drawn in by the sexy allure of Victoria's Secret next door...

The big dog is once again testing the $63,000 resistance level, flushing out the shaky short-term holders... There are still bets being placed behind the scenes that it won't hold up against the pressure and will drop back down to $57,500, but thankfully the odds are only about 18%.