Today crypto continues to decouple from tech as Jay Powell acknowledges its staying power as an asset class, Tesla dumps and pumps on a downgrade from Morgan Stanley, and the Bank of England surprises markets with a 0.50% rate hike as it concedes inflation is not cooling as quickly as it had hoped.

One side story catching our eye is the rally in Greyscale’s Bitcoin Trust (GBTC) over the last week.

While Bitcoin is up 21% since June 15, GBTC has rallied nearly twice as hard and is sitting up 39% over the same timeframe.

This is because GBTC has traded at a major discount to its underlying holdings, as investors have fled the instrument over the years because of its rigid structure and high fees.

On the heels of the BlackRock ETF filing, speculators are betting on the still-existent 32% discount in GBTC to close, as the trust would likely convert to a low-fee ETF after BlackRock’s expected approval.

Let’s get after it.

AI: The Money Robots

Tesla Downgraded by Analysts, Shakes it Off

• Tesla's shares experienced a fakeout today after being downgraded by Morgan Stanley analyst Adam Jonas. After intially falling 5%, the stock is now trading in the green.

• Jonas maintained a positive outlook on Tesla's rally but lowered the rating from 'overweight' to 'equal weight' and increased the price target to $250 per share.

• Despite the downgrade, Jonas emphasized Tesla's significance in the electric vehicle (EV) industry and its potential for collaboration with other companies.

• Barclays analysts also downgraded Tesla, expressing concerns about price discounts and margin pressures that could impact the stock's 111% year-to-date rally.

• Elon Musk, Tesla's CEO, prioritized sales volume and market expansion over profitability, with a focus on autonomous driving technology to generate significant profits in the future.

• Tesla is expected to release its second-quarter delivery figures soon, with investors anticipating strong sales in China and increased production in Texas and Germany.

• Price cuts in key markets may affect Tesla's margins in the latter half of the year.

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Public companies mentioned: TSLA

Our take: The article leans towards a bearish outlook for Tesla as both Morgan Stanley and Barclays downgraded the stock. Concerns about Tesla's valuation, margin pressures, and potential impact on its rally contribute to the bearish sentiment. But we continue to HODL our TSLA.

Crypto: Digital Gold Rush

JPow Concedes Crypto “Has Staying Power”, but “Long Road Ahead for CBDC”

• Federal Reserve Chairman Jerome Powell argues for robust federal oversight in stablecoin regulations during his testimony at a twice-yearly hearing on monetary policy.

• Powell noted in his testimony that “crypto appears to have staying power as an asset class.”

• The House Financial Services Committee, led by Chairman Patrick McHenry, plans to mark up two crypto bills in late July, including stablecoin legislation and a broader bill for market structure and oversight of cryptocurrencies in the U.S.

• Notably, no significant crypto legislation has successfully cleared a committee in either the House or Senate to date.

• During the hearing, Ranking Democrats raised concerns about the proposed legislation from Republicans, suggesting that it could limit the Federal Reserve's oversight capacity and calls for establishing a strong federal floor for nonbank stablecoin issuers.

• Powell addresses the potential establishment of a central bank digital currency (CBDC) but emphasizes that it is a long-term goal.

• He clarifies that if a digital dollar were to be introduced, retail accounts would not be managed by the Federal Reserve, but rather through the existing banking system.

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AI ART OF THE DAY

All aboard the Tesla Rollercoaster

The BRRR’s Portfolio

Amazon participating on rumors it will acquire a British online grocery company. 🤷‍♂️

On Watchlist:
$ASML: AI Supply Chain
$AI: Enterprise AI software
$ADBE: Creativity & productivity software
$ISRG: Robot Surgeons

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The BRRR is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.