View from the Arch #1

Coinbase's earnings, the FOMC meeting breakdown, and major tech startup shutdowns.

November 03, 2023

Welcome to the first edition of the Arch weekly newsletter - don’t worry - it’s more exciting than it sounds. We’ll give you a 3 minutes summary of the crypto, legacy and tech markets as well as keeping you updated on Arch events and new product launches.

The Week in Crypto

Bitcoin is sitting at a beautiful 35k as of today, it’s one of the best performing assets YTD - up 113% (NASDAQ + 35%). Bitcoin dominance, which has been trending upwards stalled out slightly and currently sits at 53%. ETH has been a laggard, underperforming Bitcoin, with ETHBTC falling to 0.051 in a strong downtrend. The winners of this week have been the L1s, with SOL, NEAR and RUNE all climbing 30%.

Elsewhere, $COIN beat in its Q3 earnings and has tested the $85 dollar mark again. Mining stocks have also shown a strong resurgence owing to the performance of Bitcoin. Please like and retweet us on Twitter if you enjoy the content below.

Collated news from crypto markets

The week in TradFi

The week's main focus was on the FOMC, and the committee (Powell) managed to assuage the markets main concerns. The less than expected hawkish statement promoted a 'melt-up' in risk assets - witness the S&P rising by almost 3% over the immediate 2-day period following it. Market rates declined as well as Treasuries rallied with some of the better bid for rates coming from a lower than expected Treasury funding requirement for Q4. Relief.

The Bank of England followed suit and all of a sudden, the outlook for risk assets looks brighter after several months of investor angst surrounding the size of government (read US predominately) funding requirements and the potential for recession risk in 2024. That might still come, but for now, it isn't seen as seriously derailing the risk rally. If rates have peaked, we can expect there to be a better bid for equities through the rest of 2023 and into 2024. The outlook for equities is suddenly brighter.

We should also anticipate that rate markets will sustain some good support notwithstanding the huge US funding/refinancing requirement, and that brighter outlook is already beginning to show up across the Treasury curve. Lower market rates will also boost credit markets while other assets like Bitcoin ought to gain as the rising tide lifts all boats. Gold should stay bid only.

Risks remain. The war in Ukraine is ongoing and we head into the long winter months with US funding levels for the Ukrainians uncertain. The Middle East in that sense has become a bigger concern where contagion risks are front and centre and any subsequent major increase in oil prices will impact inflation/growth/sentiment through the final quarter and into the early part of 2024 at least.

The week in Tech

We’re are continuing to see the ramifications of growth stage over-valuations with high profile shut-downs like Olive AI and Convoy, both of which were darling unicorns previously. This is a result of both:

  1. A tough current macroeconomic environment (for fundraising and acquiring revenue)

  2. Prior cycle creating valuations that are no longer justified in todays market and make a company un-investible.

However, AI companies, defense startups, and early stage startup fundraises seem to be humming along, with a variety of companies announcing funding in the past week. Below are some broader tech news and funding announcements:

  • X (f.k.a. Twitter) has announced it’s intentions of moving into fintech with the aim of fully replacing your bank in the next 1-2 years.

  • Vespa.ai raising $31M in Series A

  • Factory raises $5M in Seed funding from Sequoia

However, there are early signals that the bull-market is back!

Arch updates from the week

  • Arch will be hosting a happy hour in the coming weeks at our NYC Soho office - reply here to RSVP!

  • Founders Himanshu and Dhruv were hosted on Constantin Kogan’s podcast to talk all things Crypto Lending and Arch. Tune in here or catch our tweet storm highlights.