Rate Cuts & Oracle Earnings

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This Week in Crypto

The Fed delivered its widely expected 25bps rate cut on Wednesday, bringing rates to 3.50-3.75%, and crypto’s response was…not great?

• Bitcoin briefly rallied above $94K ahead of the announcement, and then immediately fell below $90K on Thursday - down a little over 3% and triggering $440M in liquidations. 

• Classic buy the rumor, sell the news moment. The issue wasn’t the cut itself, but Powell’s hawkish press conference, where he described the decision as a “close call” and signaled the Fed is “well positioned to wait” before cutting again. But more on that below! 

• Markets had already priced in 89% odds of the cut, so there was no surprise factor. Ethereum dropped 4-5% below $3,200, XRP dropped over 4% trying to hold on to $2, and smaller tokens got totally massacred.

• A whale allegedly dumped $100M in BTC right before Powell spoke, which of course also didn’t help. 

Despite XRP’s price pain, XRP ETFs continue to dominate with continued inflows. 

• Cumulative XRP ETF inflows hit $887M. Every single trading day since the November 13th launch has seen inflows - not even one day of outflows. 

• Two more XRP ETFs are launching this month, which will create even more buying pressure. 

• Unfortunately, Bitcoin ETFs are not doing as well - on December 10 BlackRock’s IBIT saw the largest single-day outflows of $523M since its January 2024 launch.

This Week in TradFi

Markets experienced whiplash this week following the Fed’s rate cut decision on Wednesday. 

• The cut was widely expected and the third consecutive reduction since September. However, the decision exposed unusual divisions within the central bank, with three dissenting votes - the most since 2019 and the fourth consecutive meeting without unanimity. 

• Stocks initially rallied on the news, with major indices trading positive in the immediate aftermath of the 2pm announcement. 

  • However, Powell’s cautious tone suggested the rate-cutting cycle may be nearing its end. “We are well positioned to wait and see how the economy evolves,” said Powell. 

  • The updated dot plot showed that Fed officials expect just one rate cut in 2026 and another in 2027, unchanged from September projections. 

  • Fed policymakers raised their 2026 GDP growth projection to 2.3%, while continuing to expect inflation will remain above the 2% target until 2028. 

• Thursday brought mixed signals as investors rotated out of high-flying tech stocks following disappointed Oracle earnings (more on that below!). 

On the international front:

• The Bank of Japan emerged as a major driver of global market volatility this week after Governor Kazuo Ueda sent a clear signal that a December rate increase is on the table. 

  • Japanese 10-year government bond yields surged to 3.31%, levels not seen since 2008.

  • The yen strengthened nearly 1% against the dollar, reversing months of weakness. 

• European markets traded cautiously this week as investors digested mixed economic signals ahead of the ECB’s December 18th policy meeting. 

  • The STOXX 600 closed flat on Wednesday ahead of the Fed decision, then gained 0.5% Thursday to close the week in positive territory. 

  • Individual country performance was more mixed. 

• Gold has been hovering around $4,190/oz for most of the week ahead of the Fed decision, then jumped following Wednesday’s rate cut.

• By Thursday it had opened almost 1% higher, and as of today it’s surged above $4,300/oz - hitting new highs.

This Week in Tech

Bad news for Oracle holders this week:

• Oracle stock has tumbled over 40% from its September peak, erasing more than $360B from its market cap.

• Nearly $67B of that decline came from just yesterday, as Oracle’s Q2 results failed to assuage one key concern from investors - that the company is too heavily reliant on OpenAI. 

• In September, Oracle had told investors that its remaining performance obligations was about $455B. But it was later revealed that OpenAI accounted for at least $300B of that - and since then, the stock has struggled.

• Q2 results showed 12B in capital expenditures - higher than expected - and its free cash flow loss of $10B was much heavier than the $6B outflow anticipated. 

Disney signed a three-year partnership with OpenAI that will bring its characters to the company’s Sora AI video generator. 

• Disney is also making a $1B equity investment in OpenAI. 

• Disney says that it will also “become a major customer of OpenAI,” using its APIs to build new products, tools, and experiences, including for Disney+.

SpaceX is reportedly planning a 2026 IPO with a target valuation of $1.5T. 

• The company is looking to raise $30B at a valuation of $1.5T, according to a new report by Bloomberg News. 

• That would make it the largest IPO of all time. 

• This comes after the Wall Street Journal reported that SpaceX was engaged in another secondary share sale for employees, putting the company’s current valuation at $800B. 

As usual, below are some fundraising announcements, M&A, and tech personnel changes that caught our eye:

• Boom Supersonic has raised $300M to build natural gas turbines for data centers. 

• Learning startup Oboe has raised $16M for its AI-powered course generation platform. 

• Spotify developer-tool Backstage competitor Port has raised a $100M Series C, valuing the company at $800M. 

Arch is building a next-gen wealth management platform for individuals holding Alternative Assets. Our flagship product is the crypto-backed loan, which allows you to securely and affordably borrow against your crypto.

Disclaimer: None of the above is financial advice, seriously.