View from the Arch #15 | Feb 9

Some general housekeeping before we get to the week. As you can see, this edition looks a little different - to make all of our lives easier, we’ve migrated our weekly newsletter to Beehiiv, a newsletter platform!

This Week in Crypto

Incredibly strong week from BTC - she’s looking to put in her highest close in quite some time. Price action can be attributed to continued equities strength and sustained ETF inflows.

• According to Bitmex Research, net inflows for 02/08 were +$400m alone, the second largest daily inflow (after day 1). This is a great dynamic to have emerged, over a month after launch, whereby GBTC outflows are cooling down, but new interest refuses to let up. Chart here (omitted for space).

• We’re usually punching the air with joy when Saylor announces a buy of around this size - now we’re seeing it being scooped up in a single day through ETFs. Bullish.

  • Talking of which Saylor announced another buy of 850 Bitcoin for $37.2m. We guess he finally sold the office furniture.

Interesting tweet from Vance Spencer that thinks about the structural impact of these ETF flows - something we mention quite frequently.

I’m not sure what Vance’s argument is for the 1.5-1.8m figure, however, I think it’s a lowball. Here’s why:

• The first chart below from Glassnode shows the percentage of Bitcoin in existence that was last moved within the time period denoted in the legend.

• The second chart shows BTC exchange balances over time

Alright cool lines, what are the takeaways?

• Chart 1 shows that 43% of the Bitcoin supply, or around 8 million coins have been active in the last 2 years.

• Chart 2 shows the peak amount of coins on exchanges was just over 3 million coins in March 2020 (which also perfectly marked that cycle’s bottom, which is interesting in and of itself).

• I think Vance is likely to have lowballed, potentially quite significantly, as the coins on exchanges figure is an underestimate given many unique coins will be included here.

In any case, it doesn’t really matter that much for the bullish thesis to hold weight - the core point remains that the rate of Bitcoin being acquired by ETF participants is significant.

I’ll wrap up with a series of events across the rest of the space:

• $DYM went live, we know some of our earlier readers who acted on airdrop farming advice would have received a free 4 figure airdrop at a minimum. It’s not much, but it’s honest work.

  • Wormhole also announced it will be doing an airdrop.

• ARK 21shares included some language around staking in its latest ETF filing - a reminder that the final deadline for an SEC decision will be sometime in May.

• FTX is trying to sell its 8% stake in Anthropic, creditors now have hope they will be re-paid in full and secondaries markets for claims are trading >80c.

• OPNX, Kyle Davies and Su Zhu’s open exchange, has announced it will be shutting down.

• And finally, for your weekend reading, a new Arthur.

This Week in TradFi

The FOMC decided to push back the widely anticipated March rate cut and decreased the guidance for the number of rate cuts in 2024 (only 3 now). This decision assumes that incoming macroeconomic data doesn’t surprise to the upside. Although there was disappointment in the hawkish Fed tone, the risk rally over the past few weeks is still justified given:

• Investors believe that the rate cycle has peaked.

• Sidelined investor cash is being put to work.

• Over 80% of companies in the S&P500 have met or beaten expectations.

It's great for US equities (and corporate bond markets) at the moment, but we're not seeing the 'everything rally' - having been used to said dynamic for the best part of a decade. 10-year UST yields are up this week because rates have been backing up, hard.

There's a multitude of factors clouding the picture for rates; including the fiscal deficit financing burden, the absolute level of US indebtedness, the inflation outlook, and the mood/demands of the bond vigilantes.

Elsewhere, there had been scant hopes of a recovery in Asian (read Chinese) equities, as the authorities finally showed signs of acting. A busted property market, no hope of domestic demand improving as youth unemployment rockets, and a global slowdown (which won't help their export trade) suggest that more is needed than the targeted measures aimed to kickstart the economy. Too little, too late.

• China suffered its sharpest fall in consumer prices since 2008 this week, down 0.8% in January (exp -0.5%) as the economy slips into a deflationary spiral. Stay away.

The risks loom large. Global markets are still interconnected.

• The Chinese will try and export their domestic woes away threatening continued disinflationary forces elsewhere.

• The US threatens to become more protectionist as the presidential candidates jostle for a clear position on the economy.

• Germany has taken on the mantle of being the sick man of Europe, and the economic outlook is poor.

• The Middle East threatens an escalation that tips the global economy over the edge on its own.

Rate cuts might come too late. The US equity markets for now are best placed to offer the best returns - and they're delivering. Follow the money flows, folks.

This Week in Tech

Much of the tech world has been moving around in virtual reality world with the Apple Vision Pro and the AI world, bringing an increasing number of financial scams that are scary to think about. However, one man has been making moves in the real world - Adam Neumann. Reports leaked this week that Neumann is channeling his inner Steve Jobs and attempting to buy WeWork, the company he previously co-founded. WeWork and Neumann have had one hell of a journey:

• Masayoshi Son, iconic investor and the founder of Softbank, invested a total of $14B into WeWork alongside additional capital from other marquee investors through the lifecycle of the company prior to its IPO.

• WeWork’s peak private valuation hit $47B prior to its IPO.

• WeWork’s IPO hit a snag given its financials as well as corporate governance, resulting in Neumann stepping down while receiving $1B+ payday along with way.

• Eventually, WeWork went public via a SPAC.

• WeWorked filed for bankruptcy and currently has a market cap of ~$4M (yes, you read that right!).

• Neumann since went on to found a residential rental real-estate startup, Flow, which raised $350M from Andreessen Horowitz out of the gate.

Neumann is now trying to buy out WeWork with his current company, Flow. Neumann was not happy with the way he left WeWork, and this transaction materializing for him would be as sweet as apple pie. While SoftBank held the bag on WeWork, Masayoshi Son always finds a way of coming out alright in the end, with their ARM position recovering all losses and more:

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

• NinjaOne, a cybersecurity startup, raised $231M at a $1.9B valuation led by Iconiq Growth.

• Epic Games, the maker of Fortnite, raised $1.5B from Disney.

• Wonder Ventures raised a fresh $102M across both a pre-seed fund and a growth stage fund.

• Ambience Healthcare, a startup building an AI assistant for healthcare organizations, raised a $70M Series B led by Kleiner Perkins and OpenAI’s Startup Fund.

Arch Updates

Thank you to all of you who attended our Happy Hour at our Soho offices this week - it was a blast! Keep an eye out on this section for our future events, the next one is penciled in for March.

Have a great week!

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