View from the Arch #18 | 1st March

There’s a lot to cover this week, particularly in crypto which had yet another crazy week … read on for the highlights!

This Week in Crypto

As per, I’ll start with the week’s ETF flow data:

Clearly, this has been the main driver of Bitcoin price action over the last week - note the record net inflow day on the 28th Feb.

More interestingly, according to Bloomberg’s Eric Balchunas, the BTC ETF is 0.2% of BlackRock's ETF lineup yet accounts for 42% of its net flows. Similarly, for Fidelity, it’s just 2% of their lineup yet 64% of their net flows YTD. This is a business where flows are directly tethered to profits.

• This squares with news that BOFA and Wells Fargo are offering access to clients and rumors that UBS and Morgan Stanley are looking to get in on the game too.

• The Bankers really are buying our bags:

A quick recap of our start-of-year predictions:

1. BTC and ETH ETFs both get approved

   • Halfway there.

2. SOLETH hits 0.1

   • Currently 0.04, but we’re confident in this one.

3. Coinbase posts a record quarterly revenue of >$2.5bn (~$600m at the time of prediction)

   • Up 50% to $900m in Q4 2023. $2.5bn may be a tad ambitious but directionally it’s correct.

4. We see two more meme coins hit a market cap of >$10bn

   • $WIF just got listed on Robinhood and is the first dog coin to hit $1. $PEPE (+147%) is the best performer of the week in the top 100 and $BONK is also up +95%. All three are currently <$2bn in market-cap. We’re still confident one of these, or a new meme coin will go to >$10bn.

5. Two more nation states adopt Bitcoin as legal tender and/or buy Bitcoin

   • Edward Snowden read our newsletter a bit late!

Elsewhere here are some things to keep an eye on:

• Bitcoin Ordinals are catching increased mindshare. This tweet (graphic below) is handy for some perspective on the comparisons of collection market caps across chains.

• To us, it makes sense that for those who subscribe to the “digital art/ownership” thesis of NFTs, at least some of the top collections should be on the largest, most secure chain (Bitcoin). You can view collections and buy them on Magic Eden.

• Of course, if you think spending thousands of dollars buying JPEGs of cartoon puppets and cats is just ridiculous, well… that’s reasonable.

This Week in TradFi

Investor sentiment remains more bullish, and the latest surveys suggest that the current lofty valuations/index levels still have a way to go.

• AI stocks are leading the way, but the Goldilocks-like US economy (more resilient to be fair) is going to need broader sectors to provide the next level of support.

• The improved investor sentiment against the easing of rates should help the bid for equities.

Decreases in price pressures have been stalling and this week's PCE, the Fed's preferred indicator for inflation, was extremely important.

• The core PCE price index showed that inflation had come in line with expectations of 0.3% MoM in Jan but is higher than December's reading of 0.1%.

• U.S. durable goods orders also showed a big miss, -0.3% MoM for January versus +0.2% expectations.

It’s a tricky time for the Fed. The Eurozone had mixed data with Germany recording a decrease in both consumer spending and inflation, while France recorded an increase in inflation with a decrease in consumer spending. We’ll have to see how both the Fed and the ECB react concerning rate cut timings.

China’s property crisis continues to worsen, with property developer Country Garden receiving a winding-up petition from a Hong Kong-based investor after failing to repay a $204M loan. The stock price tanked as a result. Keep out.

This Week in Tech

The AI frenzy continues to capture tech, Apple being the latest victim. Reports came out this week that Apple scrapped its autonomous electric car unit in order to double down on generative AI, Vision Pro, and other bets. We’ll keep an eye out for announcements of any new products Apple is launching in the generative AI space.

While AI continues to steal the show, it seems like the IPO markets are quietly opening up with Reddit poised to list soon. Reddit, interestingly, is setting aside a portion of their IPO shares for their hardcore users.

• This in theory is a great move as it financially aligns incentives with your core users, who create value in content-based platforms such as Reddit.

• This concept is very analogous to the crypto world where you will often see companies and protocols give ("airdrop”) tokens to early adopters to reward them financially for the value they’ve created.

However we have yet to see real long-term value creation from this - the crypto world has mainly seen users hack the system and provide value until they receive tokens, sell the tokens received, and then move on to the next new project. Unlike crypto users who can’t get enough of this, Redditors seem to be angry at this and other recent decisions by the company.

• Reddit executives were left blank-headed when Reddit users congregated on the platform to talk about collectively shorting the company stock when it goes public.  

• Reddit was used to collectively band against hedge funds on the Game Stop stock - not something to take lightly.

Reddit may experience a volatile IPO, and we recommend staying far away from it. We’ll stay tuned to see what the stock market gods aka Reddit power users decide to do.

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

• Snowflake’s stock dropped 20% immediately upon news that Frank Slootman, its legendary CEO would be stepping down.

• Bay Area-based robotics firm, Figure, raised a $675M Series B at a $2.6B valuation from an A-list set of investors, including Microsoft, OpenAI, Nvidia, Jeff Bezos, Intel Capital, and more.

• Stripe’s valuation jumped to $65B after its most recent tender program in which employees were allowed to sell stock.

• OpenAI’s valuation jumped to $80B after its most recent tender program led by Thrive Capital, in which employees were allowed to sell stock.

• Qatar’s sovereign wealth fund, QIA, launched a $1B fund of funds for venture capital.

Arch is building 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. We also offer access to bank-grade custody, trading and staking services, powered by BitGo.

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