Record ETF inflows, Bitcoin surpassing Gold and Starship

View from the Arch #20 | 15th March

Author

Freddy Mann
March 15, 2024

All time high’s all round this week! For Bitcoin, ETF flows and Elon’s Starship!

This Week in Crypto

As per, there was a new Bitcoin ATH this week ($73,738) and as per, we’ll start with the week’s ETF inflows.

Bitmex Research

  • The highest net inflow day, over $1bn was hit on Tuesday.

    • To put this into perspective, 900BTC are issued per day. Therefore, 16 days of issuance were added by the ETFs in a single trading session. Issuance will be 450BTC per day after the halving (c.37 days from now).

    • At that pace, an entire year of issuance could be added in 12 trading sessions by the ETFs alone.

  • May 15th is a date to watch - Investors with >$100m AUM are required to disclose their publicly traded holdings to the SEC

This headline makes a lot of sense to us.

In our view, Bitcoin as “digital gold” is a somewhat lazy and incomplete analogy. New technologies are typically an order of magnitude (at least) better than their predecessors. The telephone was 10x better than the telegraph. The car was 10x better than the horse and cart. Bitcoin is 10x better than Gold - it’s more portable, scarce, divisible, verifiable, and programmable, yet it is valued at 10x less. 

  • Gold’s market cap = c.$14.5 trn. Bitcoin’s market cap = $1.3trn. Bitcoin price at Gold parity = $780,000.

  • Bitcoin’s future is Bayesian. The probability of A (Bitcoin flipping Gold in market cap) happening changes if B happens. Events that “B” could take the form of are major all-or-nothing landmark events that significantly alter Bitcoin’s standing in the world. The ETF approval was one such “B” event. Public companies buying Bitcoin was another. Major nation-states buying and/or making Bitcoin legal tender will be the next. International commodities (oil) trades settling in Bitcoin could be another.

  • Whatever they may be, we believe the die has been cast, and the Rubicon crossed. Bitcoin’s path to flipping Gold is pre-ordained.

Quickly to touch on a few other notable events:

  • Tensor, a Solana NFT platform, announced a $TNSR token.

  • Arthur is back with his latest blog post; essentially an ode to Ethena - a synthetic, yield-bearing dollar. Ethena is a highly debated and anticipated protocol launching soon, with some calling it the new Luna.

  • Berachain reportedly raises $69 million in funding round. I am once again imploring you to mess around on the test-net, for a shot at free money from the sky.

This Week in TradFi

Equities up, and bond prices down. The classic relationship was back, until the latest inflation reports were published:

  • Inflation remains sticky and a potential headwind for the Fed.

  • US CPI unexpectedly rose to 3.2% in February, up from 3.1% from January's rate.

  • The PPI print was also higher at 0.6% (month-on-month) against expectations of 0.3%.

  • The core PPI print came in at 0.3% which was higher than expectations (0.2%) as well, but lower than January's print (0.5%).

  • To add to the macro quandary, monthly retail sales also missed, in at 0.6% versus 0.8% expected.

However, there has been a good, continued corporate earnings stream in the US (Oracle) as the season draws to close, but also in Europe where stocks are also at record levels.

  • So an upbeat tone on the back of Powell's more dovish testimony the previous week, all but guaranteeing (?) a rate cut - even if inflation doesn't quite make the 2% level, had markets initially more upbeat than not. Some jitters might be setting in now.

Elsewhere, we had Biden administration's $7.3bn budget announcement for 2025 - proposing higher taxes (for the rich and corporates), more spending and higher US debt levels (pushing US debt/GDP to over 100%).

  • The budget will not get past Congress and is already dead in the water, but it is a marker for his election campaign.

In the UK, wage growth continued to slow in the quarter to end January confirming the BoE's view that inflationary pressures were beginning to slow.

  • In a further boost for the UK, GDP returned to growth with a 0.2% uptick in GDP in January from December, and in line with expectations.

  • The markets and the BoE continue to pencil in that rate cut for June.

This Week in Tech

Elon Musk is in the news yet again, but finally for a positive reason. Musk’s company SpaceX launched their third test flight for their Starship rocket. Starship was able to hit its primary goal of reaching orbital velocity, the speed at which a spacecraft can enter a stable orbit around Earth. Unfortunately, its engine burned out upon reentry, but not before hitting multiple milestones along the way. This is a strong turnaround from SpaceX’s previous two launches, both of which ended in rocket explosions and an environmental lawsuit. Maybe Musk will finally see similar success with Twitter X?

On the opposite end of that story, Boeing continues to suffer from mishap after mishap, leading to the ultimate consequence - share price dropping more than 25% over the course of this year. In just 2024, 

We’re no experts, but we’ll be rebooking our Digital Asset Summit flights to non-Boeing planes.

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

Attention London Based Readers!

We’re hosting two events in London next week. A cocktail evening on Tuesday the 19th of March and a Moonlit Mixer on Wednesday the 20th. You can RSVP here and here! We’d love to see any London-based readers there.

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