Solana TX failures, Jpow speaks and AI at Amazon

This week featured the always exciting YC demo day. A shocking 187 of the 247 companies in this cohort mention AI in their pitches. Our favorites include Givefront, a banking platform for nonprofits, Shepherd, a personalized teaching assistant, Haplotype Labs, a SaaS platform for genetic testing and concierge medical practices, and Ellipsis, a tool to convert technical instructions to working tested code.

Speaking of demos, have you tried out Arch’s newest offering - bank-grade custody, trading, and staking services, powered by BitGo? Set up a call here to chat with us about it. 

This Week in Crypto

Just including the ETF flows as that’s become a regular fixture in this newsletter. Though frankly, it was the most uneventful week since inception.

To summarise the current state of the market from our perspective - rate cuts are looking increasingly less likely (bad for Bitcoin, but not terrible) as growth and unemployment are looking healthy. Further, geopolitical risks remain with tensions in the Middle East simmering; this has been a factor for Gold rallying to new ATHs this week (as well as central banks buying). Given many view Bitcoin as digital Gold, we could see this sentiment parse over into the green side of the Coinbase order books.

We’ve also talked at length in this newsletter about the dynamic around the ETF acting as a conduit for structural buy pressure (good for Bitcoin), albeit the kicker here is still that gnarly GBTC overhang. Finally, on the supply side, we all know that the halving is just two weeks out, this will reduce daily issuance down to just 450BTC per day ($30m).

Overall we’re still strongly bullish going into the November election season.

Speaking of the election, meme coins generally suffered across the board this week, partially due to a fiasco on Solana whereby 75% of transactions were failing. You can see the latest data on this Dune dashboard. The SOL price itself has, perhaps surprisingly, shown amazing resilience in the face of this.

The big exception has been $BODEN, which has proved itself to be a fan favorite:

Elsewhere, Wormhole dropped $W and Ethena dropped $ENA - make sure you check if you qualified for either of these airdrops as they both launched at a >$10bn FDV.

• The wormhole airdrop has triggered people to make arguments for a relative value trade in favor of Synapse, another bridge token.

And finally, a few headlines that caught the eye this week:

• US Paypal customers will be able to use stablecoins for international payments

• Ripple is launching a stablecoin

• $2bn DOJ wallet sends a test tx to Coinbase

• Goldentree sells it’s crypto subsidiary to Republic

This Week in TradFi

The opening period of the new quarter turned a bit more mixed for risk assets while rate markets were exhibiting some weakness as investors continued to obsess over the ongoing US interest rate debate:

• Powell continued to tease, albeit more leaving them on the table than off, doing his level best to leave the flock hopeful.

• Sticky levels of inflation in excess of the 2% target and a roaring job market make it difficult for the Fed to justify a cut - at least in this quarter.

• Biden's borrowing and spending juggernaut might even preclude a cut this side of the election. There's a thought.

The global macro picture while still divergent is generally showing some tentative signs of an uptick in potentially sustained activity.

• China's manufacturing sector, for example, cheered the markets early on amid signs of stability as March's factory activity PMI edged up to 50.8 from 49.1 in February.

• This comes as a welcome relief for China's leaders, hoping that a string of stimulus measures are finally kicking in and helping to pull its struggling economy out of its doldrums in its goal of eventual growth of over 5% this year. 

Similarly, the US is in expansionary mode as the ISM manufacturing PMI for March jumped to 50.3 versus consensus expectations of 48.5, while the new orders index recorded 51.4 (49.2 previously).

• That strength and ongoing macro resilience contributed to the Fed's Mester raising her long-term growth outlook for the US economy and the longer-run Fed funds rate higher to 3% from 2.5%. She suggested a cut could come through in June.

• Nevertheless, US yields remained elevated and we had weakness across equity markets as continued uncertainty in the timing of any US rate cut stymied the recent rally.

Setting the tone for next week will be Friday's jobs report with the consensus pitched at 205K jobs added in March, an unchanged unemployment rate of 3.9% and year-on-year average hourly earnings growth at 4.1%.

• The dynamic we’re expecting is good for the worker, but probably bad for the rate-cut dreamers.

This Week in Tech

Amazon announced the removal of its cashierless “Just Walk Out” checkout systems at Amazon Fresh supermarkets around the country.

• The system debuted in 2018 in a store on the Amazon Seattle campus.

• Though it was purported as an AI system, monitoring shoppers and their items as they go through a store, The Information reported that the system was actually just a team of 1000+ India-based employees watching shoppers via cameras. 

• Amazon Fresh stores will still try and eliminate the checkout line, now relying on Dash Carts, which claim to track items as shoppers add them to their carts.

On the topic of actual AI, Microsoft and OpenAI are working on a new AI data facility headquartered in the U.S. The facility will house an AI supercomputer called Stargate, which reportedly could cost over $100 billion. 

• The project will take five to six years to complete, with its earliest launch date in 2028.

• The facility is predicted to be one of the largest and most advanced data centers in the world, requiring several gigawatts of power.

• OpenAI plans to build several supercomputers throughout the U.S., with Stargate being the last and biggest of the lot. 

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

• Aerospike, a NoSQL database company, raised a $109M Series E, led by Sumeru Equity Partners.

• Higgsfield AI, a social media video creation AI startup, raised an $8M seed round, led by Menlo Ventures. Higgsfield is cofounded and led by Alex Mashrabov, ex-Director of Generative AI at Snap.

• Data security firm Rubrik has filed for IPO, planning to trade on the NYSE under the ticker symbol “RBRK”. 

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

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