Dire ETF flows, FOMC's latest, and an AI mystery

A fair word of warning, it’s a pretty numbers-heavy edition this week… and they’re not the prettiest to look at!

This Week in Crypto

Bitcoin is set for its 5th consecutive weekly red candle, for the first time since May 2022. ETF flows again no doubt had a role to play:

I’ll let you study the numbers but it makes for grim reading.

• $IBIT has shown no net inflows since 23rd April and posted a net outflow for the first time since inception.

• We saw the largest daily net outflow on the 1st - $563.7M.

I suppose the silver lining is if you peaked at these numbers, you’d assume the price is lower than where we are trading now at $59k. The current move from the high to the low measures 23%, which is a very standard pullback relative to historic bull markets.

In Asia, the Hong Kong ETFs went live. There was some confusion as to the volume and AUM metrics at first, but the long story short of it all is that there was $292M in seed capital and day 1 volume was $11.2M.

• Bloomberg is expecting $1B inflows across 2 years, for context.

Not all metrics are bearish though!

I’ll leave you with a smattering of other headlines:

• Tether reports a record-breaking profit of $4.52B for Q1 2024.

  • For context, Goldman’s net income this quarter was $4.13B. Goldman has 45,300 employees. Tether has around 100.

• Friend Tech launches its v2 and airdrops its token. It’s currently trading around $1.50.

• Eigenlayer is facing some backlash after they released details of their airdrop, and extensive withdrawals are queued.

• Coinbase adds support for the Bitcoin Lightning network in partnership with Lightspark.

• Binance founder CZ was sentenced this week to just 4 months in prison.

• Finally, Coinbase smashed earnings yet again, but the stock is down after hours. Stay tuned on the Arch Twitter for some further commentary on the numbers.

This Week in TradFi

As expected, the Fed kept rates at 5.25%-5.5% on Wednesday. The year started with investors pricing in 3-4 rate cuts and now holding flat is a win - how quickly sentiment has changed!

• Powell’s commentary during Wednesday’s press conference was less aggressive than expected. Though he acknowledged the U.S.’s higher inflation rates, he stated that it’s “unlikely that [the Fed’s] next move will be a hike.” 

• This is good news for investors who were anticipating a rate hike sometime this year. Additionally, it doesn’t seem that the Fed is particularly worried about inflation continuing to rise, with Powell responding “not really” to a question about whether recent inflation data was anything beyond typical bumpy variation. 

• Markets were slightly volatile on Wednesday following the press conference, but finished higher yesterday. 

• Unemployment is likely the driving influence that will inform rates guidance for the rest of the year. With NFP number tomorrow, we could be back to that strange scenario where bad numbers are good numbers (higher unemployment = higher likelihood of a cut).

U.S. labor force productivity data was also released yesterday, and news is mixed.

• Worker productivity rose at a 0.3% annual pace, vs. increases of more than 3% in previous quarters (AI assistants where you at?). Unit labor costs rose 4.7%, a bigger jump than normal, consistent with recent inflation numbers. 

More Q1 earnings have come through: 

• Booking Holdings reported a quarterly revenue of $4.4B, up 17% from last year. 

• Apple reported a decline in quarterly revenue and profit. But they announced a mega $110B buyback program, the largest in history, causing the stock to surge 6% after hours.

On the international front:

• The yen suddenly rallied on Wednesday and Thursday, following a suspected intervention by Japanese authorities. The Bank of Japan reports that Japan may have spent $23.6B on Wednesday to help support the currency.

• Meanwhile, Indian manufacturing remains steady, with firms increasing purchases of raw materials at an almost-record pace. India’s outlook remains optimistic, as GDP is expected to expand 6.5% this fiscal year.

This Week in Tech

A new AI chatbot, gpt2-chatbot, mysteriously appeared on Monday on LLM benchmarking site LMSYS then disappeared the next day.

• It’s unclear where the chatbot came from, but its capabilities reportedly rivaled the current best-known AI systems. Some even say the chatbot performed better than GPT-4, OpenAI’s most recently released AI system.

• After the chatbot disappeared from LMSYS, the organization stated the chatbot had been taken off the site due to “unexpectedly high traffic”. 

• Many people expect OpenAI to release GPT-5 this summer, but it’s unclear if gpt2-chatbot is connected to that release. Multiple Reddit threads immediately popped up, trying to figure out whether the chatbot was the work of OpenAI, Google, Anthropic, or someone new entirely. 

• Sam Altman fueled speculation, tweeting about GPT-2 the day of the chatbot’s release.

Google is in the news again, after laying off at least 200 staffers on its “Core team”, relocating their jobs to offices in India and Mexico. 

• Some of the major teams hit include Flutter, Dart, and Python.

• This follows layoffs from earlier this year in Google’s engineering and hardware teams. At the time, CEO Sunday Pichai had warned staff that layoffs may continue to come. 

• In 2023, Google’s parent company Alphabet laid off 6% of its staff, around 12,000 workers. 

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

• Following a rough Q1 earnings report, Musk announced Monday that Rebecca Tinucci, senior director of the Supercharger group, and Daniel Ho, head of new products, are leaving the company as of Tuesday morning.

• AI cloud provider CoreWeave raised a $1.1B Series C, led by Coatue.

• Midwest-based venture firm Hyde Park Venture Partners has raised a $98M Fund IV.

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.View from the Arch | Issue 27