A GBTC inflow (!), Unemployment, and Nubank's Reign

While everyone’s been preoccupied with Drake’s beef with the rap industry, we’ve been paying close attention to the SEC’s beef with crypto!

This Week in Crypto

Last week was somewhat unfortunate timing for this edition as we proceeded to pump off the lows pretty much immediately after we hit send. Let’s hope that trend continues this week!

As per usual, we’ll kick off with a view of the week’s ETF flows. Honestly, at this point, it’s just included for some perspective on definable market flows - it’s quite difficult to make sense of them - especially when you see a GBTC net inflow. Which, given that it’s the most expensive instrument to own out of all the ETFs, makes no sense at all. Either someone’s grandpa has too much pocket change lying around, or Grayscale is painting the tape.

This week, $438B asset manager Susquehanna disclosed a $1.3B Bitcoin ETF portfolio, and $130B asset manager Hightower disclosed buying $68M worth. Meaningful flows, trivial allocations % wise! Rookie numbers.

On the Ethereum side, the SEC delayed decisions on the Invesco Galaxy ETF until July. Meanwhile, Grayscale, to some experts’ surprise, withdrew their futures ETF application.

• The $ETHE discount remains steep at 25%.

Earnings have been coming out over the past weeks for crypto equities. This week miners MARA and CLSK released their very positive numbers, both growing revenue north of 150%.

• This follows some great numbers from Coinbase last week, you can check our summary thread here. Perplexingly, the stock price has remained flat.

A few other headlines/reads that caught our eye this week:

• Arthur is back with a new blog. TLDR - he is buying and thinks we range from $60-70k until August.

• Headlines were made as it was announced that 98% of FTX creditors would receive 118% of their funds back in cash. However, upon further inspection, this headline is not as positive as it appears. it’s been pointed out that this is drawing from a “fake” baseline (the bear market bottom).

• Revolut launched a standalone crypto exchange for UK-based retail customers

This Week in TradFi

The US labor market has been slowing down, as demonstrated by the weekly jobless claims report that came on on Thursday. This was the highest number of Americans filing new claims for unemployment benefits over the past eight months.

• The labor market is rebalancing after the rate hikes last year.

• This should flow through to CPI as many Americans will now be spending less, given the unemployment. All eyes will be on the CPI print next week.

• This might be a tailwind for the Fed having two rate cuts this year.

The UK is expecting a win with today’s official 2024 Q1 GDP Data, which should confirm that it is out of a recession. While this would be a good signal for the UK, the Bank of England is still holding off on rate cuts until they see clear signs of inflation subsiding to the 2% target. This is causing uproar across the UK as households are acutely feeling the pain of high interest rates:

• Housing (rent or mortgage) is often the biggest expense to a household.

• In the US, the vast majority of mortgages (92%) are on a fixed rate. This means that rate increases don’t impact those existing mortgages because their interest rate was already fixed.

• However, in the UK, mortgages are only fixed for a few years and then switch to a variable rate. As a result, over 1.4M households saw their mortgage payments increase in 2023.

• As long as rates stay high, more existing mortgages will hit the end of their fixed rate period and switch over to a higher variable rate.

Both the US and UK continue to have eyes on the CPI prints to assess the timing and magnitude of rate cuts. Below is a list of other economic and financial news this week that caught our eye:

• China experienced export and import growth in April, after experiencing contraction in the prior months.

• The IMF raised its expectations for Asia’s growth, mainly driven by India which is expected to be the world’s fastest growing major economy.

• Robinhood had a monster earnings report, driven by crypto trading.

This Week in Tech

Spring has sprung, and fintech and growth stage fundraising rounds are responding. While there was a dearth of growth rounds over the last year, we’re starting to see an uptick across both growth fundraises and secondary rounds for late-stage companies. Nubank, a Brazilian-based neobank, decided to drop the mic on the tech world with its latest mind-boggling numbers. Nubank is a public company that has reached incredible milestones recently:

• Surpassing 100 million customers (92M in Brazil, 7M in Mexico, and 1M in Colombia)

• More than $8B in revenue and $1B in profit for 2023

• NPS of around 90, with 80% of new customers coming from word of mouth

• $110B market cap with huge opportunity ahead as it pushes beyond Brazil and further into LatAm, starting with Mexico and others.

Other fintech companies also followed Nubank’s lead with strong announcements:

With the tailwind of expected rate cuts this year, fintech should be poised for an incredible year. We’ll keep tracking these companies’ revenues throughout the next few quarters and keep you all posted.

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

• Iconiq Capital raised $5B+ in new funds for growth-stage investing.

• Wiz, a cybersecurity company, raised $1B led by A16Z, Lightspeed Ventures, and Thrive Capital, valuing the company at $12B.

• Oyo, India’s budget hotel chain startup, is seeking new funding at a $3B valuation or less (70%+ discount from its last round).

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.