Saylor raises $700M, China's Tariffs, and Tesla to the Moon!

View from the Arch #33 | June 14th

Author

Dhruv Patel
June 14, 2024

Action was scant in crypto this week - that certainly wasn’t the case for legacy markets or tech! Read on for the digest…

This Week in Crypto

There was not a huge amount of action in crypto this week outside of more second-rate celebrities trying to pump coins, which frankly, I don’t want to talk about.

The ETF flow momentum subsided slightly, which was somewhat surprising given the macro news (see next section).

Farside Investors

Supreme leader of the SEC, Gary Gensler, also said he expected the ETH ETF final S-1 approvals to come sometime this summer at a congressional hearing.

Bitcoin and Ethereum are still taking up mindshare in Washington:

Oh, and Big Mike is at it again, raising $700M to smash buy more corn…

This Week in TradFi

U.S. inflation came in at 3.3% in May, lower than expectations, raising hopes of a rate cut (are you tired of hearing us talk about rate cuts yet?). 

  • Core CPI, which doesn’t include food and energy costs, was 3.4%, 0.1% below expectations.

  • The S&P increased 0.9% following the news, and traders now anticipate a one to two quarter-point rate cut in September. Even Australia’s number two pension fund is confident in the Fed managing a soft landing!

On the other side of the water, all eyes are on the Bank of Japan and their policy meeting decision coming today. The yen has been declining and reached a 34-year low in April, which caused a series of interventions from the Japanese government. 

  • The yen has seen another round of weakness in the past couple months, causing uneasiness in the Asian markets. 

  • The BOJ will likely keep interest rates very low but may begin reducing its $5 trillion balance sheet by decreasing its bond buying. This relies on inflation remaining around 2%, which may be difficult, with domestic demand continuing to be slow. 

Lastly, China continues its attempts at turning around its economy. The European Union announced its decision to increase tariffs on Chinese electronic vehicles to as much as 48%. We’ll keep an eye out for China’s response here, especially as many countries start to impose tariffs on various Chinese imports. Additionally, China is set to sell $4.8B of 50-year bonds and despite all the warning signs on China’s economy, investors seem to show strong appetite for these bonds.

Other interesting trends we’re keeping an eye on:

This Week in Tech

The ARK team has clearly been sipping on something - their bear case for Tesla’s stock performance is an 11x over the next 5 years. Elon Musk who just got his $46B pay package at Tesla approved is certainly eating up this prediction! The rest of the valley has been trying to get a grip on the unit economics of AI businesses.

Sequoia, the famed Silicon Valley-based venture capital firm, estimated that in 2023, AI startups and companies spent $50B on chips from Nvidia to train AI but only brought in $3B in revenue! This is an alarming figure and while the costs of chips may decrease over a longer time horizon as more players enter that market, the viability of many AI companies does come into question. These enormous costs to train AI models even plagued larger companies such as Stability AI. However, OpenAI showed that it’s ducking this trend:

Apple’s Worldwide Developers Conference was this week, where they unveiled many exciting things, top of the list of which is Apple Intelligence.

  • Apple Intelligence is Apple’s new ecosystem-wide entry into generative AI. It’ll be included in virtually all of Apple’s operating system features, including iOS and macOS.

  • This will also include a major update to Siri, which will now answer written queries in addition to spoken ones. 

  • Probably most importantly, users will be able to use artificial intelligence to generate their own emojis when Apple’s standard set of offerings don’t quite cover it ***insert diamond hands emoji***. 

  • Apple announced a landmark partnership with OpenAI to integrate ChatGPT into Apple devices!

This partnership furthers OpenAI’s dominance in the LLM space, and while the economics of the partnership were initially undisclosed, it seems that neither party is paying the other in this partnership. 

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

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.
View from the Arch #33 | June 14th