More BTC sold, European elections, and a16z's ambition

View from the Arch #35 | June 28th

Author

Freddy Mann
June 28, 2024

The Arch team newsletter authors are enjoying some European sun this week, but don’t worry, we won’t leave you without your weekly fix…

This Week in Crypto

The turgid price action continued this week and given the bearish news that dropped, many will be pleased we are maintaining a 6 handle on Bitcoin.

Farside Investors

As aforementioned the bearish news was plentiful over the past days:

  • Arkham attributed a $240M move of BTC to Coinbase Prime to the US government

  • Continuing from last week, the German government dumped on us again, it was only $55M this week though (rookie numbers).

  • The major piece of news though, was the long-awaited Mt.Gox payouts. For a fair breakdown of the implications of this - see the thread below. TLDR; it’s quite bad, but not that bad.

Oh, also the 14th richest man in the world, Michael Dell started bull posting Bitcoin:

ETHBTC has been strong in the face of these negative BTC data points, this may not be surprising given the ETH ETF launch is set for before July 4th.

Additionally, a man from Van Eck with a monkey NFT pfp announced they just filed for a Solana ETF (I didn’t think I’d write that sentence this year). Many are speculating this marked a local Solana bottom.

To finish up, here are some headlines:

This Week in TradFi

Election fever peaks in France and the UK this next week, with the first round of the former's ballot on Sunday, while the UK goes to the polls next Thursday.

  • Judging by the polls, Le Pen's National Rally is set to win the most seats in the National Assembly, France's lower house of parliament. They have threatened not to form the next government unless they get an overall majority to govern. The second round is on a week Sunday.

  • French borrowing costs have shot higher and market jitters have persisted since President Macron announced the election - and look set to remain elevated through the next couple of weeks, at least.

In the UK, a massive Labour majority is on the cards as the ruling Tory party - according to the polls - is likely annihilated at the ballot box.

  • Business is already on the side of the new government and there is likely going to be a positive reaction in the markets once the election is done with.

In the US, Core PCE prices for Q1 rose by 3.7% (3.6% expected), durable goods orders rose 0.1% (consensus -0.5%) although the core fell by 0.1% (expectations +0.2%) and GDP for Q1 held steady at 1.4% (consensus 1.3%).

The overall market moves this week have been fairly lackluster, flattish for choice, with little expected now until we get over the first half of the year and likely await June's non-farm employment report and earnings growth numbers at the end of next week. 

This Week in Tech

News broke this week that the famed Silicon Valley VC Fund, Andreessen Horowitz (a16z), is currently raising for a private equity fund. While this may be true, it seems to be for their wealth management arm, Perennial, which manages personal money of the partners and other entrepreneurs and investors.

While a16z may initially have this fund solely for it’s wealth management division, overtime we could see a16z raising funds for private equity and real estate opportunities from a wider set of LPs, as it does for its venture capital funds.

Previously, there were seemingly two paths for venture funds:

  • Become a boutique shop with a constrained fund size and specialize at a specific stage of investing (ex: Benchmark, which almost exclusively does Series A investments)

  • Become a multi-stage investor and continue to amass funds under management.

If a16z were to start raising private equity and real estate funds, it would follow a third path - becoming a multi-stage, multi-asset investor, similar to the likes of Blackrock.

Venture capital is just one financing option amongst many for companies and there may be benefits for a VC fund to have other financing vehicles. For example, in fintech, many companies raise equity from a VC firm and then debt from a credit fund. However, we’ve seen Crossbeam & Coventure bring this under one house. Taking a VC investment from Crossbeam becomes much more attractive given the potential of receiving debt from Coventure.

Firms like Iconiq Capital and General Catalyst have been quietly running multi-stage and multi-asset investment businesses for a while. While there are many details left unconfirmed about a16z’s specific ambitions and plans with the non-VC funds, we think this trend likely continues for the few well-known multi-stage brands that are able to raise capital for this (Sequoia, Founders Fund, and select others).

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

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.