Strong US GDP growth & Nvidia earnings

As summer comes to an end, here’s to hoping that the endless $58-64k Bitcoin range follows suit into September. I can’t take it anymore!

This Week in Crypto

Not a great week across either ETFs in terms of inflows:

While the volume was slightly muted early in the month, it’s starting to pick back up with traders and investors getting back from their Hampton retreats and, well, by the looks of it, hitting the sell button.

• However, if you read the rest of the newsletter, the outlook going into the election and EoY looks healthy with a slew of rate cuts and strong growth. Nothing to worry about here.

ETH flows paint a slightly different picture

We’ve so far seen a strong net outflow of -477.4M, and on top of that, exceedingly poor volumes, signaling little institutional interest. We’ll want to see Bitcoin lead the trend reversal here.

• Ethereum has been having a tough time recently with ETHBTC continuing its forage into the doldrums (0.042) and the Ethereum foundation selling $100M for expenses. Did someone tell them they should just borrow against it?

Two other major pieces of news to touch on this week. One was met with modest amounts of schadenfreude from many crypto natives who are still salty that OpenSea didn’t do an airdrop:

You can see what the CEO said here - but you can guess he’s not happy.

Finally, this would have been all over your Twitter feed I’m sure but the Telegram CEO Pavel Durov was arrested in France this week. Many folks in the crypto-sphere are seeing this as an attack on free speech, and those on the Bitcoin side of the aisle are touting Nostr as the future of social media.

• TLDR on Nostr: it’s a form of decentralized social media that utilizes the same cryptographic principles as Bitcoin to generate a secret/public key pair for identity creation.

• Almost all of the developers are deeply involved in the Bitcoin community.

• The platform introduced "Zaps," a feature for Lightning micro-transactions, and has now evolved into a large Lightning address directory, enabling users to send Lightning payments to anyone within the network.

Any Nostr users who are readers - let us know if we should get involved!

Headlines:

• SEC rejected Cboe’s 19b-4 filings for Solana ETFs

• Trump launches a new NFT collection, he’s also teasing a new “high yield” opportunity on DeFi.

• Elon Musk cleared in Dogecoin class action lawsuit

• Arthur dropped a new blog - “Sugar High” - no new major lines of argument here, but worth the read nonetheless.

This Week in TradFi

The Bureau of Economic Analysis released its estimate of U.S. GDP growth in Q2 this week:

• This is the second estimate from the BEA. Its initial estimate had Q2 growth at around 2.8% annualized, but new data indicates the real number may be higher at 3.0%. 

• This revised estimate was mainly due to higher consumer spending, while fixed investment, exports, and government spending were weaker. 

• Moral of the story? The rest of America is spending, so you should too. 

The good news continues, with the Dow reaching a record-high yesterday, driven by the news from the BEA.

• The Dow Jones Industrial Average was up 0.6%, its third record close of the week.

• Meanwhile, the S&P stayed flat, and the Nasdaq dropped 0.2%, in part due to the good-but-not-quite-good-enough Nvidia earnings (read more in our Tech section below!). 

On the international front, inflation in the eurozone is at its lowest level in three years, teeing up a rate cut from the European Central Bank. 

• Inflation fell to 2.2%, the slowest rate since July 2021, and only 0.2% above the ECB target of 2%.

• The fall was mostly driven by lower energy prices, though price growth in the services sector from the Olympics hampered the fall.

• Multiple ECB members have indicated that the rate cut on September 12 is all but guaranteed at this point. 

This rate cut can’t come soon enough, with eurozone economic growth barely hanging on. The past couple of years of rate increases have severely slowed lending, impeding lending-heavy sectors like construction and manufacturing.

This Week in Tech

Nvidia earnings day is back!

Unless you’ve been living under a rock, you know that Nvidia has been on a stunning growth streak, beating earnings forecasts again and again and making its long-time employees millionaires. However, what goes up must come down (or must go up a little less?), because simply beating earnings expectations is no longer enough. 

• Just this year, Nvidia shares are up over 150%, and over the past five years, shares are up over 3000%, in large part due to the AI boom. The company’s market value also hit $3 trillion, one of just three companies to achieve it. 

• But on earnings day, despite posting once again incredible numbers - $30B in sales in Q2, up 122% YoY, and profits doubling to $16.6B - Nvidia shares dipped almost 5% in after-hours trading.

• Though Nvidia continues to beat expectations, investors are now worried that the company isn’t beating expectations by enough. Concerns about an AI bubble are getting louder, fueled by rumors that Nvidia’s Blackwell chip may be delayed. 

• Regardless, Nvidia continues to be a powerhouse, and we’d be surprised if we don’t see continued gains from them for the foreseeable future (this is not trading advice, though!). 

And some earnings news you can talk to your kids about - Abercrombie and Fitch massively outperformed Q2 expectations, with sales up 21% to $1.1B, its second straight billion-dollar quarter. 

• Operating income almost doubled, up to $176M from last year’s $90M. 

• Both Abercrombie and Hollister saw double-digit sales growth, fueled by increased shopping over the summer and during the back-to-school season. 

• Despite all of this, the stock dropped 15%, given concerns about increasing freight costs and slower margin growth. 

• Regardless, A&F stock is up almost 60% this year and up 285% in 2023 (that’s more than the stock market’s darling Nvidia!).

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

• Apple CFO Luca Maestri is planning on leaving the company at the end of the year. 

• Indian grocery delivery startup Zepto raised $340M at a $5B valuation.

• The CEO of Boeing’s satellite maker, Millennium Space, left the company and will be joining Firefly Space as their new CEO.

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.