Blackrock's Back, U.S.'s housing slump, and OpenAI's talent problem

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This Week in Crypto

Finally. The summer range may well and truly be finished. Blackrock posted more inflows this week than any ETF sold in the previous 3 weeks combined.

This illustrates the idea of the market being a medium for inpatient sellers to patient buyers. We’ve been between $50 and $70k since March all the while patient buyers have been building positions. Many of these folks will have been first-time buyers given they’re purchasing through the ETF also, meaning they have a higher cost basis associated than those of us who have been buying for years.

Aside from the increase in net liquidity following rate cuts, another key factor that could be driving price is Kamala Harris’s growing, albeit quiet, support for crypto. With Trump already fiercely pro-crypto - any acquiescence towards that position from Harris means that crypto gets a favorable ride regardless of the election outcome.

If you're not celebrating the recent price action as much as we are, it may be because you’ve noticed ETH continues to underperform vs both Bitcoin and Solana. While ETF flows have picked up slightly, there is still a lack of interest in ETH, as institutional money is flowing into Bitcoin and retail money is flowing into Solana.

There’s a slew of other headlines that have hit over the last week, so let’s rip through them.

• Options on the Blackrock IBIT ETF were approved. Basically, this means that institutional investors have more liquidity and retail investors have another tool for speculation. For a big brain thread see Joshua Lim’s commentary below, or see his podcast on Laura Shin:

• The SEC did two things this week. The first thing was try and argue that Bitcoin mining “boxes” are securities which obviously makes no sense, but was amusing to many nonetheless. The second was approve BNY Mellon for crypto asset custody. The duality of the SEC, I suppose?

Swan dropped a lawsuit that implicates many former employees and executives, as well as Tether. Many startling revelations are included; here’s a summary thread:

And finally, as one crook is sentenced to time behind bars, another is released. Caroline Ellison was sentenced to 2 years and CZ was released early. While 2 years was (very) light for Caroline, the truly shocking thing was she was ordered to forfeit eleven billion dollars. No that was not a typo.

This Week in TradFi

Good news continues for the U.S. economy following last week’s long-awaited rate cut:

• U.S. jobless claims dropped 4,000 to a four-month low last week. The labor market isn’t incredibly strong, with few job openings and hiring, but layoffs have also lessened.

• Corporate profits are also strong, increasing at a $132.5B annualized rate in Q2.

• And gross domestic income growth was revised to a 3.4% rate, up from the originally estimated 1.3%. 

• All signs point to a resilient economy, which bodes well for Americans but may hinder future rate cuts. As of now, it’s doubtful we’ll have another 50bp rate cut this year.

Some slightly mediocre news to balance out the good:

• August home sales data was released this week, and it doesn’t look great. 

• Sales of new U.S. single-family homes dropped 4.6% from July (but did rise 9.8% from August of last year!). Median sales price of new homes sold was $420.6K, up slightly from July. 

• Sales of existing U.S. single-family homes dropped 2.5% monthly and 4.2% annually. Median sales price of these homes was up 3.1% annually.

• Months supply of homes increased slightly to 7.8 for new homes and 4.2 for existing homes. 

• TL;DR in case you don’t want to draw the supply/demand graph in your head: sales are down, supply is up, and somehow prices are also up.

On the international front:

• Germany’s economy continues to look rough, with economists downgrading their forecast for 2024 to a negative growth rate of -0.1%. 

• Meanwhile, Italy is targeting 1% economic growth this year and 1.2% in 2025. This is desperately needed, since their current ratio of debt to GDP is at 134.6%.

• China is issuing about $280B worth of special sovereign bonds as part of a fiscal stimulus plan to increase consumption. The bonds will be used to increase subsidies for the trade-in and renewal of consumer goods and for the upgrade of large-scale business equipment. China’s household spending is currently less than 40% of GDP, around 20 percentage points below global average.

This Week in Tech

The OpenAI drama never ceases, with even more executive departures: 

• On Wednesday, CTO Mira Murati, chief research officer Bob McGrew, and research VP Barret Zoph all announced they were leaving the company. 

• This is the latest in a long string of departures, with research scientist Andrej Karpathy leaving in February, cofounder Ilya Sutskever and safety leader Jan Leike leaving in May, and cofounder John Schulman leaving last month. Greg Brockman, OpenAI’s president, is also on leave through the end of the year.

• Of the 13 original founding members of OpenAI in 2015, only three still remain. 

• This recent batch of announcements come right after reports that OpenAI is transitioning from a nonprofit to for-profit company, with Altman slated to receive a 7% equity stake. 

Drama seems to be this week’s theme, with WordPress making waves: 

• The drama began last week when Mullenweg, CEO of Automattic, criticized WP Engine publicly, calling it a “cancer to WordPress”. He also said WP Engine doesn’t contribute as much as Automattic does to WordPress.

• WP Engine then sent a cease-and-desist letter to Mullenweg, asking them to retract their statements. Automattic returned with its own cease-and-desist, alleging trademark infringement. 

• The drama escalated this week, when WordPress.org banned WP Engine from accessing its resources. 

• As a result, any sites using WP Engine hosting can’t install plug-ins or update their themes, as well as preventing them from accessing security updates. 

• Many WordPress developers have spoken out, frustrated about being caught in the middle of what sort of just looks like a pissing match between two CEOs. 

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

• Open source developer platform Supabase raised an $80M Series C led by Peak XV and Craft Ventures. 

• Digital transformation firm Whatfix closed a $125M Series E round led by Warburg Pincus. 

• Salesforce is planning on acquiring enterprise knowledge platform Zoomin.

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.