View from the Arch #5

Another week another yearly high…

This Week in Crypto

Bitcoin is currently on track for it’s seventh consecutive green weekly candle, hitting new yearly highs every hour.

It came to light this week that one of the catalysts for the recent move was in fact the Saylor bid. MicroStrategy (MSTR), the largest corporate hodler of bitcoin purchased 16,130 $593.3 million in cash at an average price of about $36,785. MicroStrategy now holds 174,530 BTC bought at an average of about $30,252 per coin. As of today, they are sitting on around a $1.4bn dollar unrealised PNL.

Michael Saylor also personally holds 17,732 BTC. The word “conviction” comes to mind…

Saylor’s trade is simple, but genius. It boils down to the fact that you can print stock, but you cant print Bitcoin. Indeed, MicroStrategy plan to offer up to $750 million worth of class A common stock.

It’s likely that Saylor will continue to issue equity when MSTR trades at a premium to their BTC holdings. As Bitcoin trades higher, MSTR price goes up, MSTR then dilute by issuing equity and buy more Bitcoin. There is a clear positive feedback loop here.

But loops go in both directions. The risk here is the debt that Saylor is taking on, and the prospect of having to refinance it at high rates during a bear market when the Bitcoin price was depressed. This thread has a good argument as to why the “debt problem” is not actually as big a problem as it may seem.

Altcoin’s were fairly reserved this week, all things considered. Top performers from the top 100 included Celestia (+28%), Thorchain (+17%) and Injective (+17%) Multiple meme coins were launched including $GFY and $MUNGER in wake of Elon’s interview outburst and the death of investing legend Charlie Munger.

News from Crypto Markets

For this week’s news section, try as I might, I could not make anything more comprehensive than Travis Kling’s summary. So, urm, here’s that instead.

This Week in TradFi

A relatively quiet end to the month for risk assets that was affected by the Thanksgiving break/Black Friday and Cyber Monday. But it was a good month for risk assets and the incoming data was very supportive - especially with inflation falling in the US and Europe. The US economy at the moment feels very 'Goldilocks-like" while Europe seems more of a mixed bag.

Rates have peaked. Credit markets are on a roll (spreads tighter). The Fed is done we believe and, the ECB is for sure given the weakness across Eurozone macro. So investors are occupying themselves with the timing of the first rate cut of the new cycle. It's risk-on. The VIX is below 13%! Nevertheless, investor portfolio re-positioning into the close of the penultimate month of the year saw a more limited trading week activity-wise, but we closed on the front foot. The omens for risk look good for the next few months.

Away from that, who would have believed that the 30-year yield has dropped to as low as 4.34% (as at the time of writing)? 6% was the call a couple of months ago. We've seen dollar weakness followed by a little bit of strength into the final sessions of November. The tone going into December will be broadly positive across the risk universe.

Separately, Private Credit has been a buzzy asset-class since rates started increasing. Here is a great read highlighting the origins of a massive ($100B+ in AUM) and opaque firm: Highbridge Principal Strategies.

This Week in Tech

Pop open that bag of Flamin’ Hot Cheeto’s, as we have some spicy news in both AI and Fintech! Stability AI, which has raised well over $100M from marquee investors such as Coatue, Intel and others has found itself back in the news as reports came out that it was reaching out to potential acquirers about a sale and that Coatue asked the CEO to resign. Stability has consistently been hit with claims of fraud and mismanagement over the past year, but the CEO Emad took to twitter to refute the most recent reports:

Stability is one of the major AI players alongside OpenAI, Anthropic, and Cohere. We’ll stay tuned to see how this unfolds!

Big news in the fintech world: Apple has finally decided to pull the plug on the Goldman Sach’s partnership for Apple’s credit card, BNPL (buy-now-pay-later) service, and high-yield savings accounts. This relationship was on the rocks for quite some time and it seems to be officially ending now. These products have an extremely large user-base and it will be interesting to see which financial institutions try to court Apple to gain the business. We will keep you all updated as this progresses!

As always, below are some M&A and fundraising activity that caught our eye:

• Cadre gets acquired by competitor Yieldstreet for a fraction of it’s last valuation

• Playground raises $19M in Series A funding to streamline healthcare payments

• Mozaic raises $20M to simplify creator payments

• Crezco raises $12M in Series A funding to streamline B2B invoice payments