Solana ripping, weak earnings, and the end of OpenAI's bromance!

You are so lucky to have this newsletter for free, and now, you can also listen to our new podcast series.

Our first guest, Michael Sonnenshein - former Grayscale CEO. It’s a cracking listen!

This Week in Crypto

We’ll start with a glance at the ETF flows, they make for pretty reading!

Despite the inflows price is flat and ranging between $66,000 and $69,000. Our read would be that the market wants higher, but given the uncertainty around elections is holding steady. We’d be long vol into mid-November (not financial advice).

Stripe, who powered $1T in payment volumes in 2023, announced plans to acquire Bridge, a stablecoin platform, in a $1.1BN deal. If the deal goes through it would be the largest crypto acquisition by a payments company ever! Here’s what the CEO had to say:

The move signals urgency from Stripe to enter the stablecoin market in a meaningful fashion, given competitors such as Robinhood and Revolut are rumoured to be developing their own stablecoin solutions. Stablecoin’s are one of the most clear use cases for blockchains, so it’s no surprise traditional payments companies are taking note:

Solana has stolen the show on-chain this week with a fervour around AI coins. Volumes have almost doubled those of Ethereum ($14.9BN vs $8.1BN).

• Accordingly SOLETH has hit new ATHs - if you recall our start of the year predictions, we had SOLETH to trade to 0.1. Currently we are sitting at 0.07 so that prediction is looking strong with 2 months remaining on the clock (maybe i’ll get a bonus!).

• SOLBTC continues to trade lower, with new yearly lows (0.037). We’ll be sure to monitor for signs of a reversal, but we wouldn’t expect any bottom to occur before Bitcoin rips to ATHs, at the least.

I actually had a dream of what the Bitcoin chart looked like in 6 months and it looked something like Gold, which hit new ATHs this week:

Some headlines that caught our eye:

• The US government appeared to get hacked for $20M (lol)

• Mining difficulty hits another ATH

• Institutional investors hold 20% of US spot traded ETFs, a surprisingly low figure if you ask me.

And finally, I’ll leave you with some hopium ($MSTR + 12.75% this week to new ATHs)

This Week in TradFi

After record-highs on Wall Street, lower-than-hoped-for earnings, changing monetary policy outlook, and an upcoming election have increased market volatility.

• Boeing dropped almost 2% after the company reported a quarterly loss of $6 billion, following a five-week strike. This comes after a significant quality crisis, with multiple mishaps throughout the year. Boeing CFO told investors he expects the company to continue burning cash next year. 

• McDonalds also dropped over 5% after news of an E Coli infection broke, and Coca Cola fell 2% after a weaker profit growth forecast. 

• U.S. mortgage rates increased for the fourth straight week, rising to 6.54% from 6.44% last week. Mortgage rates fell in September with the Fed rate cut but have begun rising again following solid economic data. 

• In that line, treasury yields jumped, potentially pointing to signs that the economy is growing too fast and that employment is too resilient (god forbid, right?). Policymakers continue to anticipate more rate cuts, but the pace is unclear. 

Separately, Paul Tudor Jones on the Fiscal deficit and government spending is well worth a listen:

On the international front:

• The International Monetary Fund warned that China’s annual economic growth could drop to “way below” 4%, unless drastic reforms are made to increase domestic consumption and confidence in the country’s property sector.

• The Bank of Japan decided to raise interest rates in July, with public support from the IMF. They now expect the BOJ’s policy rate, currently at 0.25%, to reach 1.5% in 2027 - warning about the risks of too rapid of change. 

• India’s business sector grew slightly in October after a decrease last month, led by higher demand in the manufacturing sector. The country continues to be the driving force for German investments in the Asia-Pacific region, with 51% of the German companies in India intending to increase their investment in the coming year.

This Week in Tech

OpenAI and Microsoft are reportedly trying to renegotiate their partnership terms.

• To give some quick background, Microsoft had invested an enormous $13B in OpenAI until last Fall, when Sam Altman requested additional investment. Following his sudden firing by the board, Microsoft decided not to invest a significant additional amount, despite OpenAI facing massive losses. 

• When OpenAI had initially partnered with Microsoft, the agreement was that OpenAI would exclusively buy computing power from Microsoft, and Microsoft would rely on OpenAI on new AI tech. 

• However, Microsoft has started to hedge its bet with the company, spending north of $650M to hire a majority of the staff from Inflection, an OpenAI competitor. And OpenAI negotiated a contract exception to sign a $10B computing deal with Oracle for additional computing resources.

• The two companies are now renegotiating their partnership again, due to OpenAI’s plans to restructure by reincorporating its for-profit arm and removing caps on investors’ returns. 

• The new negotiations center around how big of a stake Microsoft will receive after the restructuring and what governance rights it will receive. 

Continuing on the AI front, Google is open-sourcing SynthID Text, technology that lets developers watermark and detect AI-generated text. 

• SynthID reportedly doesn’t compromise the quality, accuracy, or speed of text generation, but it does not work as well with short text, text that’s been rewritten or translated from another language, or with responses to factual questions. 

• Multiple companies, including both Google and OpenAI, have been working on watermarking technology for a while, given the increasingly widespread use of AI detectors, which can have varying efficacy. 

• AI companies may soon be forced to develop this technology if they’re not already working on it, with China already mandating watermarking of AI-generated content and California potentially looking to do the same.

• The major difficulty with watermarking technology is creating a universal standard and enforcing adoption - the eternal struggle for any tech policymaker. 

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

• Stripe competitor Finix has raised $75M, led by Acrew Capital. 

• Call center software company Genesys has filed for IPO in the U.S. 

• General Catalyst has raised $8B, with $750M earmarked for healthcare investments.

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.