Bitcoin ATHs, Fed Cuts 25bp, & Masa's AI Vision!

Have we reached the promised land?

This Week in Crypto

I’m sure you heard the main piece of news this week. Let’s look at what happened in crypto and some second-order effects.

Yes, that is the largest BlackRock inflow ever. Oh, and Bitcoin has topped $76,000.

The bid has not just been confined to BTC, with SOL kissing $200, and ETHBTC ripping 12% from the lows (yes you read that right, ETH actually went up vs BTC). Could this be the early signs of a reversal?

Some other things to note:

• The House gained 263 pro-crypto candidates (118 anti crypto)

• The Senate gained 18 pro-crypto candidates (12 anti-crypto)

  • Calls for a Strategic Bitcoin Reserve have started from Cynthia Lummis. Polymarket prices this probability at 32% currently. While this was a campaign pledge from the incoming administration, the exact proposal was to use the Bitcoin already seized by law enforcement in the reserve (i.e. not to buy on the open market)

• A frontrunner candidate for SEC chair has emerged:

The anticipated regulatory framework change and policy shift is undoubtably a reason behind crypto related equities ripping; COIN +46.7%, GLXY +35.6%. MSTR obviously is up given the BTC highs (+19.1%), miners MARA +19.6% and CLSK +31.4% have also done well this week.

• OG DeFi (AAVE +31.1%, $UNI +24.7%, LDO 30.6%) caught this bid too, with DOGE +30.2% also catching a pump, given expectations of Elon’s Department of Government Efficiency (D.O.G.E).

Another headline that went under the radar - the first UK pension fund allocates 3% to Bitcoin. Given how antiquated, slow moving, entrenched and stubborn these folks are, even I, a Brit, am surprised at this allocation from my fellow countrymen.

And finally, two years ago today - to those who celebrate (or rather, commemorate):

This Week in TradFi

The U.S. had another 25bp rate cut yesterday, which pushed the S&P and stocks broadly up to all-time highs. This was expected from the market and now all eyes will turn to the December meeting. 

• U.S. weekly jobless claims increased 3,000 to 221,000.

• However, the increase in unemployment hasn’t flowed through to wages yet, which continues to keep the Fed wary with respect to inflation and interest rate cuts. 

• While the Fed is being very cautious, the markets are expecting one more 25bp rate cut in December. 

The other notable moment from the meeting was this exchange:

Across the pond, the Bank of England also cut rates again but has started to see inflation rise. As a result, they have indicated that they will hold rates steady until February, at which point they may look to further lower rates. 

In the Asian markets, India comes out with positive news as it finally sees a pickup in its dominant services industry. 

• Services accounted for ~55% of India’s GDP in FY 2023-24.

• India saw a surge in demand both domestically and internationally, resulting in the fastest rate of employment in services firms in 26 months.

• However, with this rapid surge in demand comes a rise in prices as well and India’s inflation is already at a nine-month high of 5.49% in September. 

• This being said, India’s economy is projected to have a strong Q4 and end with a mind-blowing 7% growth in the quarter. 

This Week in Tech

To nobody’s surprise, the AI world continues to be in a frenzy. It seems like VCs are paying attention to one of the all-time great investors, Masayoshi Son, who predicts that we’ll need at least $9 Trillion of investments in infrastructure to truly achieve “artificial superintelligence”.

The bull-case is that AI agents eventually replace a large portion of the labor/services segment of global GDP (~$100 Trillion). If this were to be true, then you can see how trillions of dollars of opportunities could emerge. However, we are still in the very early innings of AI, where most companies are simply wrappers around a LLM and are more-so aiding humans in labor/services tasks as opposed to being able to autonomously take them on. 

We’ll have to wait and see whether this prediction of Masa is more similar to his investment in Alibaba or to his Vision Fund investment thesis. Either way - he’s one person we would never want to bet against. And judging by the investments listed below, it seems like venture capitalists agree. 

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

• Amazon is in discussions to make a second multi-billion dollar investment in Anthropic, subject to Anthropic using Amazon chips. 

• Physical Intelligence, a robotics artificial intelligence startup, raised $400M in a round led by Jeff Bezos. 

• Insider, an AI native omnichannel experience and engagement platform, raised a $500M Series E led by General Atlantic. 

• Perplexity is nearing the close of a $500M round at a $9B valuation led by IVP. 

• xAI is in talks to raise funding at a $40B valuation. Nvidia reportedly is a possible investor in this round. 

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.