View from the Arch #6

A monster $JITO Airdrop, Gold rallies, and a VC firm closes shop

December 08, 2023

There has never been a red week so long as this newsletter has been written. We promise we’ll never stop. Never.

This Week in Crypto

Bitcoin is having its 8th consecutive weekly green candle. Consider this meme an early Christmas gift - send it to your nocoiner friends. You’re welcome.

Our view is that a meaningful pullback is unlikely in December, ahead of ETF approvals. Expect the narrative to change to a “sell the news” in late Dec/early Jan (reminder the next approval window is around the 10th of January). One of the frontrunners for first approval is Vaneck who has revealed the ticker will be $HODL.

Pithy.

The key meta this week have all been to do with the Solana Ecosystem. $JTO had a large airdrop to just 10,000 qualifying wallets. If you staked any amount of Solana with Jito previously, make sure you go and check for a free $5-10k+ and counting.

If like us, you did not, you can cope and seethe with us on the sidelines and desperately try and qualify for the next ones. Here are some protocols on Solana with no tokens. Consider this a second Christmas gift: Drift, Kamino, Tensor, Wormhole, Marginfi, Parcl, Mayan, Meteora, Cega, Aeta, Phantom, Birdeye, Backpack, Cube.

Elsewhere, Starknet and Layer0 also announced plans for a token. We’ll let you figure that one out. A third xmas gift from us here: take a peek and consider buying Libertus Omnibus NFTs on element.market , it might be a way to qualify yourself for the Zksync airdrop.

Anyway, winners from the week included BONK +208% (Solana dog coin), which flipped $PEPE in market cap. $ORDI +127% - a second meta which had a busy week was BRC-20 tokens (tokens on Bitcoin). These are a pain to buy but if you are interested you can checkout brc20.com and then get yourself an xverse wallet to purchase tokens on unisat.io - $TRAC might be one to check out - holding it should qualify you for the $TAP airdrop (4 gifts! Don’t say we don’t treat you well). Finally, Helium Network, $HNT is another top performer, being up +62.6% this week - they unveiled a $20 p/m unlimited phone plan with T-Mobile.

News from Crypto Markets

This Week in TradFi

Bond prices were on the up last week as the markets pencilled in US interest rate cuts in the not too distant future. There was little attention paid to the US Treasury interest bill which exceeded that of the defense budget for the first time in 20-years - and that bill is only expected to continue to grow. Treasuries over the past weeks have rallied hard, and returns are showing their best monthly levels for decades. A lot of fixed income managers will be thankful after experiencing a torrid 10-months of 2023. Equities followed a more uncertain trajectory initially after that excellent swing higher last month, but were pushing higher as the week progressed.

Gold saw a record high print in excess of $2100/ounce early on (boosted by lower rates) and oil prices were playing out at the lower end of their recently established trading range (despite OPEC cuts), with US oil edging to 5-month lows.

So the big driver supporting risk prices comes from a market that is now clearly anticipating that the Federal Reserve is done with the current hiking cycle, as mentioned above. The next Fed move will be to start cutting rates, perhaps sometime in the first half of 2024. All the while, investors are hoping that the US economy can avoid a recession - just as GDP growth topped out at 5.2% in Q3.

It might not all make sense - record treasury issuance, who's funding it (?), surveys suggesting consumer weakness is increasing but spending is up, and the like. It would seem that into the considerable levels of economic uncertainty (US job openings fell sharply, payrolls beat), markets are trading as if a Goldilocks-like growth path is the most likely outcome through 2024. As a result, risk assets seem set to stay broadly better bid.

We're not quite closing out the year, given that there are still a couple of good trading weeks ahead of us before we head into the quieter Yuletide (more illiquid) period. Thereafter, the prevailing view is that investors will be back in the saddle in January and pushing markets higher, especially given the recent bullish market direction. That heavy weight of sidelined cash will likely be getting to work quickly as we cross the line into 2024.

This Week in Tech

As everyone knows, tech has had quite a correction in valuation over the past 1.5 years. All the players in the industry have felt the pain here with startups needing to cut-costs and raise down-rounds and VCs/LPs needing to mark down returns. However, news broke this week that OpenView, a VC firm with ~$2.4B of AUM, laid off all of their staff and is winding down. We’ve seen reports of many LP’s pulling back commitments and investors slowing down the deployment place. Some are saying that this seems to be just the beginning of the contraction of venture capital, which saw AUM balloon over the last bull market:

However, there is one LP who is anything but flakey, Calpers. Reports came out that they are doubling down on venture. They committed $4.5B into VC funds in the first 6 months of 2023 alone, which represented 15% of all capital raised by US VC’s in that time period! This conviction is a result of their learnings from the 2008 financial crisis, after which they pulled out of private equity as an asset class and estimate a loss of $11B in returns from that decision. We’ll have to wait to see if history is on their side here.

In AI land, Google announced their latest AI Model, Gemini. Reception was extremely positive with many saying that it outperforms OpenAI’s GPT-4 model. This had to have been expected, given Sergei Brin decided to come back and program himself:

As always, here are some fundraising and M&A activity that caught our eyes: