Crypto Chaos, Stocks Rally, AI takes charge

This was one of the longest and most ridiculous weeks in crypto I’ve ever experienced.

This Week in Crypto

I think I’ll start chronologically from last Friday, pre-inauguration:

• Trump’s team launched a memecoin $TRUMP (during a pre-inauguration crypto-ball which industry heavy hitters attended).

• It quickly flew to become the second most valuable meme-coin behind DOGE, at a peak circulating market cap of $15B.

• A $MELANIA coin launched with insider wallets having an egregiously high number of tokens, and caused a prompt 50% drop in $TRUMP.

There has been a fierce debate over the ethics of such a launch in general, and especially from an incoming president.

In any case, the event was a mass onboarding event:

And activity on Solana went crazy, but also led to network performance issues such as increased transaction failures and delays on major platforms.

Meanwhile, as Ethereum continued it’s depression vs BTC and SOL, key Ethereum community figures have criticized the project's roadmap. In response, the Ethereum Foundation (EF) introduced structural changes and announced several internal promotions.

A quick interlude to just peek at the ETF flows now. They’ve been on fire in general since the start of the new year - picking up 6% of ALL ETF flows.

The inauguration was on Monday, as I’m sure you all know, and since then there has been an absolute avalanche of regulatory updates to consider. Let’s quickly rack through them:

• Mark Uyeda took over as Acting Chair of the SEC, pending Paul Atkins’ confirmation and launched "Crypto 2.0," a task force led by Hester Pierce to clarify regulations and improve enforcement.

• Trump granted a full pardon to Ross Ulbricht, founder of Silk Road.

• Trump signed the “Strengthening American Leadership in Digital Financial Technology” executive order. This promises to:

  • Halt Operation Chokepoint 2.0

  • Ban any CBDC’s in the United States

  • Create a working group on digital assets, which will be led by David Sacks, who spoke to Fox yesterday. They are tasked with:

    • Developing a Federal Regulatory Framework: The group will propose a federal framework for digital assets, including stablecoins, to enhance market clarity, integrity, and investor protection.

    • Evaluating a National Digital Asset Stockpile: They will assess the feasibility of a U.S. stockpile of lawfully seized cryptocurrencies, proposing criteria for its establishment.

      • The lack of wording with respect to Bitcoin specifically caused a dip yesterday and Bitcoiner’s to go characterisitcally apoplectic. Sacks reiterated their need to study what should go in the “stockpile” and what it will look like.

      • Our view is that it would be foolish to add any other assets to any reserve/stockpile, and the US should not undermine confidence in the dollar. If there is to be a reserve it should be via seized Bitcoin only.

    • Engaging with Experts: Led by the White House AI & Crypto Czar, the group will collaborate with industry experts to shape informed regulations and initiatives.

• Oh, and finally SAB121 was revoked, removing burdensome accounting rules for banks holding customer digital assets. The bankers are actually going to be buying our bags, for real.

Oh yeah, and somewhere in between all that was a new Bitcoin ATH…

And finally, public companies adopting a Bitcoin Treasury strategy continued with our client Genius Group increasing reserves to 420 BTC, Microstrategy adding 11,000BTC to hit 461,000BTC, KULR technologies reaching 510BTC and Semler Scientific raising $75M for more purchases. Expect this trend to continue.

This Week in TradFi

Things are looking good on the domestic front, though investors continue to remain reserved as we see how the new administration’s economic policies shake out. 

• Wall Street’s main indexes are on track to close their second straight week of advances, with Dow on track to hit its biggest weekly jump since October 2022. 

• The market today looked a bit weaker, with Boeing losing 1.6% in premarket trading after warning a four-quarter loss of $4B. Texas Instruments dropped 4.4% after forecasting Q1 profits lower than expected, and American Express dropped 0.6% despite posting a 12% increase in Q4 profits.

• Next week we’ll see quarterly reports from Microsoft, Meta, Apple, and Tesla, so stay tuned for that. 

• Meanwhile, the Fed is meeting on January 28 and 29, and expectations are that they will leave rates unchanged. However, President Trump is calling for rate cuts, given oil prices dropping. The Fed has historically remained independent from political administrations and have not directly responded to Trump’s request for a rate cut. They have, however, cautioned against lowering rates again while inflation remains above the 2% target. If we had to bet, we doubt the Fed will cut rates in its next couple meetings, but we’ve been wrong before! 

On the international front:

• The UK continues to struggle, with its economy stagnating and inflation remaining above the 2% target. Investors place an 80% chance on the BoE cutting its bank rate to 4.5% (currently 4.75%) on February 6 and also predict two more quarter-point cuts before the end of the year. 

• Spain’s manufacturing prices rose 2.3% last year, following a 6.3% decline last year. Prices of oil, gas, and electricity rose 7.5% in 2024, a massive jump following a contraction of 20.6% in 2023. The country’s inflation rate is also on the rise, reaching 2.8% in December after slowing to 1.5% in September. 

• China’s fiscal revenue grew 1.3% from a year prior, slowing down from its 6.4% increase in 2023. Fiscal revenues totaled just over $3T, with tax revenue falling 3.4% YoY and non-tax revenue increasing 25.4%. Revenue from land sales by local governments in the country dropped 16% YoY, indicating a steep property downturn.

This Week in Tech

Any guesses on what we’re writing about this week? I won’t pause because hopefully it’s pretty obvious - AI.

OpenAI is launching Operator, an AI agent that performs tasks autonomously. 

• On Thursday the company launched a research preview of the agent, but Operator will reach U.S. users on ChatGPT’s $200/month Pro subscription first. 

• The research preview is currently available at operator.chatgpt.com. The agent promises to be able to book travel accommodations, make restaurant reservations, and shop online. Operator will use its own dedicated browser, so users are able to continue to do their own work alongside. 

• Operator is powered by Computer-Using Agent model (CUA) that combines the visual capabilities of GPT-4o with reasoning abilities from the company’s more advanced models. The CUA can interact with the front-end of websites, just like humans, able to use buttons, navigate menus, and fill out forms. 

• The model should ask for user confirmation before completing tasks, like submitting an order, sending an email, etc. However, OpenAI reports that Operator cannot “reliably handle many complex or specialized tasks” right now, such as creating detailed slideshows, managing intricate calendars, or interacting with non-standard web interfaces. 

• In certain scenarios, Operator will require active user supervision, like for bank transactions or while writing emails. Probably good to not let a one-day-old AI agent have control over your credit card info! 

• OpenAI has been slow on the AI agent scene, with Rabbit, Google, and Anthropic all already having released some version of an agent. However, the industry does seem to indicate that AI agents are the next big thing, so we’ll be watching to see how the agent race shakes out.

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

• Neko, body-scanning startup, raised a $260M Series B at a $1.8B valuation. 

• DIvvy Homes, a rent-to-own startup, has been acquired for $1B, but some investors may not receive a payout due to specifics in the deal.

• Databricks has officially closed its $10B Series J equity round at a $62B valuation. The company also closed $5.25B in debt financing. 

• The IMDb founder and CEO Col Needham has stepped down after 35 years at the helm of the company. COO Nikki Santoro will be appointed as his successor. 

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.