$GME bids Bitcoin, Stock’s Slump, and AI Revenue's

Watch out Michael Saylor, there’s a new kid on the block.

This Week in Crypto

As usual, we’ll start by looking at the ETF flows for the week.

Volume has dropped off significantly, but we’ve not seen any outflow in the second half of the month. Bitcoin has been consolidating nicely in the $80-88k range nicely during that time - brushing off the 25% tarrif news. Remember, the market is a transfer of patient to impatient, of short term holders to long term holders - consolidation precedes expansion.

The big peice of news this week was regards to Gamestop ($GME). As the corporate and Nation State arms race for Bitcoin continues, they’re the latest major company to announce a Bitcoin Strategy, announcing a $1.3B BTC raise via convertible (Saylor style). It did this a day after announcing it’s plans to add Bitcoin to it’s treasury.

• Sidenote: Saylor’s Strategy bought >$500M more

$GME are also sitting on c.$4.5B of cash, which begs the question of how much of that they plan to allocate to Bitcoin. Given the time and effort they’ve gone through to get board approval for the strategy, I’m guessing the allocation will be substaintial.

• $GME is also a great company to follow the Saylor strategy of commoditising it’s volatility and feeding that through to arbitraging the fixed income market (through convertible notes), given it’s one of the most well known and popular stocks for retail investors.

From the wild west of on-chain crypto, this is a good read into the Hyperliquid x Jelly Jelly saga this week:

• It seems that a trader manipulated the JELLY token price on Hyperliquid, a decentralized perps exchange, causing a $12 million unrealized loss for Hyperliquid's liquidity vault (HLP). Hyperliquid responded by delisting JELLY perpetual futures, settling positions at $0.0095, and promising to reimburse most affected users, sparking debates about its decentralization and risk management.

Other headlines that caught our eye:

• SEC Closes Crypto(dot)com Investigation with No Action

• Fidelity Investments Files for Spot Solana SOL ETF with CBOE

• Senate votes to repeal controversial IRS rule - this would have required certain DeFi Protocols to be treated similarly to traditaional security brokers.

• Fidelity to launch digital dollar, as a competitor to BlackRocks BUIDL

• Coinbase is in advanced discussions to buy Deribit - the worlds largest crypto options exchange.

This Week in TradFi

Wall Street opened lower today, with new data showing an uptick in price pressures that came in higher than expected.

• The Commerce Department’s Personal Consumption Expenditures Price index overall rose as expected, but when excluding volatile items like food and energy, the index rose more than expected on an annual basis last month.

• Auto stocks also saw a fall off, with President Trump’s 25% tariff on auto imports starting next week. General Motors dropped 7% yesterday, and Ford dropped almost 4%. Tesla stocks increased slightly, up 0.4% yesterday, with investors guessing that companies like Tesla will be hurt less by the new tariffs given the company’s domestic production.

• The number of new unemployment applications dropped last week, while the jobless rate seems to have remained steady in March. 

• The S&P 500 and Nasdaq are both on course to end Q1 in negative territory. So far this year, the S&P 500 has lost around 3% and the tech-heavy Nasdaq is down about 8%. 

• And Q4 GDP growth was revised yesterday to 2.4%. 

On the international front:

• Brazil’s jobless rate rose in the quarter through February, hitting 6.8%, up from 6.1% the previous quarter. Brazil’s jobless rate has fallen to historic lows in the past few quarters, which has been exciting but also a reason for the country’s central bank’s recent raised interest rates. 

• Canada’s GDP grew 0.4% on a monthly basis in January, fueled partly by an increase in demand for cross-border trade by companies seeking to avoid the impact of U.S. tariffs.

• And good news out of Spain - the country’s annual inflation rate has fallen this month to its slowest pace since October. The 12-month inflation rate fell to 2.2% in March, down from 2.9% in February.

This Week in Tech

The tech world lost its mind with some drama involving another YC company this week - 11x, a company that’s building AI sales agents. Reports came out this week claiming 11x’s inflated revenue accounting and the fact that their latest investor, A16Z, was considering suing the company. A16Z has categorically denied any inclination of a lawsuit and investors have said that they were all aware of 11x’s revenue accounting:

• 11x enables each customer to break out of 1 year contracts at the 3 month mark with no cost. This is to reduce any hesitancy a customer would have to commit.

• However, 11x would then count the full contract as annualized revenue “ARR”.

Now doing the above isn’t unusual, in fact most companies have some notion of “expected ARR” based on signed contracts. However, 11x’s reported customer churn is off the charts - around 80%. This means that ~80% of that reported revenue number never actually came to fruition. While all the news made this seem like a big scandal, it seems like all investors were aware about both the accounting method as well as the churn numbers and so this actually wasn’t that big of a deal.

However, this does bring up a broader point about many of these AI companies that are going from $0 - $10M+ in ARR in under 1 year. After learning more about 11x, you have to question how the other AI companies are counting revenue and what the churn looks like as well. We’ll have to see as these companies continue to mature.

Speaking of AI, two words dominated twitter for the later half of the week - “Studio Ghibli”. Studio Ghibli is an esteemed Japanese animation studio. Chat GPT released a feature that enabled users to transform images into the style of Studio Ghibli’s founder Hayao Miyazaki and Twitter/X flooded with all sorts of images being transformed.

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

• Google acquired cloud-security company Wiz for $32B.

• Mercury, a business banking company, raised a $300M Series C in primary and secondary funding led by Sequoia at a $3.5B valuation.

• Island, an enterprise browser startup based in Dallas, raised a $250M Series E led by Coatue at a $4.85B valuation.

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.