$MSTR Mania, Tariff Agreements and OpenAI Reversal

A picture tells a thousand words…. so I’ve decided to include about 20 pictures for you this week (and it’s definitely not because I’m just lazy).

This Week in Crypto

The Arch Team spent most of the week down in Orlando at the Strategy Conference. Before we dig into the key takeaways, we’ll take a look at ol’ faithful here which has really posted some great flows over the last month.

At the same tiem, we can see BTC continues to perform well vs the S&P500, hitting a fresh ATH:

And it looks like we’ve set a higher low vs Gold on the monthly:

On to the $MSTR conference this week! The first day we hung out with the crowd from True North, and I personally learnt a lot about the various instruments surrounding the $MSTR stock:

There has spawned an eco-system of securities and instruments around $MSTR which allow both retail and institutional investors access to varying degrees of leverage and volatility, all tethered to the baseline of $BTC.

Going down the stack (fair warning, it’s alot):

• $MSTR ( ▼ 1.34% ) options

  • Reasonably straightforward here. Highest leverage, highest volatility instruments available.

• $MSTX ( ▼ 2.94% ) , $MSTU ( ▼ 3.38% )  

  • 2-3x Leverage on underlying $MSTR stock.

• $IMST ( ▼ 0.42% )  $MSTY ( ▼ 1.15% )  

  • Actively managed ETFs designed to generate monthly income on underlying $MSTR by selling covered calls. These aim to monetize the volatiltiy of $MSTR - the most volatile stock on the market.

• $MSTR ( ▼ 1.34% )  

  • In itself, levered Bitcoin, and more volatile. This volatility makes the strategies above possible, profitable (if done correctly) and creates a liquidity flywheel.

• $BTC, $IBIT ( ▲ 1.42% )  

  • Self explanatory

• $STRK ( ▲ 0.28% )  

  • Preferred stock which provides an 8% dividend. The stock is covertable at a 1:10 ratio above $1000 $MSTR. In other words, this is fixed income with a call option on $MSTR providing unlimited upside potential.

• $STRF

  • Preferred Stock with a 10% dividend yield. Not convertible. Pure fixed income play.

Together, retail and institutional investors looking for anything from fixed income instruments through to high leverage, high volatility strategies tethered to Bitcoin are able to get exposure via a combination of these instruments.

If you have time, I highly recommend watching Saylor’s Keynote from the conference:

The one slide that really stood out for me, which I’ll leave you to ponder on, was the following:

Only 4% of publicly listed companies actually create wealth, the remainder give performance equivalent to or below T-bills.

This Week in TradFi

Interest rates and tariffs and interest rates and tariffs, are you tired of them yet? Yeah, we’re not either.

The Fed decided to hold rates steady Wednesday, against the wishes of President Trump. 

• Financial markets had largely expected Powell to keep rates unchanged. Though the Fed expects inflation and unemployment to increase as a result of U.S. tariffs, Powell says the country has yet to see real signs of either. This gives the central bank time to wait until there’s more clarity on where tariffs actually end up and what their effects are. 

• Cutting interest rates generally helps boost the economy, but when inflation is already above-target, rate cuts could lead to an upward spiral of price pressures. 

• Trump called Powell a “fool” for not cutting rates. Funnily enough, Trump himself appointed Powell as Fed chair in 2018 during his first term in office. 

Meanwhile, President Trump and British Prime Minister Keir Starmer announced a breakthrough deal yesterday on trade, the first since Trump announced a slew of tariffs on most U.S. trading partners on April 2. 

• The Bank of England did cut interest rates yesterday in anticipation of a hit from tariffs, though yesterday’s trade deal may mitigate this some. 

  • Before details of the deal were announced, the Bank of England published estimates showing that the U.S. tariffs would shrink Britain’s economy by about 0.3% over three years. 

• Under the deal agreed to yesterday, the U.S. will continue to impose a new 10% tariff on imports of most British goods but will reduce higher tariffs on imports of British cars, steel, and aluminum. 

And Wall Street’s main indexes seem to be rising today, their third straight day of gains, as investors process Trump’s comments regarding tariffs on China - ahead of a meeting between the two countries this weekend.

• Trump said Beijing should open its market to the U.S., and that he is open to reducing the current 145% tariffs down to 80%. 

• India has also offered to slash its tariff gap with the U.S. to less than 4% (vs. the current 13%), in exchange for an exemption from Trump’s tariffs. 

This Week in Tech

In a surprising reversal, OpenAI announced on Monday that its nonprofit division will continue to retain control over its for-profit organization (rather than planning to convert to a for-profit organization). 

• OpenAI was initially founded as a nonprofit in 2015, but converted to a “capped-profit” in 2019, and was trying to restructure once again into a for-profit. 

• “OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit,” OpenAI Board Chairman Bret Taylor wrote in a statement on the company’s blog. “Going forward, it will continue to be overseen and controlled by that nonprofit.”

• The restructuring was going, to put it lightly, not great. People from all sides were against the idea, and just last week, a group of former OpenAI employees asked California’s and Delaware’s attorneys general to block the startup’s conversion, saying it was at odds with OpenAI’s charity roots. And everyone’s favorite interventionist Elon Musk had submitted a $97B takeover bid to attempt to stop the for-profit transition. 

• OpenAI needed to complete its for-profit conversion by the end of the year or risk relinquishing some of the capital the company had recently raised. The consequences of deciding to remain a nonprofit are now unclear. 

Zuckerberg spoke at Stripe’s annual Sessions conference this week about his plans to automate the entire ad industry with a black-box, end-to-end AI ad tool.

• Part of the product would mean putting thousands of AI-generated test ads in front of Facebook, Instagram, and Threads users. 

• “We’re gonna be able to come up with, like, 4,000 different versions of your creative and just test them and figure out which one works best”, he said. 

• This could have far-reaching implications for the ad industry. Zuckerberg said that small businesses would not have to “start off with the creative”, and Meta could just handle all their advertising operations. 

• In fact, he said that several of Meta’s ad tools are advanced enough already that customers don’t even need to specify the demographics they want to target. Zuckerberg claimed that Meta’s ad tools are able to find interested users better than human marketers. 

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

• Instacart CEO Fidji Simo is joining OpenAI as CEO of Applications. 

• Cybersecurity company CrowdStrike is laying off 5% of its workforce, around 500 employees.

• Longevity startup NewLimit, founded by Coinbase CEO Brian Armstrong, has raised a $130M Series B. 

• Orca AI, which develops autonomous navigation software, has raised a $72.5M Series B, led by Brighton Park Capital.

DoorDash announced two major acquisitions - U.K. rival Deliveroo for $3.87B and SevenRooms for $1.2B.

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.