View from the Arch #3
Friday, November 17, 2023
Another eventful week in crypto, with most of the action confined to altcoins…
This Week in Crypto
BTC saw a pullback yesterday (today when this note was written), but remains around $35k. A pullback to anything below 30-32 would be a surprise to us, and we would favor the opinion that dips are for buying. An ETF approval window is, according to Bloomberg, James Seyfarrt mentioned in last week's issue, now open until Friday. The next deadline would be in January.
Elsewhere, the L1 trade continued to fair well - AVAX + 75%, Rune +65% and SOL + 36%. For any of you Solana chain users be sure to check if you qualify and follow along with the upcoming $JUP and $PYTH airdrops next week. We’ll be keeping an eye on Solana chain activity to see if these airdrops trigger a sustained inflow of users.
The crypto x AI narrative also had a few nice pumps, we expect this narrative to continue and grow - RNDR gained 42% this week and $TAO gained 31%. What $TAO does, we’re not quite sure, but give this blog post from The Knower a read and if you can figure it out - please let us know. Seriously, we are dying to know.
Celestia also launched this week - thank you Gary Gensler for protecting us from claiming the free money in the airdrop. Members of the Arch team had fun figuring out how to buy it. If you want to know, get a KEPLR wallet and bridge to Osmosis using Squid router. Happy hunting!
$COIN had another good week, touching 3 digits. We continue to believe Wall street are underpricing Coinbase as a business and this will continue to perform as a high beta play in legacy markets given a sustained rally in crypto. Just this week, South Koreas national pension fund purchased $20m of the stock.
News from Crypto Markets
This Week in TradFi
The weaker than expected CPI print in the week was the big driver for the continuation of the current market rally. Investors are now clearly anticipating a softer landing for the US economy whilst continuing to ignore the massive funding requirement coming through in 2024 by the Treasury. Perhaps there's an eye on it, but as we wrote last week, the trend is your friend and few are standing in front of the rally. Rates too have rallied sharply and the 5-handle yield on the 30-year just a couple of weeks ago sees a yield edging closer to 4.5%.
The story though is equities and the market is positioning for US rates having topped out with cuts coming in 2024. The November rally in equities is largely intact and we think the direction holds into the Thanksgiving period before markets quieten into the Yuletide period. The tea leaves are lined up for a continuation of the risk-on tone though. The data in the US is (especially) supportive - with some macro weakness evident (Fed unlikely to raise again this cycle) and a Goldilocks-like scenario playing out and, even Biden and Xi managing to meet to calm the geopolitical tensions between the two economic heavyweights.
This Week in Tech
Fresh off the press: some tech VC’s caused mayhem on twitter when they announced an organization that was created to responsibly implement and govern AI. This was met with a heavy amount of resistance from others in the industry. AI always keeps it interesting.
Sometimes it’s mind-blowing to stop and think about how large the market for financial services is. The Credit card market in the US is no exception. We all know that AmEx is a heavy hitter in that world, but this statistic truly blew our minds: 1% of America’s GDP goes through the Delta AmEx. We definitely did a double take when we read that!
Markets are picking up. The general consensus is that rates are nearing the top, with an expected easing of 75bps next year. UBS has come out and predicted a 275bp rate cut! Risk assets to the moon 🚀. Growth rounds are happening and new funds are being raised - things are looking much better than they were 6 months ago. We’re hoping this momentum continues as we enter the holiday season. Below are some recent fundraising announcements that caught our eyes.
Select fundraise announcements from the week:
Blockchain.com raised a $110M Series E round at less than half of it’s prior $14B valuation.
Imprint raised a $75M Series B from Ribbit Capital, Thrive Capital and others
Coatue announced a $1.4B fund for growth stage deals
Menlo Ventures announced $1.35B in new funds
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