“Bitcoin valuations fall after increased liquidation, Altman and Musk clash over OpenAI’s mission, Dencun Update excites long-term potential for Ethereum.”
TradFi & Global Market News
Global Market: S&P 500 & NASDAQ
Prices across markets continue to rise as technology supply chains between technology giants and core technologies integrate tighter than ever before. As of Tuesday, the S&P500 and Nasdaq hit highs of around 5175 and 16245, respectively. Nvidia continues its stock price rally at around 7% from previous weeks. At the same time, enterprise cloud technology provider Oracle experienced a 12% increase as the two companies established a chip agreement for cloud computing. Rising stock prices bring heavy caution as key players like Apollo, Bank of America and Citi highlight vital similarities to the 1990s technology bubble. This is even more concerning when considering that the stock prices are masking the higher-than-expected inflation rates in the country, which have started to hit the cryptocurrency markets.
Global Market: FTSE100
In the UK, the FTSE100 hit its 10-month high at 7770 on Tuesday as commodity prices across energy sources continue to rise following supply chain disruptions in the Red Sea and the continued Israel-Palestine conflict. While this is a net positive for investors, it reflects an archaic economic portfolio that continues to drive the UK, which is overweighted in “old” economy drivers like commodities and a severe underrepresentation in technology. This has resulted in a heavy outflow from UK financial markets valued at around £14billion as they witness their 8th consecutive year of outflows. This translates into higher capital costs for UK corporations, dampening investment potential in the long run.
Artificial Intelligence (AI) News: OpenAI
Tesla and X CEO Elon Musk has stirred up the AI ecosystem by launching legal action against OpenAI, a company he helped to found almost 10 years ago. Musk claims that OpenAI has returned on its promise to develop Artificial General Intelligence for public benefit by forming the Microsoft-OpenAI partnership, thus moving the business into a for-profit structure. While these questions profoundly impact how the ecosystem continues to develop, public relations analysts are confident that these questions are secondary to Musk, who is merely using them to gain exposure for his products.
OpenAI has hit back by exposing past conversations with Musk while he was still with OpenAI. These conversations suggest that Musk was favourable to a for-profit model and wanted Telsa to be that avenue, a similar role that Microsoft has now. Therefore, the narrative is that Musk is merely jealous of the company’s success, from which he has not been able to benefit. Musk also has his own xAI platform, which he is building. Bringing his name closer to the AI discussion might bring greater attention to his work. Investors should be wary of the negative implications such bad press surrounding OpenAI has on the company’s performance as it compounds with other incidents facing CEO Sam Altman, like the concerns over his other project, WorldCoin, which will be expounded upon below.
DeFi & Digital Assets News
Cryptocurrency Market: Bitcoin & Ethereum
All-time highs across the cryptocurrency market are fuelled by continued support for crypto-backed products worldwide. Britain is set to follow in the US footsteps by allowing crypto-traded notes for institutional investors. Bitcoin breached its all-time high of 73000 while Ethereum broke 4050; however, both products have since trended downward marginally over the start of this week. By the end of the week, analysts’ prediction for a correction came true, as a sharp correction dipped Bitcoin closer to the 66000 price point while Ethereum was closer to 3700.
This movement can be decomposed into three channels. Firstly, a vast volume of liquidations amounting to $682.54 million from almost 200000 trades swept across the market, with over 80% coming from long positions. Secondly, US macroeconomic conditions remained hotter than expected after witnessing a 10 basis points jump in the 10-year rates to 4.29%. Thirdly, ETF trading activity calmed rapidly from the start of the week as reflected in a negative Coinbase Premium, an indicator that measures the difference in Bitcoin prices listed across trading platforms Coinbase, which has the lion’s share of cryptocurrency activity, and Binance. In the long run, the next halving event will increase the mining costs as the output from a unit of mining activity reduces; hence, investors should not be too bullish on any price jumps to be sustained.
Innovation News: Dencun Update
The Dencun Update has arrived to Ethereum, a long-awaited hard fork on the chain that seeks to increase activity on layer-2 protocols built on Ethereum. The key innovation here is the creation of Binary Large Objects (blobs) that allow data to be stored in temporary storage units off-chain when, previously, all data must be kept permanently on chain. This led to a significant reduction in transaction costs as processing can be conducted in these blobs, leading to broad estimations of a 90% reduction in processing costs. In addition to decreased expenses, this temporary storage system helps to reduce scalability concerns for layer-2 protocols. Nevertheless, such innovations have minimal impact on short-term prices, which are still primarily driven by market-wide sentiment drives; in fact, Ethereum is experiencing strong bearish sentiments at the moment. In the long run, however, developer activity on the chain is predicted to rise sharply, increasing the price line potential once sentiments even out.
Regulation News: Worldcoin
Altman sparks future outrage in the cryptocurrency space as his venture Worldcoin was blocked by Spain over data collection concerns. The cryptocurrency token was used as payment for participants who allowed the parent company, WorldAI, to scan and store their optical biometric information. Altman states that this data is being used to refine identification security tools to distinguish humans from machines across AI models. Spain’s regulator justifies their actions over concerns of collecting biometric data from minors and the lack of transparency over how the data will be used in detail. Additionally, risk concerns over the impact of potential data leaks have not been addressed and regulators are concerned that the participants are putting themselves at unnecessary risk for identity theft.
In Other News…
Short Updates:
Reddit – The large yet unprofitable business could soon have its IPO push realised due to the recent AI push. While primarily a community-based information channel, the amount of textual and conversational data available on the platform could be a new revenue source for AI developers globally.
Apple – Canadian-based DarwinAI looks to have already closed an informal deal with Apple to integrate its vision-based technology into Apple’s manufacturing innovation portfolio to improve manufacturing efficiencies. The partnership could open another collaborative channel as DarwinAI’s AI-building techniques could help Apple set up consumer-facing GenAI functions in iOS 18.
Opportunity Spotlight
About Moonraker Search
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