Bitcoin surges

Bitcoin (BTC) surged over 20% this week and traded above $63,000 for the first time since 2021. Ethereum (ETH), the second largest cryptocurrency, traded above $3500 at the same time. If you have followed the space for a long time, these large price movements (up and down) are not uncommon. BTC and ETH are up over 50% for the year and are up 3-4x from their lows in 2022. BTC currently sits within striking distance of all-time highs set in late 2021.

• We have discussed for months that the approval of Bitcoin ETFs would mark new demand for the asset and would be positive for price
• Since the approval of the BTC ETFs 7 weeks ago, BlackRock’s IBIT has grown to $10bn of assets
• This was previously the estimate for prospective growth in assets for ALL of the ETFs for the WHOLE year
• As we have also discussed, many brokers restricted the trading and custody of the ETFs after they were approved
• Our view has been that as demand continues to grow they would be pressured to allow for their use
• This week Wells Fargo and Morgan Stanley announced they would allow their clients to trade the ETFs
• While maybe not directly attributable, Vanguard’s CEO announced he would be stepping down this year
• He had previously stated he would not allow for trading of these ETFs

Macy's to close 30% of stores

The storied department store, Macy's, announced earnings this week, showing a continued downward trend in sales. Revenue for the year 2023 was down 5.5% versus the prior year, while adjusted earnings were down over 20%. The company announced a new plan entitled “A Bold New Chapter,” which involves shutting down 30% of their retail stores and a re-focus on their digital offering, a smaller brick-and-mortar footprint, and investment in their luxury segment (Bloomingdale's and Blue Mercury).

• Traditional brick-and-mortar retail has been under pressure for a decade+
• Despite a temporary boost during the Covid stimulus period, the long-term secular trends remain in place
• This is an example of the economy moving from “atoms” (physical) to “bits” (digital)
• This also highlights the importance of specialization in retail based on current consumer trends

Musk sues OpenAI

Elon Musk filed a lawsuit against OpenAI and its CEO, Sam Altman, alleging a breach of the company's founding mission to benefit humanity. Musk claims that OpenAI, which he helped fund, has shifted its focus towards profit rather than the original goal of developing technology for the public good. The lawsuit accuses OpenAI of becoming a closed-source subsidiary of Microsoft, deviating from its non-profit status, and making decisions to maximize profits for Microsoft rather than for the benefit of humanity. Musk is suing for breach of contract, breach of fiduciary duty, and unfair business practices, seeking an injunction to prevent any entity from benefiting from OpenAI's technology. The legal action highlights a significant dispute over the direction and values of OpenAI and its impact on the development of artificial intelligence technology.

• The latest development of artificial intelligence has the potential to alter the course of human history
• For this reason, OpenAI was originally founded as a not-for-profit, with many benefactors, including Musk
• While Elon Musk is a controversial figure, he has continued to prove himself driven by something other than money
• As part of Twitter (now X), Elon has started an AI service called Grok
• We wonder if this lawsuit is a way to hamper OpenAI giving Grok the ability to catch-up

‍