Casey Wagner

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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This time yesterday, I was writing about how US equities had started down the <a href="https://blockworks.co/news/upcoming-inflation-earnings-report">road to recovery</a>.&nbsp;



Well, that was short-lived.&nbsp;



The S&amp;P 500 and Nasdaq Composite indexes opened in the red Tuesday and were trading 0.4% and 1.2% lower, respectively, at 2 pm ET.&nbsp;



Big Tech and crypto stocks were not immune. The Bloomberg Mag7 Index, which equally weights seven of the largest companies, was down almost 3% midway through the session.&nbsp;



Nvidia, on the eve of reporting its fourth quarter earnings, was down 1.9% at 2 pm ET. Coinbase and MicroStrategy were down 7.2% and 12.1%, respectively, at that time.&nbsp;



We’re attributing the decline to two things:&nbsp;



<ol class="wp-block-list">
<li>Investors are worried about economic growth. </li>



<li>Previously paused tariff plans are, apparently, moving forward. </li>
</ol>



On this first point, yet another economic report on Tuesday signaled that the US growth outlook isn’t looking stellar. Consumer confidence in February fell by the most since August 2021. The figure, reported by The Conference Board, came in at 98.3 this month. A reading below 100 indicates a pessimistic economic outlook.&nbsp;



In terms of tariffs, President Trump said late Monday that levies against Mexico and Canada are “on schedule.” He didn’t get specific, but the comment comes a few weeks after Trump agreed to pause tariffs on the countries for 30 days.&nbsp;



<a href="https://blockworks.co/news/reciprocal-tariffs-may-be-coming">We’ve written before</a> that the market has been (perhaps remarkably) resilient to tariff threats, likely because the policies have so far been vague, both in terms of timeline and details on percentages. Tariffs are still a headwind, though, and today’s market moves signal that the gusts are starting up.&nbsp;



In terms of more immediate price action, the big market movers this week will be Nvidia earnings (tomorrow) and PCE data (Friday).&nbsp;



Nvidia, not too long ago considered the <a href="https://blockworks.co/news/on-the-margin-newsletter-nvda-market-breadth">golden child of AI</a>, has faltered this year. DeepSeek, the Chinese AI firm that debuted its AI model in January, <a href="https://blockworks.co/news/talking-about-ai-selloff">spooked investors</a> enough to pull almost $600 billion out of Nvidia last month.&nbsp;



The US chipmaker was able to pare most of the losses, though, and as of midway through today’s session, shares were down only 6%.&nbsp;



Option chain data shows that many traders remain optimistic NVDA will rally at the end of the week, with calls hitting $145 to $160. Shares were trading at $128 at 2 pm ET.&nbsp;



In terms of future stock moves, DataTrek Research co-founder Nicholas Colas says to keep an eye on the CBOE Volatility Index (the VIX).&nbsp;



“We’ll know when stocks may have made a tradeable low if/when the VIX is either very close to 27.3 or above it,” Colas said. “The historical track record of this indicator is clear.”&nbsp;



This is not trading advice (from me, at least). But here’s the historical track record Colas is talking about: Any value at or above 27.3 (one standard deviation above the long-running average) indicates heightened volatility. Generally, stocks perform well after volatility spikes.  In mid-December, the VIX hit 27.6 after the Fed <a href="https://www.blockworks.com/news/fed-dovish-hawkish-2024-conduct">cut interest rates</a> by 25 basis points. A week later, the S&amp;P 500 had gained almost 3%. Volatility today is hovering around 19, but a bigger selloff in big tech and/or disappointing inflation data could send the VIX higher.



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Traders pray for Nvidia boost as stocks dip red

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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The “tariff trade,” or the market volatility we’ve seen the past couple of weeks as investors evaluate <a href="https://blockworks.co/news/crypto-markets-tariff-reaction">tariff risks</a>, has overshadowed the tail end of earnings season.&nbsp;



But many analysts still think US equities have room to go higher.&nbsp;



President Trump’s threats have been delayed, not canceled. 25% tariffs on steel and aluminum tariffs are slated to start next month, and <a href="https://blockworks.co/news/reciprocal-tariffs-may-be-coming">reciprocal tariffs</a> against a range of countries are still being designed, so the news cycle — and market — are likely to take a break from focusing on duties.&nbsp;



In the meantime, Big Tech stocks are just starting to recover from some post-earnings dips, but the S&amp;P 500 is still outperforming the Magnificent Seven.&nbsp;



Amazon’s web services business reported a 37% profit margin in Q4 2024 — an impressive feat, but investors weren’t sold. Shares fell more than 4% following the company’s report.&nbsp;



Microsoft was a similar story. Shares had their worst day since 2022 after execs reported Q4 earnings, even though figures for earnings per share and revenue came in higher than expected.&nbsp;



Google shares were down more than 8% after Alphabet missed on Q4 revenue.&nbsp;



Still, Sevens Report Research founder Tom Essaye says that as long as economic data continues to stay in the “Goldilocks” range, the market should prove resilient. Should the Fed signal that this pause is likely to continue for a long while, we could be in trouble.



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Earnings season takes back seat to interest rate, tariff concerns 

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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Bolstered by Big Tech, US equities were on the road to recovery after yesterday’s <a href="https://blockworks.co/news/trump-tariffs-trade-war">tariff-fueled rou</a>t.&nbsp;



The Magnificent Seven stocks were in the green midway through the session, with Meta and Alphabet as the big winners. Meta is now riding a record 12-session winning streak while Alphabet saw positive momentum ahead of the company’s earnings release later today.&nbsp;



We’re about a third of the way into earnings season and results have been fairly solid.&nbsp;



As of last Friday, when 36% of S&amp;P 500 companies had reported, 77% had beat analysts’ earnings expectations for Q4 2024. This is in line with last year and slightly ahead of the 10-year average. 63% of companies so far have beat on revenue expectations, which is a bit below the 5-year and 10-year averages.&nbsp;



Today’s rebound aside, US Big Tech is still lagging behind big foreign names. NVDA, down almost 15% year to date, is the worst-performing Big Tech stock across every region. Alibaba (+21% in 2025) is the best.&nbsp;



Other top performers so far this year include Hong-Kong-listed Xiaomi (+16%) and Seoul-listed Hynix (+10%).&nbsp;



Zooming out, the CBOE Volatility Index, known as Wall Street’s “fear gauge,” was on the decline Tuesday after a brief surge to around 19.6 on Monday. Anything above 19.5 (the long-run average) is generally viewed as elevated.&nbsp;



While earnings continue to trickle in, these reports will impact share prices. But the bigger catalyst for further corrections is the tariff situation and potential fallout.&nbsp;



The uncertainty of if and when these tariffs may come into play, and the unpredictability of it all, is going to continue to weigh on global equities.



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Tech stocks lead US rebound, but still lag behind global names

Jack Kubinec

This is a segment from the Lightspeed newsletter. To read full editions, <a href="https://blockworks.co/newsletter/lightspeed">subscribe</a>.



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Following a string of high-profile collapses and bad press in 2022, crypto largely felt like its own market sector from which the rest of the tech world kept a cautious distance. With a <a href="https://blockworks.co/news/trump-memecoins-rock-solana">memecoin-brandishing</a> President Trump now in office, that seems to be shifting: The techies like memecoins.&nbsp;



Since Trump came to office, several more-mainstream tech players have either launched or endorsed memecoins —&nbsp;a couple of which have seen major price drawdowns, like the TRUMP token. It’s perhaps a sign that animal spirits are back in crypto, and tech players want a seat at the table, past qualms be damned.



Last night, Venmo co-founder Iqram Magdon-Ismail launched a token for his new startup, a kind of TikTok-meets-FaceTime app called JellyJelly. The token launched on the Solana memecoin launchpad pump.fun and quickly raced to over $230 million in market capitalization. Less than a day later, it crashed to under $100 million in market cap.&nbsp;



Magdon-Ismail <a href="https://x.com/JakeGagain/status/1885024521121398931">said</a> today on a podcast that one of Solana’s co-founders texted him expressing excitement about the launch, and he was in talks with someone at the Solana Foundation as well.



Sam Lessin, general partner of Slow Ventures, which invested in both Venmo and Solana, then <a href="https://x.com/lessin/status/1885032200904859849">posted</a> a clip of himself waxing poetic about how money is just a form of communication, and memecoins are the expression of a viewpoint. Lessin promoted the memecoin on his X account, and it’s not clear how much of the token he owns, if any.



The saga came shortly after a co-founder of the defunct video sharing app Vine launched a memecoin of his own, which also saw its market cap spike before quickly retracting. Nikita Bier, an entrepreneur who has launched multiple viral social media apps, posted and then deleted a meme saying he would be launching a memecoin, too.&nbsp;



Silicon Valley’s new memecoin apologists tend to talk about such tokens using terms like “fun” and “community,” but not everyone thinks memecoin as a capital formation tool will prove auspicious for startups.



“I do not believe that startups launching memecoins will gain any real traction over any reasonable length of time,” Dragonfly general partner Rob Hadick said. He cited attention dilution, the negative feeling investors get from losing money and significant regulatory risk as marks against startup coins.



People in crypto and tech tend “to overreact to short-term market dynamics. We saw very similar discourse about NFTs in 2021, which turned out to be almost entirely wrong,” Hadick said.



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Silicon Valley wants in on memecoin craze

Zac Cheah

While AI’s potential to benefit humanity is vast, its trajectory under corporate monopolies threatens to concentrate power, excluding most stakeholders from shaping its future. The best way forward? Decentralize AI through community-driven, blockchain-based models and build a transparent, inclusive ecosystem that keeps AI safe, ethical and accessible to everyone.



When OpenAI launched in 2015, it aimed to “benefit all of humanity” with an open source, nonprofit approach. Yet, less than a decade (and much leadership <a href="https://theconversation.com/openai-is-a-nonprofit-corporate-hybrid-a-management-expert-explains-how-this-model-works-and-how-it-fueled-the-tumult-around-ceo-sam-altmans-short-lived-ouster-218340">turmoil</a>) later, its <a href="https://www.reuters.com/technology/artificial-intelligence/openais-stunning-150-billion-valuation-hinges-upending-corporate-structure-2024-09-14/">pivot</a> to a for-profit model — driven by a pressing $6.6 billion debt to investors — has made it clear that corporate interests, not collective benefit, are increasingly shaping AI’s development. The move illustrates a wider trend: Today’s leading AI organizations are becoming tightly controlled, profit-driven and increasingly opaque.



While these changes might be justifiable from a business standpoint, AI’s future shouldn’t rest solely with a few powerful companies. The shift toward private investor-driven AI has the potential for dystopian consequences, excluding grassroots users and developers from contributing meaningfully, just as many were sidelined in the Web2 era.



Read more from our opinion section: <a href="https://blockworks.co/news/ai-future-is-decentralized-compute-networks">A small group of tech giants are holding AI’s future hostage</a>



To counterbalance this trend, decentralized and community-led AI initiatives are crucial. These would offer an alternative where AI systems remain accessible, safe and unbiased, reducing the impact of profit-driven “black box” models.



Today, AI development is dominated by a few major players — OpenAI-Microsoft, Google, Amazon, Meta, Nvidia — all racing toward monopolization. By controlling critical parts of the AI stack — models, training data and applications — companies can maximize profits, keeping revenues and innovation tightly siloed.



Moreover, cloud infrastructure controlled by Amazon and Google provides most of the compute and storage resources needed to train and deploy AI systems. This centralization comes at a steep cost: <a href="https://akash.network/blog/the-rise-of-decentralized-compute/">According</a> to Akash Network, grassroots developers will spend over $679 billion on cloud computing in 2024 — already unaffordable for most small-medium players, with costs likely to rise as demand grows.



Read more: <a href="https://blockworks.co/news/cloud-services-0xresearch-competition">Cloud computing is operated by an anti-competitive oligopoly, says Osuri</a>



Within Big Tech’s walled gardens, users are given limited, conditional access to AI tools and APIs — often at exorbitant prices. Because AI’s development has become a winner-takes-all game, corporate interests will continue to compromise long-term ethical considerations in favor of immediate revenue. OpenAI’s recent dissolution of its Superalignment team, as Jan Leike <a href="https://apnews.com/article/openai-jan-leike-safety-ilya-8a7ba341e06a66e9a7935bb06214edcb">pointed out</a>, suggests that safety and accountability are taking a backseat to high-profile product launches.



Decentralization is the best antidote to BigAI monopolies. Ongoing blockchain AI innovations let user and developer communities become active, incentivized contributors in AI’s evolution. Projects like KIP Protocol have <a href="https://www.kip.pro/">pioneered</a> decentralized ownership of the AI stack, allowing individuals to contribute data for model training without needing to build the models themselves. This lowers entry barriers, while crypto-based payment rails enable non-intermediated profit-sharing among stakeholders.



Read more from our opinion section: <a href="https://blockworks.co/news/dixon-read-write-own-broken-internet">The internet is broken. What if we can fix it?: On Chris Dixon’s ‘Read Write Own’</a>



Similarly, Akash Network’s decentralized marketplace provides storage and compute resources at roughly <a href="https://blockworks.co/podcast/0xresearch/09906c88-7381-11ee-b6e0-0f7a3092d4d3">80% lower costs</a> than centralized providers. Projects such as Flock.io are already leveraging Akash’s infrastructure for decentralized AI training.



Beyond these examples, decentralized physical infrastructure (DePIN) projects are one of DeFi’s most active areas, <a href="https://research.nansen.ai/articles/object-oriented-finance">according</a> to Nansen. With initiatives like NodeFi, end-users can monetize excess compute or storage on personal devices. By offering governance rights to node owners, projects in this space can take community-owned AI to the next level.



Funding trends reflect this momentum. Decentralized AI projects are drawing attention from investors, with AI startups raising 30% of total funding in Q3 2024 — an impressive $52.2 billion, <a href="https://stocklytics.com/content/ai-startups-raised-11-8-billion-in-q3-total-funding-hit-a-record-53-billion-ytd/">according</a> to Stocklytics. Blockchain AI ventures like Wire Network and OpenGradient have <a href="https://cointelegraph.com/news/vc-roundup-capital-flows-ai-blockchain">emerged</a> alongside traditional players, and the gap between decentralized and centralized AI presents immense opportunities for growth.



This influx of funding is more than just a financial trend; it signals a shift in industry priorities towards decentralized alternatives. Decentralized AI offers a feasible, attractive alternative to BigAI, promising an inclusive, equitable and accessible future. BigAI is moving at breakneck speed to establish dominance, and the time to support decentralized alternatives is now. There is no looking back.



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Big Tech can’t own AI’s future if we decentralize it first

Macauley Peterson

One of the core value propositions of blockchain technology is its resilience, which follows from decentralized and redundant infrastructure. Yet components vital to the everyday use of crypto rails, such as RPC nodes, often still rely on a centralized architecture, making them vulnerable.



To address this, Infura, a leading Web3 API provider and a part of <a href="https://blockworks.co/tag/consensys">Consensys</a>, revealed its collaboration with 18 major internet infrastructure companies, including Microsoft and Tencent Cloud. This alliance, kicked off at Devconnect in Istanbul, aims to establish the Decentralized Infrastructure Network (DIN).



DIN, described as a decentralized RPC-as-a-service, is a new venture that provides developers with a robust, scalable, and highly reliable blockchain infrastructure.



<h2 class="wp-block-heading">RP-what-now?</h2>



To get the gist of an RPC node’s role, ​​imagine a blockchain as a large, bustling restaurant kitchen where dishes (transactions and blocks) are continuously being prepared, served and recorded (the blockchain ledger).



In this kitchen, the chefs (nodes) are busy preparing dishes, with each dish representing a piece of transactional data or a block in the blockchain.



Now, as a customer (user), you can&#8217;t just walk into the kitchen to order a dish, or check on the progress of the Beef Wellington. Instead, you interact with a waiter (the RPC node) as your point of contact. When you want to place an order (make a transaction), or check if that take out order you phoned in earlier is ready (query transaction data), or pay your check (add a new block), you call the waiter.



The waiter takes your request, goes into the kitchen, and conveys it to the chefs. They find the right dish in the restaurant’s culinary oeuvre (locate the correct data in the blockchain), prepare it (process a transaction) and eventually you enjoy a nice meal (transaction confirmed).



In technical terms, the RPC node acts as an intermediary that helps users interact with the blockchain. It processes users&#8217; requests, translates them into actions that the blockchain network can understand, and then returns the results or confirmation back to the user. This makes the whole process more manageable and efficient.



<h2 class="wp-block-heading">Decentralization is resilience</h2>



At least most of the time.



Infura and its chief rival Alchemy are responsible for the majority of RPC node infrastructure — 70% to 80% according to Konstantin Zaitcev at DRPC, a decentralized RPC provider to Ethereum and connected chains. So, when one or the other goes down, it can have a significant impact on the ability of most users to access decentralized apps.



A major <a href="https://decrypt.co/98457/metamask-ethereum-apps-down-infura-outage">outage</a> in Infura’s nodes in <a href="https://status.infura.io/history?page=7">April 2022</a>, for instance, made it difficult for MetaMask users to reach Ethereum applications for several hours. (The Ethereum blockchain itself has never gone down.) MetaMask, another Consensys company, uses Infura by default, but users have the ability to <a href="https://support.metamask.io/hc/en-us/articles/360043227612-How-to-add-a-custom-network-RPC">manually</a> set their own RPC provider.



Ensuring reliability will undoubtedly become more important as Web3 gains adoption. Eugene Yeo, technical director at node provider Luscent.io, considers the DIN analogous to electric utilities, without which “our modern life could not exist,” suggesting that uninterrupted blockchain access will be of similar importance.



“It&#8217;s a step in the right direction,” Zaitcev told Blockworks, but added, “it&#8217;s really early to speak about a ‘decentralized solution,’ and quite early, even, regarding [a] ‘distributed’ one,” he added.



Other node providers, such as <a href="https://blockworks.co/tag/ankr">Ankr</a>, have been <a href="https://blockworks.co/news/ankr-doubles-down-on-decentralization-of-web3-infrastructure">focused on decentralizing</a> this aspect of Web3 infrastructure for years.



“Decentralizing RPC infrastructure is not just a trend for us; it&#8217;s a commitment to a more robust and scalable decentralized ecosystem,” Josh Neuroth, Ankr’s vice president of product, told Blockworks. “It&#8217;s gratifying to see other providers recognizing the importance of our approach.&#8221;



Consensys’ announcement, made at the Decentralized RPC Summit during DevConnect in Istanbul, highlights the collective effort of 19 partner organizations. These include Grove, Covalent, and other leading names in the technology sector.



Covalent’s ecosystem head Erik Ashdown said the DIN partnership “embodies the ethos of crypto and the phrase a rising tide raises all ships.”



The ultimate goal of DIN is full decentralization, a process that will evolve progressively. The network plans to expand its membership and collaboratively develop a roadmap toward this ambitious goal.



DRPC plans to help, Zaitcev said, “because, eventually, the market will decide, and we need to collaborate more with each other.”



“Currently, Infura works only in the USA,” he noted, meaning “they can&#8217;t provide good latency for the rest of the world.” DIN may be able to help them address these shortcomings, he said. Blockworks reached out to Consensys for clarification.



“From my perspective, it could be better to support one of the existing players instead of creating their own [decentralized network], but maybe they will create something cool as well,” Zaitcev said.



One of the key differences between the two approaches is that Infura operates its own nodes, and Zaitcev said these are likely to handle the majority of the RPC requests — even in this more distributed vision.



“In our case, we don&#8217;t have our own nodes — we concentrate on developing the best possible solution, not maintaining nodes,” he said.



The status quo is like comparing a local farmer’s market with Walmart, Zaitcev said.



At the market, for every vendor, “each sale is really important, and they take care of their vegetables and service,” he said. “But big shops can sell you anything they want at the price they want — you can choose from the options that the shop provides you [and] probably it will be modified tomatoes without taste.”



Decentralized solutions democratize access to markets — at least in theory — which should allow service providers to compete on quality above all else.



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<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: Built for Solana investors, developers and community members. The latest from one of crypto&#8217;s hottest networks.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: For crypto collectors and traders, covering apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.</li>
</ul>

Consensys invites Big Tech to decentralized infrastructure network

Bessie Liu

Despite mounting US regulatory pressure, more than 80% of Fortune 500 companies are either looking into or actively deploying Web3 initiatives, according to a <a href="https://blockworks.co/tag/coinbase">Coinbase</a> study released on Monday. 



Coinbase’s report, which compiled data from Fortune 500 firms, found that a little over half of respondents had experimented with blockchain technology and considered starting their own related initiatives in early 2020. By last year, that figure had increased to over 60%.&nbsp;



Early entrants circa 2020 included Citi, Google and Goldman Sachs, Coinbase said in its “The State of Crypto: Corporate Adoption.” Companies in the finance, technology and retail sectors have been prominent adopters of crypto technology.&nbsp;



Those three areas comprise over 75% of all initiatives that the Fortune 100 companies have undertaken since the start of 2020.&nbsp;&nbsp;



The majority of initiatives that the companies are looking into involve infrastructure development, supply chain management and data collection, according to Coinbase. Payment use cases have also received significant interest.



Over 60% of the executives interviewed said crypto investment would grow, and many of them claimed blockchain technology will play a significant role in shaping the future of business — similar to the role of the internet and artificial intelligence (AI). 



Although the report’s general sentiment (77%) shows Fortune 500 companies believe that blockchain technology will significantly shake up the future of the financial system, almost 90% agree there remains a lack of clear rules and regulations around the technology that is hindering further adoption.&nbsp;



The report notes that a large majority (over 90%) of respondents believe policymakers must create new rules to govern this emerging technology — rather than enforcing already existing rules that apply to older tech.



It also highlights concerns that the US may lose its competitive advantage if it does not implement favorable policies to accommodate up-and-coming blockchain technology advancements. That’s especially true, per the report, considering the US’ share of worldwide Web3 development dipping from 49% to 20% over the past six years.



The sentiment comes soon after the <a href="https://blockworks.co/tag/sec">SEC</a> filed lawsuits against large cryptocurrency players <a href="https://blockworks.co/news/binance-execs-unlicensed-securities-exchange">Binance</a> and <a href="https://blockworks.co/news/us-states-are-going-after-coinbase-following-sec-lawsuit-heres-how">Coinbase</a>, causing significant market volatility and a <a href="https://blockworks.co/news/crypto-us-europe-regulation">flurry</a> of talent and investors moving overseas. 



Coinbase has since launched an <a href="https://www.coinbase.com/blog/crypto-moving-america-forward">integrated campaign</a> which is aimed at teaching policymakers the purpose and role of crypto.



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Crypto is not dead: Fortune 500 companies bullish on the space

Max Thake

Let’s set the scene: The year is 2030, and the Internet of Things has become ubiquitous. Sensors are everywhere, everything’s outfitted with a chip, and you’ve already interacted with twenty IoT service providers before you brushed your teeth this morning without even knowing.&nbsp;



After your morning cup of coffee, dutifully prepared for you by the smart machine that knows your taste better than you do (it also knows your daily routines and may or may not be selling this info), you head for the hairdressers. Via an app, you find and unlock the nearest shared electric vehicle and hit the road as it happily sells off more of your data to Big Tech.



An hour later, as stylish as ever, you head back for the vehicle — only to find that it rejects all of your attempts to get in. You try to hop on the bus, using your phone to pay, but the transaction doesn’t go through. Even a nearby vending machine refuses to sell you your now much-needed emotional support chocolate bar.



<h2 class="wp-block-heading">The pieces moving today</h2>



All of the things that you tried to do during your hypothetical day in 2030 relied on transactions involving devices. These devices were leveraging central bank digital currencies (CBDCs), controlled by that self-same central bank. And your friendly central bank was only happy to help when the local authorities, upset by your involvement in some recent protests, wanted to teach you a lesson. The rest is history.



The above scenario may feel far-fetched,&nbsp;but my humorous hyperbole reflects the worst possible future scenario imagined by CBDC critics. The number of connected devices is <a href="https://www.statista.com/statistics/1183457/iot-connected-devices-worldwide/">growing fast</a>, both in business inventories and on the consumer market. The rise of artificial intelligence — yes, that includes ChatGPT, which Twitter can’t get enough of these days — and the way the technology enables connected devices to be <a href="https://www.infoworld.com/article/3663017/how-ai-is-changing-iot.html">more efficient</a> means that more processes will be automated. And this doesn’t just go for things like smart factories: Amazon’s <a href="https://www.theguardian.com/us-news/2020/feb/25/amazon-go-grocery-supermarket-seattle-technology">autonomous shop</a> and the fully-automated <a href="https://metro.co.uk/2022/12/26/mcdonalds-opens-first-restaurant-thats-not-fully-run-by-humans-17996648/">McDonald’s in Texas</a> are both harbingers of just how much automation we will be dealing with daily. And it’s worth noting that my scare tactic of a morning routine is already more or less approaching the status quo in <a href="https://worldcrunch.com/culture-society/china-surveillance-cameras">China</a>.



The fact of the matter is, we are relying on connected devices in more daily activities. It’s not the problem, really; the real problem is the digital infrastructure that the apps — and thereby the increasingly intelligent vehicles, machines, and robots — run on. That’s why the paradigm of machine and human economic relations we are fast heading into needs to run on Web3 rails, with everyone in charge of their own data and assets. The machines are not the enemy, but our legacy methods of running them are.



The interactions between all of these internet-connected devices and the wide world out there include a transactional component. Sometimes it’s about <a href="https://www.consumerreports.org/privacy/connected-devices-share-more-data-than-needed-study-says-a7015033345/">selling your data</a>, and sometimes, it’s more direct, like when you’re using your phone to pay at the grocery store (which is becoming <a href="https://fintechmagazine.com/digital-payments/75-of-consumers-now-using-mobile-wallets-survey">ubiquitous</a>). In today’s world, most of these transactions involve a traditional banking account at a certain point, either the user’s own or an omnibus held by a specific platform for its business needs. In the future, though, these accounts could instead be virtual wallets with CBDCs, digital tokens issued and managed by central banks.



And as wonderful as that might sound, CBDCs and their inherently centralized design enable the issuer to directly control your spending behavior. Digital currencies are programmable, malleable, which makes any sort of control possible. You can set limits on how much a person can keep in their account in order to stimulate economic activity by forcing purchases and investment. You can limit their ability to purchase non-eco-friendly goods, or build carbon offsets into transactions. Oh, and only one plane flight per year. For some, all of this may still sound appealing, but this slope is oh so slippery. Why not just ban everyone you don’t like from buying food?&nbsp;&nbsp;&nbsp;



Recent years already saw cases where governments sought to hamper citizens’ ability to transact as a punitive measure, like China’s <a href="https://www.businessinsider.com/china-social-credit-system-punishments-and-rewards-explained-2018-4">social credit system</a>, for example, or Canada’s <a href="https://www.marketwatch.com/story/canadian-banks-restrict-funds-to-trucker-protest-groups-11645115277">action</a> against trucker protests. You may feel differently about the people involved, but the mechanisms at play are similar in their logic. We enact our financial freedom by choosing what we purchase and from whom. If this freedom depends on the goodwill of a third party, it’s no freedom at all, and being excluded from the real-world economy is a direct threat to one’s livelihood.&nbsp;



Take these trends, put them together, let them simmer for a bit, and there we are — that doomsday scenario is looking way more realistic. You may have heard about the <a href="https://www.thesocialdilemma.com/">Social Dilemma</a>, where tech experts from Silicon Valley sounded the alarm in an hour-and-a-half long informative yet dystopian documentary about the dangerous impact of social networking’s manipulative underbelly, “brought to you by Big Tech.” We’re next heading towards what you may call “the connected dilemma,” where we either leverage the Internet of Things at the cost of giving away even more intimate data about even more aspects of our lives, or keep some slither of privacy but remain in the Stone Age, comparatively speaking.&nbsp;



But IoT apps don’t have to be built on centralized Big Tech — they can be built on Web3 instead. IoT-specific decentralized applications (dapps) enable any user, whether human or machine, to securely interact and transact with others in a peer-to-peer manner. They can do so with full sovereignty and ownership over their identities and their data, meaning user surveillance becomes a thing of the past. On an even better note, if the currencies we choose to use are built on decentralized tech, the potential for monetary censorship then stays in the past too. And so, this leaves us with a choice, not a dilemma. It’s no longer a case of ‘choose privacy, but live in the Stone Age, or ‘choose the latest tech but give up your most intimate data.’ It’s a case of choosing to build and use apps which run on decentralized foundations. On Web3, not Big Tech. If we get that right, we can have our cake and eat it too.&nbsp;



<hr class="wp-block-separator has-alpha-channel-opacity"/>


<div class="wp-block-post-author-biography">Max Thake is an entrepreneur, writer, and co-founder of peaq, a blockchain network powering the Economy of Things, and EoT Labs, a software development and incubation organization supporting open-source projects focused on the Economy of Things. peaq empowers people to manage and earn from vehicles and devices as they provide goods and services to people and other machines. Max has built multiple organizations, teams and brands during his years in the blockchain space. He operates at the intersection between the humanities and sciences and enjoys explaining technological complexity in simple terms and using it to solve problems.</div>


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For the Internet of Things, It’s Either Web3 or 1984

Michael Bodley

Cryptocurrency valuations have at least one thing in common with a long fly ball to center field: They’re going, going, gone.



The sentiment applies across the digital assets board, extending to spot assets, the cost of putting on overlying derivatives trades, stakes in startups and structured products. And the list goes on. And on. And on.&nbsp;



The next time Aaron Judge of the New York Yankees smashes a fastball over Fenway’s towering Green Monster, Red Sox fans are going to be up in arms — what else is new?



For institutional cryptocurrency traders and the allocators that back them, though, the MLB analogy equates to an entirely different outcome than the irate Bostonians. <a href="https://blockworks.co/news/bargain-basement-opportunity-for-crypto-volatility-traders">There’s abundant opportunity this quarter</a> and beyond to rake in substantial sums out of all the carnage, provided one has the capability, plus the connections, to sell the correct kind of strategy to seeders and limited partners.



Market participants told Blockworks that — by and large — there’s no shortage of silver linings, ones that smack the never-ending depressive sentiment squarely across the face. This analysis also relies on previous Blockworks reporting.



That’s not to say raising capital in this environment is an easy feat these days.



Digital asset’s epic, at times almost unfathomable, beating in 2022 backed crypto natives — and Wall Street’s top traders who have at least dabbled in the sector — into the tightest of corners. Success stories in the fourth quarter, at least in terms of performance and known notable capital raises, were hard to come by.



Untold billions of capital, especially Wall Street dollars, were still hanging in the yearend balance.



The metric is difficult to quantify, but every source arrived at the same general conclusion on the market’s rollercoaster-like volatility: There are virtually endless and lingering opportunities to derive alpha via strategies that are tailor-made for all the financial insanity.&nbsp;



But those opportunities are likely fleeting.



<h2 class="wp-block-heading">Turning the (finance) corner</h2>



From a macro perspective, the corner, in more ways than one, is already turning — or has already turned — for the better.



Even if viewpoints on what’s to come vary, vary a whole lot.&nbsp;



The S&amp;P 500 and the NASDAQ have clawed back 2022 losses in a big way, inflation has cooled, and the <a href="https://blockworks.co/news/federal-reserve-raises-interest-rates-25-bps">Federal Reserve has not been ramping up interest rates</a> as aggressively.&nbsp;



The relative bullishness has extended to the world of Web3, albeit to a more measured extent.



Case in point: <a href="https://blockworks.co/news/altcoins-soaring-2023">Altcoins have taken off</a>.&nbsp;



The industry’s cumulative market cap clocked in at $754 billion on Jan. 1, according to TradingView data, far from its bull market standing in the trillions.&nbsp;



It’s now hovering around the $1 trillion mark, equating to a 25% recovery in a little more than a month’s time — handily outpacing the NASDAQ&#8217;s own bounce back of about 15%, as well as the S&amp;P 500’s approximately 8% rebound from 2022’s worst showing since 2008.&nbsp;



Longtime traditional finance players with sway have taken note. Cambridge Associates, in one example, has not stopped the institutional allocation adviser’s developing push into digital asset due diligence. Hedge fund multi-billionaire Steve Cohen’s Point72 has pushed onward in the same (buy-side) fashion, not to mention Cohen’s nascent and progressing proprietary trading firm that started taking shape last year.



Read More: <a href="https://blockworks.co/news/inside-crypto-lp-big-leagues">The inside scoop on what flailing crypto investors told their LPs in Q4</a>



Brevan Howard Digital — the <a href="https://blockworks.co/news/brevan-howard-scores-largest-crypto-hedge-fund-launch-ever">largest crypto hedge fund launch</a> on record at the time — is said to have dipped a bit in terms of the performance of its core strategy from time to time in 2022.&nbsp;Its more recent showing isn’t known.



The entity at the time represented one of the largest one-time commitments to digital assets by a traditional investment manager. It was heralded as a mammoth indicator of the seriousness of the world’s top macro investors taking the Web3 plunge.&nbsp;



The affiliate of the long-time multi-strategy manager <a href="https://blockworks.co/news/brevan-howard-crypto-layoffs">cut some underperformers</a> toward year-end 2022. Like so many of its peers did — or are in the process of doing now.



For many institutions, though, it’s been more of a pump-the-brakes effort, in many cases, not a get-us-out-of-here moment.&nbsp;



Attractive valuations are a big reason why.&nbsp;



Jeff Reed, global head of sales for crypto market maker Liquidity One, told Blockworks that “valuations across the board” from blue-chips like bitcoin and ether to stakes in sector startups, are “extremely attractive at this point” in the cycle.&nbsp;



“It really just comes down to what kind of experience you had [in the fourth quarter and in 2023 so far] — and how much dry powder you now have available,” Reed said.



Added Reed in an interview last week: “All the signs I’ve been seeing over the last three weeks are extremely positive.”



<h2 class="wp-block-heading">FTX? Moving on&nbsp;</h2>



Crypto traders of all ilks are really, really sick of talking about the saga revolving around FTX’s collapse in the fourth quarter. They’re also very much dealing with the aftershocks, in terms of volatility and liquidity (or lack thereof, given funds stuck on the bankrupt exchange in some cases).



“People got really spooked by FTX,” Reed said. “They wanted to let that play out and see what was going to happen and re-adjust. The more conservative [investors] that may be coming into crypto for the first time, they’re doing more due diligence. They’re taking more time before they invest their capital.”



Armando Aguilar, co-founder of venture startup Aztlan Capital — <a href="https://blockworks.co/news/latin-america-growing-crypto-hotbed">which focuses on Latin American blockchain plays</a> — told Blockworks that “a lot of people started relatively cash heavy” in 2022’s fourth quarter as the market took (yet another) dive.&nbsp;



Seed rounds raised in the last couple of months of last year, Aguilar spotted at the time, were clocking in around the $5 million (or less) valuation mark, typically on lower multiples — with net check sizes of less than a million dollars.&nbsp;



More recently, Aguilar said he’s picking up on “quite a few deals that are now [around] the $10 million to $25 million mark.”&nbsp;



Recent examples sourced from previous Blockworks’ reporting fitting that bill:



<ul class="wp-block-list">
<li>Block Joy, a Web3 infrastructure-focused startup, landed a Series A round of $12 million</li>



<li>Digital assets security specialist Hypernative locked in a $9 million seed raise led by IBM’s venture arm</li>



<li>Another crypto infrastructure provider, Spatial Labs, snagged $10 million in a round with Marcy Venture Partners, a firm affiliated with Jay-Z</li>
</ul>



The number of bets venture capitalists are taking on crypto startups of late has been up from the same period a year ago — though the individual check sizes have been down.&nbsp;



Companies <a href="https://blockworks.co/news/funding-roundup-investors-bidding-small">raising rounds last week took in a cumulative $185 million</a>, per <a href="https://defillama.com/raises" target="_blank" rel="noreferrer noopener">DeFiLama</a> data. That’s a far cry from the $578 million startups raked in over the same seven days in 2022.&nbsp;&nbsp;&nbsp;



But, according to the same data providers, 20 entities took in capital this time around. Just three did the same in 2022, including FTX…



There’s a recent and building appetite for risk assets, according to Aguilar, who attributed the sentiment shift to macro factors — including the Federal Reserve showing signs of cooling its quantitative tightening measures, inflation metrics dropping from near-historic 2022 highs, and top technology stocks booming.



Coinbase <a href="https://blockworks.co/news/coinbase-stock-soaring">has boomed even more</a>.&nbsp;



Consider that Meta’s stock had its floor fall out in 2022, dropping more than 40% at one point. Still, the share price of the social media giant — now <a href="https://blockworks.co/news/meta-metaverse-losses-q4-2022">focused on metaverse initiatives</a> — was down roughly 17% over the last 12 months through Tuesday afternoon in New York.&nbsp;



That’s because it was up about 55% in the five or so weeks since 2023 began alone.



Traders and analysts alike pay close attention to correlations between tech stocks and spot cryptoassets which, in turn, inform the valuations of crypto startups over the long haul. In other words, what’s good for Big Tech is often good for crypto getting big.



<h2 class="wp-block-heading">Venture, spot, NFTs…</h2>



NFT markets haven’t been immune to the market’s shifting winds.&nbsp;



Sasha Fleyshman — a portfolio manager for the established and <a href="https://blockworks.co/news/dodging-worst-of-ftx-arca-wont-stay-stagnant">digital assets-focused investment manager</a> <a href="https://blockworks.co/tag/arca">Arca’s</a> actively managed NFT vehicle — told Blockworks that the fourth quarter’s digital collectibles downturn was likewise driven by “the actual macro deteriorating” over the last six to 12 months. Arca’s NFT strategy takes a longer-term time horizon and imposes a corresponding lockup on the capital of its limited partners. Fleyshman, who is a crypto veteran, said the bullish buildup to the dropoff in some ways was reminiscent of the initial coin offering (ICO) era in 2017 — “where everything was getting funded” and “everyone was excited, [because] things were rocketing higher.”



Well-documented liquidity complications circa last fall, at least in part, triggered the “rapid fall,” which Fleyshman compared to an elevator rising and falling. But in a faster fashion.



Sounds a lot like Disney World’s <a href="https://youtu.be/3zo64_w0pyo?t=248" target="_blank" rel="noreferrer noopener">Tower of Terror</a>.&nbsp;



There was, for sure and at the time, a “level of despair” among big-money allocators, according to Joe Marenda, Cambridge Associates’ global head of crypto investing.&nbsp;



And it was a deep despair, the Cambridge partner told Blockworks, with a bleaker outlook than last year’s preceding down periods. But <a href="https://blockworks.co/news/brevan-howard-crypto-layoffs">things are looking up</a>.&nbsp;



“People were like, ‘Oh, boy, this is gonna’ be a bad one,’” Marenda said. “That was very similar to what the crypto winter’s bottom in the last round felt like, where people were beginning to question [if] they should go back to Big Tech, go back to traditional finance…I feel like we’re past that now. So, I feel like we’re past the bottom.”



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What’s Bad for Crypto May Be Good for Crypto Traders

Bitcoin has decoupled from Investo’s QQQ Trust, suggesting the cryptocurrency’s days of trading virtually in tandem with Big Tech stocks may be in the past — at least for now.&nbsp;



Bitcoin’s 30-day correlation coefficient to QQQ, the tech-heavy ETF known as the Qs, dipped below -0.77 to more three-year lows set on Thursday, per <a href="https://www.tradingview.com" target="_blank" rel="noreferrer noopener">TradingView</a> data. A correlation coefficient of -1 would mean the assets are moving in complete opposite directions. 



BTC’s 60-day coefficient is also negative but not as extreme, sitting at -0.2, its lowest point since last July. Blue-chip, growth technology stocks are expected to continue underperforming, according to Tom Essaye, founder of Sevens Report Research.&nbsp;



“Tech and growth stocks have recovered some ground on value recently, but we continue to believe that progress in the economic recovery and subsequently higher interest rates will be a headwind for tech, and a rotation from growth to value can be utilized to reduce tech overweights, but not abandon super-cap tech holdings altogether,” Essaye said.&nbsp;


<div class="wp-block-image">
<figure class="alignleft size-large"><img loading="lazy" decoding="async" width="1024" height="626" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/12/Screen-Shot-2022-12-02-at-19.27.53-1024x626.png" alt="" class="wp-image-40997" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/12/Screen-Shot-2022-12-02-at-19.27.53-1024x626.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/12/Screen-Shot-2022-12-02-at-19.27.53-1024x626.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/12/Screen-Shot-2022-12-02-at-19.27.53-1024x626.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/12/Screen-Shot-2022-12-02-at-19.27.53-1024x626.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/12/Screen-Shot-2022-12-02-at-19.27.53-1024x626.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2022/12/Screen-Shot-2022-12-02-at-19.27.53-1024x626.png?w=420 420w, https://blockworks-co.imgix.net/wp-content/uploads/2022/12/Screen-Shot-2022-12-02-at-19.27.53-1024x626.png?w=427 427w, https://blockworks-co.imgix.net/wp-content/uploads/2022/12/Screen-Shot-2022-12-02-at-19.27.53-1024x626.png?w=358 358w, https://blockworks-co.imgix.net/wp-content/uploads/2022/12/Screen-Shot-2022-12-02-at-19.27.53-1024x626.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/12/Screen-Shot-2022-12-02-at-19.27.53-1024x626.png?w=50 50w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>QQQ is up 90% over the past five years, double bitcoin&#8217;s returns | Chart by David Canellis</figcaption></figure></div>


The divergence comes as equities have dipped, following a stronger-than-anticipated jobs report, which showed nonfarm payrolls increasing by 263,000 in November. Analysts expected a 200,000 raise. Average hourly earnings also increased 0.6% between November and October and are up more than 5% year over year, suggesting the Fed’s efforts to curb inflation may not yet be sufficient.&nbsp;



The S&amp;P 500 and Nasdaq Composite indexes were each trading about 0.5% lower halfway through Friday’s session. Bitcoin was largely flat, while ether rallied 0.4%. QQQ lost close to 1%.



Still, risk-off sentiment is likely to persist in the long run, analysts say.&nbsp;



“Crypto traders need to remember that a key reason why crypto has fallen so much over the past year is that inflation was out of control and central banks were motivated to send rates higher which ultimately was bad news for all risky assets,” Edward Moya, senior market analyst at Oanda, said in a note Friday.



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<li><a href="https://blockworks.co/newsletter/daily">Blockworks Daily</a>: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Start your morning with the top news and analysis to inform your day in crypto.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: Built for Solana investors, developers and community members. The latest from one of crypto&#8217;s hottest networks.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: For crypto collectors and traders, covering apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.</li>
</ul>

Bitcoin, QQQ Correlation Dips to Lowest Level in More Than 3 Years

Crypto layoffs make up only 4% of tech layoffs between Jan. 1 and Nov. 13., a new report from CoinGecko reveals.



Despite being featured extensively in news and media, the entire cryptocurrency sector laid off 4,695 people, as of Nov. 13, significantly fewer than the consumer technology and food technology sectors, which laid off 18,486 and 13,203 people, respectively.



Consumer technology cuts represent 15.6% of all tech layoffs — this number is likely driven by recent Big Tech staff slashes at Meta — which let go of 11,000 employees — and Twitter’s 3,700 employee culling following the arrival of Elon Musk as CEO.&nbsp;



Instant delivery companies that benefited from venture capital funding during the pandemic were responsible for many of the food technology layoffs, the <a href="https://www.coingecko.com/research/publications/tech-layoffs-by-sectors" target="_blank" rel="noreferrer noopener">report shows</a> — Turkey-based Getir let go of 4,480 employees in May and other affected companies included GoPuff, Foodpanda and Delivery Hero, just to name a few.



Of course, some of these companies fall into more than one sector.&nbsp;



Following the FTX implosion earlier this month, it is likely that the cryptocurrency space will see more layoffs in the coming weeks and months — besides the obvious cuts and resignations at FTX itself.



Large industry players are already being affected, with the potential to spillover into job losses.



Cryptoasset manager Multicoin Capital has <a href="https://blockworks.co/news/multicoin-lost-more-than-half-its-crypto-funds-capital-this-month-sources" target="_blank" rel="noreferrer noopener">lost more than 55%</a> of its funds, Genesis <a href="https://blockworks.co/news/genesis-halts-lending" target="_blank" rel="noreferrer noopener">put a halt</a> to customer redemptions and new loan originations, and other funds with direct exposure to FTX are still surfacing.&nbsp;



Cryptocurrency asset management firm <a href="https://blockworks.co/news/ikigai-fund-caught-up-in-ftx-contagion" target="_blank" rel="noreferrer noopener">Ikigai</a> revealed that the majority of the company’s funds had been on FTX, and when it tried to withdraw money, it could retrieve very little.&nbsp;



Internationally, one of the largest Japanese exchanges — Liquid Global — revealed that it would be halting withdrawals.



Who’s next?



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<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.</li>



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<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: For crypto collectors and traders, covering apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.</li>
</ul>

Tech Layoffs Outnumber Crypto Cuts, but Not for Long

Bitcoin is once again diverging from its correlation with equities as traders react to a disappointing earnings season and the latest news on <a href="https://cms.blockworks.co/news/ftx-bankrupt-hacked-investigated-a-timeline-of-events/" target="_blank" rel="noreferrer noopener">FTX’s bankruptcy filing</a>.&nbsp;



The largest digital currency’s 30-day rolling correlation with US equities fell to .17 last week — its lowest level since November 2021 — before recovering to .4, according to data from Kaiko. A correlation coefficient of 1 means the assets are moving perfectly together.&nbsp;



“On any other week, crypto markets would have almost certainly experienced a significant bounce after last week’s inflation print, which fueled hopes that inflation may be peaking and the Fed will slow its monetary tightening,” Kaiko researchers wrote in a <a href="https://blog.kaiko.com/crypto-liquidity-in-a-post-alameda-world-5fb2c190f0b" target="_blank" rel="noreferrer noopener">note</a> Monday. “While crypto assets tumbled, the Nasdaq 100 and the S&amp;P 500 jumped by a whopping 8.8% and 5.9%, respectively.”



Bitcoin and ether, by contrast, are trading more closely than they have in over a year. Both digital assets locked in modest gains Monday, each rallying about 1%.&nbsp;



Meanwhile, crypto-linked stocks — such as exchange Coinbase, mining group Stronghold and tech firm MicroStrategy — posted sharp declines Monday as the FTX-fueled turmoil continued. Coinbase lost nearly 7% as of noon ET, while Stronghold and MicroStrategy slipped 4% and 5%, respectively. All three companies trade on the Nasdaq. 



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" src="https://flo.uri.sh/visualisation/11816239/embed#?secret=fkDjm1nAOB" data-secret="fkDjm1nAOB" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption>The big purple line on the far right of the chart shows negative correlation between bitcoin and the Nasdaq Composite</figcaption></figure>



“MicroStrategy, which saw the value of its 130k BTC holdings plummet by roughly $500mn in 5 days, registered the largest drop in its share prices, ending the week down by 37%,” Kaiko researchers wrote. “The largest BTC investment vehicle, Grayscale Bitcoin Trust (GBTC), lost 28% of its value.”&nbsp;



The move added to the <a href="https://cms.blockworks.co/news/crypto-chaos-dims-prospects-of-us-bitcoin-etf-analysts/" target="_blank" rel="noreferrer noopener">ever-widening Grayscale discount</a>, which measures the difference between GBTC’s share prices and the market value of the underlying bitcoin holdings. The discount hit a record low of 41% last week, according to <a href="https://ycharts.com/companies/GBTC/discount_or_premium_to_nav" target="_blank" rel="noreferrer noopener">Ycharts</a>. Rumors that Alameda Research had significant GBTC positions likely added to the selling pressure, analysts said.&nbsp;



While crypto-related trading moves have weighed on tech stocks in recent days, Big Tech’s rally, which saw the Nasdaq rise 6% over the past five trading days, is likely to be short lived, analysts warn.&nbsp;



“Tech and growth stocks have recovered some ground on value recently but we continue to believe that progress in the economic recovery and subsequently higher interest rates will be a headwind for tech and a rotation from growth to value can be utilized to reduce tech overweights, but not abandon super-cap tech holdings altogether,” Tom Essaye, founder of Sevens Report Research, said.



The loosening of crypto’s Big Tech trading patterns is a reversal of a months-long trend. In <a href="https://cms.blockworks.co/we-live-for-this-moment-crypto-exec-says-of-harsh-market-contraction/" target="_blank" rel="noreferrer noopener">May</a>, the <a href="https://cms.blockworks.co/cryptos-correlation-to-equities-dips-following-all-time-highs-in-may/" target="_blank" rel="noreferrer noopener">correlation</a> between bitcoin and the tech-heavy Nasdaq broke 0.8 for the first time, and bitcoin’s tandem trading to the broader S&amp;P 500 also hit similar levels in early May. In June, the correlation between bitcoin and the S&amp;P 500 fell to around 0.5 and has hovered there ever since, according to Coin Metrics <a href="https://charts.coinmetrics.io/correlations/#435" target="_blank" rel="noreferrer noopener">data</a>.



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<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.</li>



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<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.</li>
</ul>

Bitcoin Diverges From Tech Stocks as FTX Fallout Continues

<div id="highlights-block_635af65bfd138" class="highlights">
 <ul>
 <li>Bitcoin managed to stay above $20,000 as Big Tech stocks continued their decline in after-hours trading</li>
 <li>Amazon lost more than 20% during the after-hours session Thursday while Meta closed Thursday nearly 25% lower</li>
 </ul>
 
</div>



Based on Thursday’s session, Big Tech is starting to trade like cryptocurrencies.&nbsp;



Although bitcoin managed to stay above $20,000, paring just 2% over the day, Big Tech stocks continued their decline in after-hours trading following disappointing earnings results.&nbsp;



<a href="https://www.cnbc.com/2022/10/27/amazon-amzn-earnings-q3-2022.html" target="_blank" rel="noreferrer noopener">Amazon lost more than 18%</a> during the after-hours session Thursday after the company missed on revenue. <a href="https://cms.blockworks.co/metas-metaverse-division-loses-nearly-3-7b-in-q3/" target="_blank" rel="noreferrer noopener">Meta closed Thursday</a> nearly 25% lower, ending the trading session at its lowest price since 2016, after posting a 4% year-over-year revenue decline. 



Apple, by contrast, posted a record quarterly earnings but still could not escape the market decline and lost 5% during the trading session, according to data from Investing.com.&nbsp;



<h3 class="wp-block-heading">Bitcoin’s volatility is legendary, but…</h3>



Bitcoin, known for its volatility, has only lost 18% or more in one day on 10 occasions over the last 10 years, and only twice in the last 5 years.&nbsp;



<a href="https://cms.blockworks.co/bitcoin-a-stable-investment-volatility-dips-below-nasdaq-sp-500/" target="_blank" rel="noreferrer noopener">Bitcoin’s 20-day volatility</a> is now lower than both that of the Nasdaq and S&amp;P 500, according to research from data firm Kaiko. Both BTC and ETH have outperformed META over the past year.



“Bitcoin’s market share of trade volume hit its highest level in more than two years,” Kaiko noted in a research report released Thursday. “Bitcoin dominance has increased sharply since April which suggests that sentiment has turned predominantly bearish after the collapse of Terra’s ecosystem and the wave of high-profile bankruptcies over the summer.”



Disappointing earnings, coupled with a looming central bank decision and a tumultuous macroeconomic environment, is creating an increasingly uncertain outlook for equities.&nbsp;



“US stocks are struggling for direction after a mixed bag of earnings was accompanied with economic data that supports the idea that the economy is weakening,” Edward Moya, senior analyst at Oanda, said. “Mark Zuckerberg is looking reckless here…artificial intelligence investment was boosted and now everyone is expecting Meta to have a free cash flow problem.”





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<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.</li>
</ul>

Big Tech Trading Like Bitcoin on a Bad Day After Disappointing Earnings

Shalini Nagarajan

<div id="highlights-block_62b2e6ef78284" class="highlights">
 <ul>
 <li>There are limits to what financial services can create in terms of content-driven experiences, DBS’ compliance head told Blockworks</li>
 <li>The firm expects to grow its tech-focused strength by an average of 1,000 employees annually over the next few years</li>
 </ul>
 
</div>



The struggles of the cryptocurrency market might currently be grabbing eyeballs, but companies haven’t lost sight of opportunities around the metaverse. More <a href="https://bankingblog.accenture.com/banking-in-the-metaverse-the-next-frontier" target="_blank" rel="noreferrer noopener">traditional banks</a> want to establish value-added financial services in the metaverse, and some are taking on the challenge of introducing financial interoperability between one or more digital worlds and the physical world.



Singapore-based DBS Bank, for one, believes the current narratives around the metaverse miss a fundamental point of putting humans at the center.&nbsp;



Lam Chee Kin, the head of legal and compliance at DBS Bank, wrote in a recent paper that he doesn’t entirely agree with the Web3-centered view of token or NFT-based play-to-earn gaming metaverses. He’s of the opinion that the virtual world gives humanity a promise of escapism and fulfills the need for more avenues for progression and achievement.



Having invested over 1 billion Singapore dollars ($722 million) on average over the past four years into its technology infrastructure — <a href="https://asia.nikkei.com/Business/Finance/Singapore-s-DBS-explores-metaverse-in-digital-push" target="_blank" rel="noreferrer noopener">including</a> the metaverse — DBS Bank expects its tech bench to grow by an average of 1,000 employees annually over the next couple of years.



Below is Blockworks’ conversation with DBS Bank’s Lam Chee Kin.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Blockworks: How does DBS Bank plan to get involved in the metaverse?



Chee Kin: That’s a very nuanced conversation, but it’s key to note that it&#8217;s early days. What’s going to be critical is familiarity with underlying technologies, and this goes back to the idea of human-centeredness.



If the future is going to be represented by immersion technology, emergent delivery technology and digital asset technology, then DBS needs to be increasingly familiar with technological developments in each of these three areas.



The intent is to develop a digital assets capability that would be consistent with the future envisaged. Consequently, our people would need to pick up not only the technical skill sets but also need to develop adjacent skills, such as in the legal or regulatory space, in order to make the metaverse a reality. DBS is making moves in these areas in order to be ready for that future when it comes about.



Blockworks: Do you think metaverse-related investments will take time to reap solid returns?



Chee Kin: A few articles recently went into this and showed Big Tech appears to be going a bit slower on the metaverse than would have been expected relative to the excitement that existed about a year ago. Having said that, there&#8217;s no doubt that we&#8217;re in an inflationary environment, and a lot of value has come off stock prices. Right now, people are probably a bit more risk-sensitive in terms of making big moves into this area.&nbsp;



But you can’t just watch the tech companies. Another view posits that the metaverse is a perfect platform playing to the strengths of the big content brands — those that have created entire content franchises, or have had extensive experience building story universes.



Partner conversations are going to be relevant because there&#8217;ll be limits to what financial services can create in terms of a content-driven experience, but embedding financial services into a partner&#8217;s metaverse is also an equally valid proposition.&nbsp;



Blockworks: What names come to mind in Asia or in the world that you see dabbling in the metaverse today?



Chee Kin: Clearly China. If you look at the Chinese technology giants such as Baidu and Tencent, they all appear to be taking a socially-focused view and that&#8217;s interesting. South Korean banks have also made some public announcements around branch virtualization in the metaverse. So let&#8217;s say Silicon Valley is one angle, and China is definitely another.



Blockworks: What are the biggest risks that you see the metaverse facing today?



Chee Kin: There are a whole bunch of technical risks. Some are more obvious, such as the incredible amount of market volatility. Another would be worries of money laundering and criminal activity on the metaverse.&nbsp;



But in using the blockchain, there are opportunities that come with risks. When you become so transparent with activity on the blockchain, everything is written, everybody can see what’s going on, and there are good ways of managing these risks.&nbsp;



Another risk which is more abstract has to do with how digital reality interacts with physical reality. We’re all still human beings subject to the rule of law in the physical world. We&#8217;ll need to create a legal scholarship around this.



In terms of social risks, there’s a concept in online gaming called “griefing” — which means that the only reason a person plays an online game is to make other players&#8217; lives as miserable as possible. Computer gaming has known this for decades, and many game developers have become adept at designing griefing out of their games. We can similarly learn lessons on how to set up a metaverse that is as protected from griefing as possible.



In Japan, there’s a social phenomenon called hikikomori — the total social isolation of the individual. At the individualistic level, you&#8217;ve just got a person who&#8217;s addicted, or probably finds more value in his digital life than he finds in his physical life. Because of that value perception, he makes a conscious life choice to live in the digital world, and not the physical world. If you get all this withdrawal from society, then what happens to economic productivity? What happens to birth rates? We care about the unintended consequences of these moves.



Blockworks: What is your view on the current crypto market downturn?



Chee Kin: There have been winners and losers. Those with financial markets experience, who could handle the market and liquidity risk, will be able to come out of this in reasonably better shape.



But I think the people who perhaps underestimated some of the technical risks have probably suffered relatively worse. Bear in mind that actually the whole market, not just the crypto market, is being affected.



This interview is edited for length and clarity.



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<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.</li>
</ul>

Q&A: Southeast Asia’s Biggest Bank is Bullish on the Metaverse

<div id="highlights-block_62991102eb399" class="highlights">
 <ul>
 <li>By combining technology and ideology, Web3 is attracting big tech’s top talent</li>
 <li>94% of crypto investors are Gen Z and Millennials, and many believe that Web3 will play a significant role in their future</li>
 </ul>
 
</div>



Just as Big Tech companies lured top talent away from Wall Street in the early 2000s, today’s Web3 companies are catching the attention of senior executives in the tech industry.&nbsp;



Google’s former vice president, Surojit Chatterjee, now serves as Coinbase’s chief product officer. Amazon’s Pravjit Tiwana left his position as general manager of AWS Edge Services to become the chief technology officer at Gemini. Lyft’s former chief financial officer, Brian Roberts, joined non-fungible token (NFT) marketplace OpenSea, and the former head of gaming at YouTube now leads Polygon Studios as its CEO.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">I’ve never felt this connected to a community of builders like the crypto/web3 one. I’m not talking about folks who are in it for a quick speculative win. I’m talking about people who want to rebuild the internet’s infrastructure to move value and power in the hands of people.&mdash; David Marcus (@davidmarcus) <a href="https://twitter.com/davidmarcus/status/1486160772296101889?ref_src=twsrc%5Etfw">January 26, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Perhaps the most well-known of them all is Twitter’s Jack Dorsey, who has now stepped down from his position as the company’s CEO to focus on his crypto-oriented payments company, Block (formerly known as Square).



Senior executives are not the only ones moving into the space. <a href="https://www.stilt.com/blog/2021/03/vast-majority-crypto-buyers-millennials-gen-z/" target="_blank" rel="noreferrer noopener">Studies</a> reveal that 94% of crypto investors are Gen Z or Millennials, a demographic that <a href="https://www.investopedia.com/younger-generations-bullish-on-cryptocurrencies-5223563#:~:text=Generation%20Z%20is%20close%20behind,and%20ahead%20of%20mutual%20funds." target="_blank" rel="noreferrer noopener">skews toward a view</a> of cryptocurrency as a retirement asset and perhaps a career option.&nbsp;



“The most attractive thing about working for a crypto company is obviously the opportunity to work on the forefront of bleeding-edge&nbsp;[innovation]. We have heard many times before that the space right now is akin to what the internet was in the late 1990s or early 2000s,” Duy Cao, senior consultant at CryptoRecruit told Blockworks. “A lot of us were too young back then to capitalize on the opportunity or to meaningfully contribute to an exciting space.”



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Crypto is the once-in-a-lifetime opportunity industry of our generation,” Cao said.&nbsp;&nbsp;</blockquote>



Although Web3 can appear to be an exciting area to explore, the crypto market is also known to be quite volatile. Recent inflation rises and stock market downturns have led the bitcoin and ether market caps to decline by over 50% over the past six months. TerraUSD’s crash further crushed the market, wiping off $200 billion in just a day.&nbsp;



“Recruiting has seemed to <a href="https://cms.blockworks.co/gemini-joins-growing-list-of-crypto-exchanges-cutting-staff-amid-downturn/" target="_blank" rel="noreferrer noopener">slow down a little bit</a>. We don’t get as many incoming leads as say six months ago,” Cao said, adding that despite this, “some of the best projects are built during bear markets, whilst the hot air projects tend to disappear.”



The market downturn has not yet deterred venture capitalists from investing in the space. Andreessen Horowitz last week <a href="https://cms.blockworks.co/andreessen-horowitz-launches-largest-crypto-fund-ever/" target="_blank" rel="noreferrer noopener">went ahead</a> with the previously planned launch of its $4.5 billion mega fund, targeting Web3 startups from decentralized finance (DeFi) and social media to gaming and decentralized autonomous organizations (DAOs), among others.



Binance Labs, the venture capital arm of cryptocurrency exchange company Binance, <a href="https://cms.blockworks.co/binance-launches-500m-web3-blockchain-fund-to-drive-tech-adoption/" target="_blank" rel="noreferrer noopener">also ann</a><a href="https://cms.blockworks.co/binance-launches-500m-web3-blockchain-fund-to-drive-tech-adoption/">ounced</a> its plans to allocate $500 million to blockchain projects in incubation, early-stage and late-stage growth startups.&nbsp;



Compared to the 2017-18 ICO craze, Cao said, “this time around it&#8217;s very different — there is more clarity around regulatory and compliance procedures, more institutional adoption and most importantly, there is a lot more money coming in from VCs.”



As a result, Web2 veterans are flocking to an industry in need of their experience and guidance, he said.



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<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.</li>



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<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: For crypto collectors and traders, covering apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.</li>
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