Below is the latest edition of #w3w, my free newsletter about decentralization. If you would like to receive it in your inbox every Sunday, please subscribe here.
Hard to believe, today marks the midpoint of 2024. For me, that brings two thoughts to mind.
First, it's never too early to begin your Christmas shopping. Just a friendly reminder fwiw. βΊοΈππ
More pertinent for purposes of the newsletter, it's time to look back at the first half's major storylines in tech. A few thoughts below about what might be in store through year-end as well:
- The successful launch of listed bitcoin funds on public U.S. stock exchanges in January has undoubtedly been the biggest positive for the crypto industry so far this year. Bitcoin's price has soared 45% through the first half, triple the gain in the S&P 500 over the same period.
- U.S. regulators' approval of bitcoin exchange-traded funds (ETFs) also set off a heated race among fund issuers, with Wall Street giant BlackRock emerging as the winner so far. Its fund, which trades undeer the ticker IBIT, topped $19.5 billion in assets under management last month to surpass rival Grayscale.
- The token market hit serious turbulence in the second quarter, however. Bitcoin has tumbled nearly 14% over the last three months, and global crypto market capitalization is down 15% to $2.27 trillion, according to CoinMarketCap data. By comparison, the S&P 500 rose almost 15% over the same period, and the tech-focused Nasdaq Composite and Nasdaq 100 fared even better. (For a fuller scorecard of how major market indicators performed in the first half, check out this spreadsheet I've generated in Google Drive.)
- A changed outlook on U.S. interest rates has been the markets' biggest stumbling block lately. Coming into 2024, analysts were expecting the Federal Reserve to make multiple cuts to official rates. That would have lowered borrowing costs in the U.S. broadly and thus favored leveraged bets on riskier assets like stocks and crypto. But then the U.S. central bank's policy committee signaled at its early-June meeting that only one cut might be in store this year. And a few Fed governors have recently speculated there might be no cut at all given the continued need to curb U.S. inflation.
- The FTX saga drew to a close, sort of. Founder Sam Bankman-Fried was sentenced by a federal judge in late March to 25 years in prison, and the bankrupt exchange's estate has proposed a plan to reimburse investors in full -- a far better outcome for victims than in many similar meltdowns on Wall Street in the past. Nevertheless, SBF is appealing his criminal case, and his former customers are petitioning in civil court because they say they still aren't getting enough under the proposed payback plan. Sigh...
- Major stablecoin issuers like Tether and Circle now hold more U.S. Treasury debt in their reserves than the governments of major creditor nations like Germany and South Korea do. If that doesn't demonstrate the popularity of stablecoins -- and the potential economic risks associated with them -- I don't know what will.
- Thursday's presidential debate between Donald Trump and Joe Biden included no mention of crypto, contrary to many industry insiders' hopes going in. A torrent of press coverage since the event has focused on other details, like Biden's shaky delivery and, to a much lesser extent for some reason that frankly escapes me, Trump's incessant lying. Regardless, I think the crypto-specific omission bears mentioning here, as it was truly a missed opportunity for the industry to be put in broader context of the U.S. economy before a mass audience.
- What Diogo said. For an excellent thumbnail sketch of the industry's pre-debate expectations, and its policy priorities heading into the next U.S. presidential term, I would highly recommend Bloomberg TV's interview on Wednesday with Diogo Monica, co-founder and chairman of Anchorage Digital. He says the industry wants clear rules on three main things right now: stablecoin regulation, defining roles of various federal agencies in overseeing crypto, and an end to agencies "de-banking," or severing the conventional finance relationships, of crypto businesses.
- AI mania pushed chipmaker Nvidia's valuation over $3 trillion in June, briefly nudging it past Microsoft as the world's most valuable company. Yahoo Finance editor Brian Sozzi says Nvidia is now "the world's most important stock," though it faces big risks if the broader hype around AI technology doesn't pan out as expected. That's an important caveat because...
- AI continues to generate hilarious mishaps in the real world. McDonald's called off an experiment in conjunction with IBM because its AI was mucking up customers' drive-through orders, trying in some cases to put bacon on their ice cream. Google's new AI Overviews feature in search suggested people glue cheese to their pizza. And a Catholic publisher in San Diego was shocked to see its AI chatbot suggest the church use Gatorade for baptisms. At the same time, Goldman Sachs is predicting AI could eliminate up to 18% of global employment. Something really has to give here, folks.
- Honestly, the more I hear about AI, the more I'm reminded of an old adage: We tend to overestimate new technologies' short-term effects and underestimate their long-term ones. Sounds about right.
That's it for now. Thanks for reading the newsletter today!
To reach me directly with feedback, a story suggestion, or other queries, email peter[at]w3w.media.
Best wishes for a healthy and productive week ahead.