ACCUMULATION STRATEGY
JPMorgan has recently noted that mining companies are adopting the bitcoin accumulation strategy seen in firms like MicroStrategy due to profitability challenges post the reward halving and rising network hashrate. Miners are choosing to stockpile bitcoin or explore opportunities in other sectors like AI and high-performance computing. MARA Holdings is a prime example, holding 35,000 bitcoin tokens valued at $3.5 billion. Additionally, companies outside the mining sector, such as Semler Scientific, have entered the crypto space, with Semler acquiring $144 million in cryptocurrencies.
DOMINATING TRADING ACTIVITY
HyperLiquid, a prominent on-chain perpetuals trading protocol, has witnessed a surge in trading activity, with a notable shift towards ether over bitcoin. The platform has recorded a cumulative volume of over $500 billion, a significant increase of 15 times since the beginning of the year. In the past week, ether has outpaced bitcoin in trading volume on HyperLiquid, indicating a growing interest in the cryptocurrency. Furthermore, the open interest in ether perpetual contracts has seen substantial growth, reaching $857.5 million. The platform’s success is also mirrored by the remarkable performance of its native token, HYPE, which has surged by over 300% in value, surpassing well-established DeFi projects like Aave.
AI BREAKTHROUGH
The leading chipmaker, Broadcom, has exceeded expectations for the fourth quarter, as it reported a significant 51% increase in revenue. This boost was largely attributed to their success in the artificial intelligence (AI) sector, with revenue for AI chips increasing by 12% to $8.23 billion. The company’s CEO, Hock Tan, announced that they are developing custom AI chips in collaboration with three major cloud customers, leading to a 13% jump in the company’s stock value during extended trading. In addition, Tan projected a promising future for Broadcom in AI, emphasizing the surging demand in generative AI infrastructure, and since AI revenue is skyrocketing by 220% to $12.2 billion for the year, Broadcom is strategically positioning itself to capture a substantial market opportunity estimated at $60 to $90 billion by 2027 with their AI chips known as XPUs. Additionally, the company’s infrastructure software division experienced a remarkable three-fold increase in revenue driven by their acquisition of VMware.
CREDIT FUSION
Fintech company Affirm is partnering with private-credit firm Sixth Street in a $4 billion joint venture to offer short-term installment loans over the next three years. This collaboration combines the trend of alternative-asset managers investing in fintech companies for more efficient financing options. Unlike traditional banks, Affirm uses various funding models, including deals with private-credit funds, like the one with Sixth Street, to expand its lending capacity. While banks also indirectly finance these loans, the partnership reflects the growing demand for short-term installment loans and buy now, pay later products. Affirm’s funding capacity has grown substantially, providing credit to consumers at adjustable APRs. Despite a rise in delinquency rates, this collaboration aims to capitalize on the increasing popularity of online shopping and flexible payment options.
INTERNATIONAL NEWS
In response to the current economic challenges, China is prioritizing policies to enhance growth as highlighted in a recent high-level economic planning meeting led by President Xi Jinping. Emphasizing the importance of proactive fiscal measures, the government plans to increase the deficit, issue more long-term bonds, and implement monetary easing strategies like lowering interest rates. These decisions reflect a shift in focus towards stimulating consumption, investment, and technological innovation amidst growing external uncertainties, including the threat of trade tensions with the U.S. While the meeting reaffirmed intentions to maintain economic stability, details regarding the scale of stimulus activities are pending, with expectations of growth targets hovering around 5%. Despite these efforts, the stock market reaction indicated a sense of disappointment among investors, as seen in the losses faced by China’s stock markets post-meeting. This suggests a mismatch in expectations and highlights the market’s desire for more concrete solutions and support for sustained economic momentum.
