- Markets opened lower before rebounding on news of accelerated hiring in January (517k jobs added) and the lowest unemployment rate in 53 years at 3.4%. Despite strong job gains, wage growth continued to soften last month (+4.4% YoY). As reflected by markets, these conflicting data points could accommodate a soft landing scenario. SPX (-0.1%) and QQQ -0.07% (-0.1%) are trading relatively flat at time of writing, while DXY and US20Y are up by 1.0% and 2.7%, respectively. Digital asset markets have also cooled off since the Fed's 25bps hike on Wednesday, with BTC and ETH trading at $23.5k (-1.3%) and $1.66k (-0.9%), respectively. Over the last week, RNDR (+92.9%) has been the top gainer in the Top 100. RNDR introduced deflationary tokenomics last week and benefits from AI/Mixed Reality narratives that have been trending of late.
- Over the last week, two prominent figures in finance have expressed strong views on Bitcoin. Charlie Munger, the right-hand man of Warren Buffet and vice chairman of Berkshire Hathaway, published an op-ed in the WSJ, comparing cryptocurrencies as 'gambling contracts with 100% edge for the house.' While some of the predatory dynamics described by Munger hold true, it certainly does not apply to all crypto projects. It is thus essential to distinguish bad actors from the underlying technology. Analogously, one would not reject the internet because of bad actors seeking to profit from the dot-com bubble. On the other hand, Ray Dalio, who stepped down as CEO of Bridgewater Associates last October, warned of a looming currency crisis, pointing towards overprinting by most countries. He further deemed Bitcoin to be 'too unstable' to be an effective future currency, suggesting the ideal design to be an inflation-linked coin that can ensure buying power. We concede that Bitcoin has adopted and abandoned multiple past narratives, including a medium of exchange and an inflation-resistant store of value. While predicting which cryptocurrency can become the dominant currency is beyond our purview, the possibility of the ideal design using smart contracts is significant in itself. In fact, elements of what Dalio describes are encapsulated in Frax Finance's FPI -0.96% .
- The Bitcoin community has recently voiced conflicting opinions about NFTs on-chain. While NFTs on Bitcoin are nothing new, incumbent platforms such as Counterparty and Stacks historically utilized their own layers and tokens to implement smart contract functionality before settling transactions back to the Bitcoin base layer. Leveraging the Taproot upgrade, Ordinals takes a different approach to NFTs by inscribing videos or images to individual satoshis (one-hundred-millionth of a bitcoin). Proponents of the development praise it as Bitcoin has lost prominence to Ethereum and Layer 1s that offer smart contract functionality. In contrast, opponents argue that putting NFTs directly on-chain will drive up transaction costs and total chain size. One notable project includes Bitcoin miner Luxor Technologies' collaboration with independent developer Udi Wertheimer to mint Taproot Wizards NFTs on the largest Bitcoin block ever mined.
Billionaires Opine on Bitcoin, Bitcoin NFTs Pick Up Steam
Feb 3, 2023
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