Bitcoin's Big Surge, Tech Takes on Geopolitics | Bloomberg Technology

Bitcoin Surges Past $100,000; Paul Atkins Picked as SEC Chair

• Bitcoin has surged past $100,000, with a 3.6% increase, and has reached as high as $103,000, driven by positive sentiment and comments from Fed Chair Jay Powell comparing it to gold and indicating he would not restrain crypto (1m30s).
• Paul Atkins, the future S.E.C. chair pick, is seen as crypto-friendly due to his background as a regulator and advocate for digital currency and fintech, having previously served as a commissioner during the George W. Bush era and advised fintech and crypto companies (2m4s).
• Atkins' appointment is encouraging to investors who supported Donald Trump's candidacy and want to see changes in the crypto industry, as Trump aims to make the U.S. a crypto hub and has advocated for changes in U.S. policy toward digital currency (2m33s).
• Atkins is expected to make broader changes at the S.E.C., including possible changes in disclosure rules and easing of fines imposed by the agency, and has been referred to as the "Godfather of Conservative Capital Markets Ideology" (3m48s).
• The crypto market is expected to be impacted by Atkins' appointment, with some seeing it as vindicating for those who have been in crypto for a long time, and others watching for potential changes in the market (4m31s).
• The S.E.C. has been cracking down on the crypto market under current chair Gary Gensler, and Atkins' appointment is seen as a change in direction, with some expecting a more favorable regulatory environment for crypto (3m2s).
• Atkins' agenda is expected to include making the U.S. a more attractive place for crypto companies, and he has singled out the need for changes at the S.E.C. to achieve this goal (2m43s).

Market Impact and SEC Changes Under Atkins

• The surge in Bitcoin's price is also driven by optimism from Bank of America's visit to the Gigafactory, and a move in some asset classes, with some seeing it as a sign of a broader shift in the market (1m23s).
• The announcement of Paul Atkins as the potential new SEC chair is seen as a great choice, as he has experience as a commissioner and knows how the commission works, allowing him to hit the ground running (4m55s).
• Atkins' ability to get along with people is considered crucial, as he needs to work with the industry, lawmakers, and other commissioners to achieve regulatory clarity (5m25s).
• The current environment in Congress has been antagonistic, with questions not being answered and tension created, making it difficult to achieve regulatory clarity (5m41s).
• Atkins is expected to bring a more collaborative approach, working with the CFTC and lawmakers to get some clarity and forward motion on regulatory issues (6m7s).
• The economic team being put together by the transition team is seen as excellent, regardless of one's politics (6m22s).
• Some cynics believe that having a pro-crypto SEC chair will lead to a lack of regulation, but the industry is actually asking for clarity and regulation, not just enforcement actions (6m34s).
• Enforcement actions are expensive and limited to specific cases, and do not provide a broader rule to help businesses engage with the industry in the correct way (7m19s).
• Having worked closely with the SEC, it is understood that the approach will not change overnight, but rather will involve a better dialogue and collaboration (7m38s).
• The industry is not looking to get rid of all regulations, but rather to get to a more collaborative approach to achieve regulatory clarity (7m54s).
• Crypto-related companies are seeing a downturn after a run-up into the announcement, possibly due to profit-taking (8m5s).
• Stablecoin legislation from Congress is likely to be the first regulatory move, due to its smaller scope and bipartisan support (8m26s).
• Market structure legislation will take longer, as it requires more dialogue and definition of who will be the regulator, depending on where these assets sit along the spectrum (8m39s).
• Paul Atkins is a hopeful choice for a role, with no obstacles seen that should block his appointment, although there are other great candidates as well (9m4s).

Political and Economic Developments

• Elon Musk and Vivek Ramaswamy plan to meet with lawmakers to discuss slashing $2 billion from the federal government (9m49s).
• French government turmoil is impacting the country's business and startup sector, with uncertainty affecting business leaders who prefer to focus on budget planning for the next year (12m0s).
• The uncertainty started in June when President Macron called an unexpected snap election, and the prime minister's budget plan to slash help for innovative startups is now uncertain (12m14s).
• Startup leaders are waiting to see what the new budget will be or if the current year's budget will continue through next year (12m48s).
• France is considered a standout in Europe in terms of getting things done and having a healthy ecosystem for companies to thrive, according to Eric Schmidt, a former Google CEO (13m11s).
• President Macron's push for a "startup nation" seven years ago helped companies and encouraged the growth of new startups, including those in AI, such as Mistral (13m34s).
• A world summit on AI is scheduled to take place in February (14m5s).
• Marine Le Pen commented on President Macron's position, stating that the president's resignation can only happen in a political crisis or an entity crisis, and that new legislative elections will take place in the next few months (10m43s).
• President Macron has been dismissing growing calls for his resignation from politicians across the political spectrum, but he has stated that he will serve his second term in full (11m32s).
• The current momentum in the market is fragile and companies are hoping it will continue despite the challenging political situation (14m13s).
• South Korea's main opposition leader has stated that it may be difficult to get enough support from the ruling party to impeach the president this week after his declaration of martial law, but remains committed to removing the president (14m31s).
• The opposition leader believes that ultimately, politics is done by the people, and even if the result of the vote may go against the will of the people in the current situation, the vote result may change next time if individual members of the parliament are pressured heavily by public opinion (14m51s).

Tech Market and Investment Strategies

• The impact of geopolitical uncertainty on tech markets is a concern, with the US tech sector being one of the most geopolitically exposed, with 62% of revenue coming from overseas (15m37s).
• To mitigate this risk, investors can consider tilting their exposures within the tech sector to companies that buy and sell in the United States, such as those benefiting from the Chips Act, or companies focused on artificial intelligence, data centers, and power companies that are localized to the US (15m48s).
• The Chips Act has not been beneficial for all companies, such as Intel, but has helped others (16m6s).
• The leadership in artificial intelligence is with US-based companies, and data centers and power companies are important parts of the AI ecosystem, but are very localized to the US, providing some isolation from geopolitics (16m17s).
• A fund has been created based on the strategy of looking at the tech sector and tilting towards US domestic-focused companies to isolate geopolitical risk (16m37s).
• The next frontier of AI is the application layer, and conversations are going in that direction, with a focus on the "magnificent seven" and a concentrated rally within artificial intelligence (16m58s).
• As the build phase of artificial intelligence enters its third year, markets are expected to recognize the broader impact on technology stocks, semiconductor stocks, power stocks, cybersecurity stocks, and healthcare stocks (17m12s).

AI, Crypto, and Bitcoin's Rise

• The story of artificial intelligence is picking up in crypto, with Bitcoin passing 100,000 being a significant milestone, and anticipation of more friendly regulatory tailwinds (17m44s).
• The launch of the Bitcoin ETP is also significant, allowing investors to access digital assets for the first time (18m12s).
• Bitcoin is being considered as a hedge in portfolios due to its different behavior from stocks and bonds, and it could benefit from geopolitical risk (18m14s).
• There are significant flows looking at India, which has been a major beneficiary of efforts to build more domestic and diversify supply chains geographically, especially in chip capacity and tech manufacturing (18m42s).
• India has been focused on building out more chip capacity and tech manufacturing, making it a big beneficiary of the current situation (19m0s).

AMD vs. NVIDIA; Chip Market Dynamics

• AMD CEO Lisa Su is preparing for a battle against NVIDIA, and she believes that AMD has a history of doing amazing things despite being considered the underdog (20m10s).
• Lisa Su does not see being considered the underdog as a like or dislike, but rather as an opportunity for AMD to punch above its weight in terms of technology capability and impact on the industry (20m21s).
• Lisa Su and NVIDIA CEO Jensen are distant cousins, but they did not grow up together and only met at an industry event, and they do not trade notes or have family dinners (21m0s).
• Lisa Su believes that the market for chips is huge, and there are enough chips for everybody to build, and it's natural for companies like Google, Microsoft, and Amazon to have their own chip capability (21m31s).
• The shakeup of the established industry has surprised Lisa Su a little bit, but she believes that it's natural for companies to have their own chip capability (21m53s).

Tech Industry Updates and Market Trends

• Talks are preparing to produce AI chips at their new plant in Arizona, with plans to start production early next year (22m7s).
• Apple's main manufacturing partner, Foxconn, has reported a second month of sales growth, with Apple historically accounting for about 50% of overall sales (22m22s).
• The EU's new competition chief, Teresa Rivera, is considering a potential split of Google businesses, aiming to build on the legacy of her predecessor (22m36s).
• The NASDAQ is teetering around record highs, with the big benchmark for big tech, Tesla, being closely watched (23m9s).
• Bitcoin has become a significant benchmark, with its ecosystem valued at $2 trillion, and has surged past $100,000, up 3.5% today (23m26s).
• Chip stocks are experiencing a decline, with the biggest point drag being Synopsis, integral to chip manufacturing and testing designs, after weaker-than-expected first-quarter forecasts (23m47s).
• Intel's stock is off by 3.4%, and the company is seeking a new CEO, with two key experienced operators joining the board (24m0s).
• MicroStrategy, a Bitcoin proxy, has been rising but is now turning to the downside, off by 1.7%, after a phenomenal run-up in the stock (24m14s).
• MicroStrategy has raised $6 billion in convertible bonds to fund its Bitcoin buying and has become a popular choice among retail investors and hedge funds (24m53s).
• The company's plan involves a complex market-neutral arbitrage bet, riding the volatility of underlying MicroStrategy stock (25m11s).
• MicroStrategy's stock was up almost 9% when Bitcoin hit a new record, and the company is making the convertible arbitrage trade more appealing to hedge funds (25m21s).
• Retail investors have been playing leverage bets on MicroStrategy, getting into 2x, 3x, which has proven difficult due to liquidity issues (25m48s).
• There are worries about playing with volatility, given the institutional and retail involvement, as MicroStrategy is not short of volatility, trading at 200% more than the value of Bitcoin (26m5s).
• % of outstanding shares are currently shorted, which has been a painful trade so far (26m49s).

Chinese Hacking of US Telecoms

• Chinese hackers have compromised eight American telecom companies as an espionage effort to gather intelligence on prominent U.S. citizens, according to the Biden administration officials (27m7s).
• The details are scarce, but multiple U.S. telecoms have been breached in a seemingly wide and broad campaign to burrow into U.S. telecommunication networks (27m27s).
• There are worries about the incoming president and vice president being compromised on their communications, but few companies have publicly discussed the issue (27m54s).
• T-Mobile has become the first carrier to publicly share details about the threat, speaking exclusively about the markers of the threat and the sophisticated attempt to breach their network (28m14s).

Startup Success and the Rise of GenAI

• Last year, over 1400 startups were valued at more than $1 billion, but only 15% of them claimed profitability, raising questions about the measure of real success in the startup world (29m36s).
• Rebecca Lynn from Canvas Ventures suggests that the traditional metrics for success, such as reaching a $1 billion valuation, are no longer meaningful, and a new benchmark is needed to measure success (30m37s).
• Lynn notes that with the rise of generative AI (GenAI), companies can generate revenue quickly, with the median time to reach $1 million in revenue being 11 months, and some companies achieving it in as little as two weeks (31m9s).
• However, Lynn questions the sustainability of such rapid growth, emphasizing the importance of companies having a unique insight and deep industry knowledge in their area of operation (31m25s).
• Lynn also mentions that the initial hype around GenAI, which led to a surge in pilot projects and investments, is ephemeral, and companies need to demonstrate long-term value to be successful (31m47s).
• Canvas Ventures is being approached by dozens of AI companies every day, and Lynn is excited about the potential for innovation in areas such as voice technology, which could revolutionize industries like healthcare (32m21s).
• Lynn cites the example of a company called Case Text, which was impacted by GenAI and was subsequently acquired by Thomson Reuters, and another company called Parakeet, which is working on voice technology for the medical space (33m9s).
• Lynn believes that voice technology has the potential to transform industries and is an area that Canvas Ventures is eager to invest in, having been searching for the right technology for many years (33m43s).
• Rebecca Lynn anticipates that the window for companies going public is starting to open, with some companies ready and the market prepared, possibly leading to a viable option for people going forward in 2025 (34m29s).
• Lynn prefers M&A (Mergers and Acquisitions) as an exit option, considering it a more linear exit for founders, but advises keeping both IPO and M&A options in mind (34m52s).

TikTok Ban and National Security Concerns

• TikTok's app saw a 165% annual increase in usage on Black Friday through Monday, but the platform faces concerns over its parent company ByteDance posing a national security threat (35m37s).
• A decision on whether the U.S. will ban TikTok is expected, with the possibility of the app being banned in January, marking a consequential moment as the first foreign social media app to be banned in the country (35m59s).
• TikTok is used by half the American population, with more users than those who voted in the last election, and the future administration's head is also on the platform (36m32s).
• The U.S. court's decision on TikTok's fate is uncertain, but it seems likely that the court will uphold the law, potentially leading to an appeal by TikTok to the D.C. Circuit or the Supreme Court (37m1s).
• American investors, including those with ties to Trump, have billions of dollars invested in ByteDance, which could affect the outcome of the decision (37m36s).

OpenAI's Defense Partnerships and AI Policy

• OpenAI is partnering with defense tech company Anduril on anti-drone systems, prioritizing support for the U.S. government and defense (39m23s).
• Etsy announced their new CFO, who will be joining from Eventbrite, marking executive changes from the CMO perspective (38m33s).
• Allies are increasing their defense partnerships, including a partnership with the U.S. Air Force Research Lab, and working with Los Alamos, with the goal of adopting AI (39m31s).
• They have hired former top Pentagon officials to head up their policy and added the former head of the NSA to the board, indicating a lot of movement in that direction (39m51s).
• Employees generally have less resistance to this kind of work now compared to 2018 when Google's partnership with the Pentagon ended up not working out (40m15s).
• It's not just OpenAI, as their competitor Anthropic did a big partnership with Palantir, and Amazon and Meta have been doing work in this area, indicating a growing trend (40m25s).
• Elon Musk's potential involvement in AI policy is uncertain, and it's too soon to say what will happen in terms of AI policy (40m57s).

Jared Isaacman Nominated to Lead NASA

• President-elect Trump has nominated fintech billionaire and SpaceX astronaut Jared Isaacman to lead NASA, who will be leaving his CEO role (41m21s).
• Jared Isaacman is passionate about space and has become a central figure at SpaceX, which is a big partner of NASA and possibly their biggest contractor (41m54s).
• There may be questions about Jared Isaacman's relationship with SpaceX, and he might have to recuse himself from certain decisions due to his investment in the company (42m2s).
• NASA administrators might have protections in place to avoid blurred lines, such as recusing themselves from decisions or divesting shares (42m42s).
• Jared Isaacman's election could add fuel to contentious decisions on major contracts, such as the human landing system, where SpaceX won but Blue Origin sued NASA and the government (43m28s).