Alternative Investing Report - November 14, 2024

*as of 11/13, Sources: S&P, BTC, FTSE, DJRE, CL50

In the week since the election and the Fed rate cut, homebuying demand rose by 25% and posted the highest year-over-year gain since 2022. However, mortgage rates are also up, topping 7% for the first time since July. There are also concerns that Trump’s mass deportation proposal, which he claims will help lower housing costs, could end up doing the exact opposite.

➨ TAKEAWAY: Demand could be up for several reasons - with no more election uncertainty, more potential buyers are now ready to make a move, and some could be optimistic about the incoming administration. It could also signal the opposite, as some buyers may want to act now before Trump’s potential tariff and deportation policies raise construction prices significantly. Around 15% of the construction workforce are undocumented immigrants, and the cost of replacing them will boost housing costs, restricting supply. Additionally, very few undocumented immigrants are homebuyers, so deportations would not likely reduce the demand side.

Interested in investing in private companies? Join us on Monday at 11 AM ET to dig into the business overview of Stripe, Stripe, the global payments platform last valued at $95 billion. Co-founder Slava Rubin of Vincent and Marcelo Ballvé, Pre-IPO analyst at Sacra, will dig into the company’s growth, strengths, challenges, IPO prospects, and answer investor questions. The session is free but slots are limited.

Total VC investment into crypto startups fell 31.3% in Q3, while the number of deals fell 25.3%. But within the industry, infrastructure projects such as exchanges and custodians have seen a lesser drop-off, as investors look to a “picks and shovels” strategy. The public markets have reflected this as well, with crypto exchange Coinbase’s stock spiking more than 60% after the election.

➨ TAKEAWAY: Keep in mind that the quarterly totals reflect a pre-election period, before the recent bull market. For most of 2024, crypto, and most industries, have been overshadowed by the rise of AI, and VC dollars have gone along with it. With the crypto market pumping post-election and Bitcoin surpassing the $90,000 price for the first time, it could bring renewed VC interest to the space. On the other hand, investors may simply park their money in Bitcoin and other cryptocurrencies themselves, which could bring even better returns.

🪙 Coinbase 50 Index: The leading U.S. crypto exchange launched a new benchmark index that tracks the top 50 digital assets, led by Bitcoin, Ethereum, and Solana. It will be updated quarterly to include top performing coins, and gives investors the opportunity to track the crypto market without having to construct a portfolio themselves.

🚀 Klarna IPO: The Sweden-based payments company filed paperwork for a U.S. IPO, starting the process of going public. It has been valued at high as $46 billion in 2021, but now carries an estimated $15 billion valuation.

💎 Diamond necklace sale: An 18th century 300-carat diamond necklace with possible links to Marie Antoinette sold for $4.8 million at Sotheby’s, well above the high estimate of $2.8 million.

🤖 Amazon AI research: In an effort to draw attention to its Trainium AI chip and compete with Google, Microsoft, and others, Amazon is offering $110 million in grants to academic and research institutions.

🚀 Databricks fundraise: VC firm Thrive Capital is in talks to buy a stake of the data and AI software startup at a valuation of $55 billion. Databricks has been looking to raise money in part to provide liquidity for employees whose stock grants are set to expire in early 2026.

🎨 Fake art network busted: A network of 38 art forgers extending over multiple countries has been arrested, and over 2,100 fake works seized along with forged certificates of authenticity. The most commonly forged artists were Banksy and Andy Warhol, with some works displayed at shows in Italy.

It was inevitable that the rapid pace of AI development would start to plateau, and according to some, that has already started to happen. Startups like OpenAI, Anthropic and xAI have been facing delays and setbacks as they aim to release a large language model (LLM) better than OpenAI’s GPT-4. Ilya Suskever, co-founder of OpenAI and Safe Superintelligence, said that LLMs are starting to face limitations as they scale up. As a result, AI companies are developing new training techniques that are attempting to have the models “think” like humans. The company that develops the first successful iteration of this breakthrough is likely to see rapid growth in its valuation.