Investment
Is Bitcoin A Smart Investment For Your Portfolio Now (Cryptocurrency:BTC-USD) – Seeking Alpha
On January 20, 2023, the price of Bitcoin (BTC-USD) broke through the bearish trend that had been observed for fourteen months and thus brought a touch of optimism to the crypto market. Bitcoin has been consolidating in the $21,500-$25,300 range since the end of January, indicating the first significant signs of market stabilization as the Fed continues to raise interest rates and increase geopolitical tensions around the world due to a Chinese balloon entering US space and increased hostilities between Russia and Ukraine.
This article will present the factors still exerting downward pressure on the price of coins and not allow talking about a complete change from a bearish trend to a bullish one. On the other hand, more and more signs on the market indicate the beginning of a recovery in investment interest in cryptocurrencies after the devastating news about hacker attacks on crypto exchanges and even the bankruptcy of some of them in the second half of 2022.
Increasing fees in the Bitcoin network
One of the first factors that are beginning to point to the transition of the crypto industry from a bearish cycle to a bullish cycle is the increase in the average transaction fee in the Bitcoin network. The key reason for the rise in commissions is the increase in the number of transactions in the Bitcoin network, and as a result, competition for inclusion in blocks is intensifying. Consequently, crypto miners are starting to select transactions with higher fees to maximize their revenue for their services.
After reaching a multi-year high in November 2021, the price of BTC was in a bearish trend until January 16, 2023. At the same time, fee revenue remained extremely low for only four months after the price of Bitcoin reached $65,000 per coin. After many market participants became disillusioned with cryptocurrencies and apathy reigned, relatively low prices attracted new traders and investors who took advantage of the situation.
At the moment, we can see the fee momentum breaking above one, indicating an increase in block space demand. As a result, this not only leads to a recovery in miners’ profits but can also confirm the emergence of hope among crypto community members with the subsequent end of the crypto winter.
The balance of crypto exchanges continues to decline
In recent quarters, the cryptocurrency industry has been flooded with news of various exchange hacks. On October 6, 2022, there were reports on many information resources that hackers successfully hacked the blockchain associated with Binance, stealing $566 million in BNB, Ethereum (ETH-USD), Fantom (FTM-USD), Polygon (MATIC-USD), and other coins.
And in mid-January 2023, FTX stated (FTT-USD) in a report to creditors that $415 million of digital assets were stolen due to hacking attacks. And as a result, many investors began to be more conservative in holding Bitcoins, Litecoins (LTC-USD), and other coins, moving them to more secure offline crypto wallets. Moreover, the trust continues to decline in exchanges that were actively used to conduct transactions with coins until Q3 2022, and at the moment, many of their clients prefer to keep their assets under their control.
On November 22, 2022, the total number of Bitcoins held by Coinbase (COIN) was around 531,242, and the next day there was a significant withdrawal of funds in excess of 44,000 BTC as a result of the spread of adverse reports about the bankruptcy of FTX. On a larger scale, there is a trend toward reducing the holding of coins by investors on the balance sheet of a crypto exchange. So, since the beginning of 2022, Coinbase’s clients have withdrawn a little less than 195,000 Bitcoins, thereby creating additional pressure on the financial position of one of the largest exchanges in the world.
Moreover, one of the additional reasons for the reduction in the balance of Coinbase may be the desire of investors to take profits from their investments due to the increase in the price of Bitcoin by just over 40% over the past month and a half. Overall, in Q4 2022, the company posted an operating loss of $474.5 million, starkly contrasting to the last three months of 2021, during which Coinbase posted its highest operating income ever. The continued downward trend in operating income from quarter to quarter is a red flag and can be a significant cause for concern for investors and the entire crypto community.
In addition, Binance’s partner in issuing Binance USD, Paxos, is under the gun. The U.S. Securities and Exchange Commission has begun a discussion with Paxos about the need to change the legal status of this stablecoin, and the regulator is also considering steps against the company. In the event that Binance USD (BUSD-USD) is recognized as a security, this will open Pandora’s box, as a result of which many other stablecoins can receive this status, which will lead to more stringent regulation and loss of interest by traders and investors in the crypto industry. You can already see how the balance of Bitcoin at Binance (BNB-USD) has decreased by 10.6% from the peak in the 4th quarter of 2022.
Fed rate hike
At the Federal Open Market Committee meeting, which was held from January 31 to February 1, the majority of its participants agreed that it is necessary to raise the interest rate by 0.25%, which is in line with the expectations of investors and traders. However, the negative moment was the information that several participants of the meeting were in favor of raising the interest rate by 0.5%, and thus this could lead to higher borrowing costs and, as a result, lead to a slowdown in economic growth. One of the possible reasons for the desire of some members of the FOMC to tighten monetary policy and thereby raise the key rate by 50 basis points may be the fact that the pace of slowing inflation is declining and, as a result, it is necessary to act more aggressively to achieve the inflation target at 2%. So, the annual inflation rate in the United States was 6.41% as of January 31, 2023, which is only 0.04% less than the previous month.
If the Fed raises the interest rate by 0.5%, then this will strengthen the US dollar and increase investment interest in US Treasuries (US10Y) (US2Y) compared to Bitcoin, which is trying to get out of the bearish cycle.
Conclusion
After a fourteen-month bear market that brought frustration and apathy to various digital assets on the part of crypto community members, the first significant signs of its recovery finally appeared on the horizon.
During the bearish period, there has been a redistribution of Bitcoin ownership from investors who are less disciplined and less confident in the asset to those who clearly understand the value of cryptocurrencies in a rapidly evolving digital world. In recent weeks, there has been a significant increase in the number of transactions, which positively affected miners’ profits. In Q1 2023, two key players in the crypto industry, Riot Platforms (RIOT) and Hut 8 Mining (HUT) announced an increase in Bitcoin mining. Given the increased price of cryptocurrencies and the rise in the number of mining equipment, it can be said with high confidence that the largest Bitcoin mining companies have successfully passed the test of the strength of their financial position from Mr. Market.
According to a report by Fidelity Digital Assets, a subsidiary of Fidelity Investments, European and American institutional investors have reported an improvement in the perception of cryptocurrencies and continue to increase investment in various digital assets. In my estimation, in 2023, there will be a tightening of regulation by various government agencies, which, on the one hand, will reduce the appetite of speculative traders in the short term, but on the other hand, will attract the attention of long-term and more conservative investors. So, for example, according to the optimistic forecast of ARK Invest, the price of Bitcoin can reach $1.48 million by 2030, but with a more conservative estimate, Katie Wood’s company (ARKK) can reach the price of the most popular cryptocurrency in the amount of $258,500, which is significantly higher than the current values. In addition, many institutional market participants continue to reduce interest in commodity mastodons such as Exxon Mobil (XOM), Occidental Petroleum (OXY), and Chevron Corporation (CVX) and begin to increase their appetite for riskier assets.
In conclusion, I would like to note that according to my model, in the next two weeks, I expect a correction in the price of Bitcoin due to the strengthening of the US dollar against other currencies during the Fed’s interest rate hike and also the tightening of tensions between the administration of US President Joe Biden and the Chinese government. After that, the accumulation phase may come, which I will use to buy shares in Bitcoin mining companies and ETFs involved in managing digital assets.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
Investment
Amazon completes $4B Anthropic investment to advance generative AI – About Amazon
Amazon concludes $4 billion investment in Anthropic.
Customers of all sizes and industries are using Claude on Amazon Bedrock to reimagine user experiences, reinvent their businesses, and accelerate their generative AI journeys.
The work Amazon and Anthropic are doing together to bring the most advanced generative artificial intelligence (generative AI) technologies to customers worldwide is only beginning. As part of a strategic collaborative agreement, we and Anthropic announced that Anthropic is using Amazon Web Services (AWS) as its primary cloud provider for mission critical workloads, including safety research and future foundation model development. Anthropic will use AWS Trainium and Inferentia chips to build, train, and deploy its future models and has made a long-term commitment to provide AWS customers around the world with access to future generations of its foundation models on Amazon Bedrock, AWS’s fully managed service that provides secure, easy access to the industry’s widest choice of high-performing, fully managed foundation models (FMs), along with the most compelling set of features (including best-in-class retrieval augmented generation, guardrails, model evaluation, and AI-powered agents) that help customers build highly-capable, cost-effective, low latency generative AI applications.
Earlier this month, we announced access to the most powerful Anthropic AI models on Amazon Bedrock. The Claude 3 family of models demonstrate advanced intelligence, near-human levels of responsiveness, improved steerability and accuracy, and new vision capabilities. Industry benchmarks show that Claude 3 Opus, the most intelligent of the model family, has set a new standard, outperforming other models available today—including OpenAI’s GPT-4—in the areas of reasoning, math, and coding.
“We have a notable history with Anthropic, together helping organizations of all sizes around the world to deploy advanced generative artificial intelligence applications across their organizations,” said Dr. Swami Sivasubramanian, vice president of Data and AI at AWS. “Anthropic’s visionary work with generative AI, most recently the introduction of its state-of-the art Claude 3 family of models, combined with Amazon’s best-in-class infrastructure like AWS Tranium and managed services like Amazon Bedrock further unlocks exciting opportunities for customers to quickly, securely, and responsibly innovate with generative AI. Generative AI is poised to be the most transformational technology of our time, and we believe our strategic collaboration with Anthropic will further improve our customers’ experiences, and look forward to what’s next.”
Global organizations of all sizes, across virtually every industry, are already using Amazon Bedrock to build their generative AI applications with Anthropic’s Claude AI. They include ADP, Amdocs, Bridgewater Associates, Broadridge, CelcomDigi, Clariant, Cloudera, Dana-Farber Cancer Institute, Degas Ltd., Delta Air Lines, Druva, Enverus, Genesys, Genomics England, GoDaddy, Happy Fox, Intuit, KT, LivTech, Lonely Planet, LexisNexis Legal & Professional, M1 Finance, Netsmart, Nexxiot, Parsyl, Perplexity AI, Pfizer, the PGA TOUR, Proto Hologram, Ricoh USA, Rocket Companies, and Siemens.
To further help speed the adoption of advanced generative AI technologies, AWS, Anthropic, and Accenture recently announced that they are coming together to help organizations—especially those in highly-regulated industries including healthcare, public sector, banking, and insurance—responsibly adopt and scale generative AI solutions. Through this collaboration, organizations will gain access to best-in-class models from Anthropic, a broad set of capabilities only available on Amazon Bedrock, and industry expertise from Accenture, Anthropic, and AWS to help them build and scale generative AI applications that are customized for their specific use cases.
Deepening our commitment to advancing generative AI, today we have an update on the announcement we made to invest up to $4 billion in Anthropic for a minority ownership position in the company. Last September, we made an initial investment of $1.25 billion. Today, we made our additional $2.75 billion investment, bringing our total investment in Anthropic to $4 billion. To learn more about the broader strategic collaboration between Amazon and Anthropic, of which this investment is one part, check out the stories below:
Investment
Amazon doubles down on Anthropic, completing its planned $4B investment – TechCrunch
Amazon invested a further $2.75 billion in growing AI power Anthropic on Wednesday, following through on the option it left open last September. The $1.25 billion it invested at the time must be producing results, or perhaps they’ve realized that there are no other horses available to back.
The September deal put $1.25 billion into the company in exchange for a minority stake, and certain tit-for-tat agreements like Anthropic continuing to use AWS for its extensive computation needs.
Amazon reportedly had until the end of the first quarter to decide whether to increase its investment to a maximum of $4 billion, and here we are just before the deadline, and the company has decided to throw in the maximum amount.
Anthropic’s AI models are one of very few that compete at the highest levels of capability (however you define it) yet are available at scale for enterprises to deploy internally or in user-facing applications. OpenAI’s GPT series and Google’s Gemini are the others up there, but upstarts like Mistral may soon threaten that fragile triumvirate.
Lacking the capability to develop adequate models on their own for whatever reason, companies like Amazon and Microsoft have had to act vicariously through others, primarily OpenAI and Anthropic. The two have reaped immense benefits by allying with one or the other of these moneyed rivals, and as yet have not seen many downsides.
What we can take from Amazon’s decision to invest the maximum after (one must assume) getting a pretty close look at how they make the AI sausage over there is, really, pretty scant.
It makes too much strategic sense for these companies, which possess enormous war chests saved up for exactly this purpose (outspending rivals when they can’t out-innovate them), to pour cash into the AI sector. Right now the AI world is a bit like a roulette table, with OpenAI and Anthropic representing black and red. No one really knows where the ball will land, least of all the companies that couldn’t predict or create this technology themselves. But if your bitter enemy puts their chips down on red, it only makes sense for you to bet on black.
Especially if you can bet on black at a discount — which is what Amazon got here, since it could invest at Anthropic’s September valuation, which is most certainly lower than it is today.
That said, if things were looking sketchy over there — the way they must have looked at Inflection before Microsoft pounced on it — Amazon could have backed out or just invested less than the full supplemental $2.75 billion. But that might have sent a confusing signal no one wants getting out there, least of all existing multibillion-dollar investors.
We know Anthropic has a plan, and this year we’ll find out what Amazon, Apple, Microsoft and other multinational interests think they can do to monetize this supposedly revolutionary technology.
Investment
Canada to tighten foreign investment rules for AI, other sectors
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Canada will require foreign companies to warn the government in advance before making investments or acquisitions in artificial intelligence, quantum computing and space technology, Bloomberg News reported on Tuesday, citing an interview with Innovation Minister Francois-Philippe Champagne.
The move will aid the government in conducting a national-security review before transactions get too far advanced and would-be investors may be restricted in their access to target companies’ user data or other property while the inquiry is taking place, the report said.
The tougher rules will also apply to investments in critical minerals and potentially other sectors, Champagne said to Bloomberg.
Earlier this month, Champagne said Canada will crack down on foreign investment in the interactive digital media sector to stop state-sponsored actors from endangering national security.
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