Artificial Intelligence is the New Electricity, LUNA/UST Meltdown Explained, FTX's Robinhood Stake
Artificial Intelligence is the new Electricity, FTX invests in Robinhood, Terra's Wipeout
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By Terrence Hooi
Chief Investment Strategist
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investment advice or opinion regarding the specific investment objectives or
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1. Terra Blowup Exposes Badly Designed Technology
Last week, the entire crypto market deteriorated as they watch the volatility and drama unfold related to Terra, LUNA, and the UST stablecoin. As many of you are already aware, the UST stablecoin lost the $1 peg earlier last week and the LUNA token has fallen more than 99% in value.
The collapse of Terra might be the largest layer 1 blockchain failure in crypto history and and has resulted in approximately $28 billion in Total Value Locked in DeFi on May 7th wiped out.
Singular believes Terra’s collapse was due to its fundamental flaws stemming from its price stability mechanism consists of two main tokens.
Terra- burns Luna to stabilize Terra
Luna- native staking token that absorbs the price volatility of Terra
Unlike the USDC which is a fully collateralized stablecoin fully backed by the US dollar and cash-like instruments by the bank, UST, Terra’s mechanisms uses UST’s price peg to the dollar algorithmically using Luna and this is problematic for a variety of reasons.
Terra has drawn massive scrutiny from the crypto community and majority of people calling LUNA/UST a rug pull. Rather than calling it some sophisticated rug pull or fraud, it was actually the result of a badly designed technology product exposed by some intelligent market traders with deep pockets.
Will Terra’s UST stablecoin survive this blowup? Hard to say and we’re staying out of UST or LUNA as published last week. Terra could very well be the Lehman Brothers of Crypto and most of the crypto users invested in Terra were not around for the in past market cycles.
Singular’s Take: Bitcoin has seen a drawdown of ~85% multiple of times over the years, never invest what you’re not willing to lose. Even Amazon was down ~95% at one time, and a laundry list of shitcoins losing 99.9% of value and never recovered. Terra’s collapse should be seen as a failed experiment and it takes special skill to be optimistic about technological experiments.
Singular’s Action: Never invest what you’re not willing to lose. Terra’s blowup will prompt more stringent regulation in crypto and we’re already seeing that happening with US treasury secretary pushing stablecoin regulation by end of this year. Bitcoin at deep discount now after surviving Mt. Gox, Silk Road, nation state attacks and so many more, look to buy Bitcoin on dips with this correction in the overall crypto market. Down the road maybe six months, we could see a healthy recovery in overall crypto markets.
2. FTX Founder Sam Bankman-Fried buys 7.6% of Robinhood
The billionaire founder and CEO of crypto exchange FTX has host filed a 13D filing this week buying 7.6% of Robinhood with $648 Million. FTX also announced plans to offer equity trading on its FTX US platform as FTX President Brett Harrison posted a Twitter post on May 10th showing a trade on AAPL.
Singular’s Take: FTX and Coinbase’s strategic move to offer crypto and equities on its platform could blur the line between crypto and stocks in the near future and as Coinbase responded to “massively accelerate crypto adoption” during its earnings call last week
3. Alphabet’s DeepMind AI Model Gato one of the World’s Most Intelligent Artificial Intelligence Model
According to Forbes, Artificial Intelligence could add ~$15 trillion to the global economy by 2030. last year, AI has contributed $2 Trillion and we are now seeing Deep Mind’s Gato, a multi-tasking AI model that can perform 604 tasks acting as the “foundation’ of AI model that can be trained in control, vision and language datasets. That said, we are seeing Gato making significant progress in AI systems development with the emergence and homogenization of AI models over the last 30 years.
Currently, the Gato model can already perform 1.2 billion parameter and perform 604 tasks like playing a video game and stacking blocks with robot arms.
Singular’s Take: AI is poised to contribute ~15$ Trillion to the world economy by 2030. The biggest commercial opportunity will be consumer facing products. Own an iPhone X and above? You’re already experiencing facial recognition and AI in play. Google Maps redirecting you to a less congested route because of an accident of construction? AI in play. AI will be the new electricity.
Nothing we havent seen before in Bitcoin drawdown. BTC and Nasdaq seems to be tightly correlated in recent months.
BTC Volatility index shows that panic has subsided