What happened today? 14 Jan 26'

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The wire was non-stop today, carrying an unbelievable amount of information and unprecedented risk flowing through the markets. Volatility is everywhere, evidenced by the VIX surging nearly 5%. The Nasdaq suffered one of its worst single-day performances, dropping -1% amidst news of China blocking Nvidia H200 AI chip imports. Conversely, safe havens and value assets saw inflows: Gold rose +0.7%, Silver jumped +7.5%, and 10-year US bond yields declined -0.8%. This market movement highlights a clear flow toward diversifying asset classes. A prime example of capital rotating from growth to value mentioned yesterday is Dominion Energy, which is up +2% while the SP500 is down -0.5%, reinforcing the thesis favoring energy and value companies.

Today was defined by geopolitical conflicts and strategic maneuvering. As we hypothesized yesterday, Trump did not fire on Iran; rather, if he created tension to generate alarm. The logic holds that an imminent attack is rarely announced, whereas silence breeds tension and fear, compelling the Iranian government to act in accordance with Trump’s desires. This strategy succeeded: Trump cited internal sources stating that executions in Iran had ceased, removing the need for immediate US retaliation. The oil market bought into this de-escalation, dropping $2 from $62 to $60, achieving Trump’s clear goal of lower energy prices, and providing him the signal that this is the right move.

Attention is now shifting toward Greenland, Iran, and Ukraine, while Venezuela and Taiwan remain temporarily quiet. Tensions are clearly rising regarding Greenland, with Europe and NATO staunchly supporting its security. Mark Rutte, the NATO chief, declared the security of the Arctic non-negotiable, warning of the need for diligence against Chinese and Russian activity in the region. This is a critical warning to Trump regarding the threat of foreign invasion in the Arctic Ocean. Russia’s position allows for potential strikes against NATO, while China’s proximity poses a threat to the US mainland. Consequently, a majority of European allies—including Sweden, Denmark, Italy, Germany, and France—are sending soldiers to cooperate in protecting Greenland.

Despite Trump’s expressed desire to conquer Greenland, the meeting proceeded pacifically. For the US, the priority is assuring national security, not just for the extraction of rare earths and critical minerals—which are harder to extract in Greenland than in regions like Brazil—but for strategic control. I do not believe the US will take forced action; rather, I see a master plan where the Trump administration manufactures alarm surrounding Greenland to push Europe and NATO into defending it. By integrating US forces with NATO to secure the region, they reduce Russian and Chinese influence in the Arctic Ocean, thereby securing US national safety without a unilateral long-term burden. However, this increased focus on Greenland opens a dangerous window in Ukraine. With European resources concentrated on the Arctic, I expect an increase in fire on Ukraine, as Russia may seize the opportunity to conquer territory and inflict damage while global eyes are elsewhere.

In the resource sector, minerals—specifically copper and critical minerals—are on the critical line for the AI boom. Controlling the supply chain for AI infrastructure and space capabilities is essential for the next phase of global development. The White House has declared US dependence on foreign processing of rare earths, lithium, and cobalt a strategic vulnerability. Trump has invoked authority under Section 232 to monitor and adjust imports, even imposing a 25% tariff on imported chips, including the Nvidia H200 and AMD MI325X. Regarding copper, 239 out of 240 mining facilities are profitable at current prices, creating a massive incentive to extract and sell. While this will eventually increase supply and lower prices, the adjustment process takes time. For existing mines, supply can go live in six months, but new projects require years. A real supply chock it is not close. Therefore, market price projects the eventual acceleration of supply—therefore expecting another +50% price hike in 2026—may be inaccurate.

Broadly, stock markets struggled today. European indices traded down on tension trades, Japan fell, and China announced an increase in margin financing deposit ratios from 80% to 100%. This move eliminates leverage possibilities, which will likely reduce volatility but creates a negative force to momentum and an eventual selling pressure on the index. Meanwhile, in the corporate sector, global luxury retailer Saks filed for bankruptcy.

In stark contrast to traditional equities, crypto is the only asset class I am confident will point to a great year, likely outperforming all others. We saw a massive surprise in ETF flows, with over $900m in total inflows yesterday—Bitcoin commanding $753m and ETH $130m—and I expect this trend to continue as Bitcoin holds above $97k. The privacy narrative is also gaining momentum, with XMR experiencing double-digit performance with $100m in added Open Interest (OI). This massive long positioning signals a bubbly situation where a squeeze could happen anytime. At this prices levels increase the risk of holding. And ZEC currently underperforming XMR by 80% YTD, largely due to the ECC conflict. This lag highlights a “catch-up” trade opportunity where capital may rotate from XMR to ZEC.

The broader crypto market is reacting violently to these flows. IPOs are heating up, with Bitgo’s IPO well-subscribed and Bitpanda preparing for a Frankfurt listing at a $4-$5b valuation. This sentiment is triggering massive short squeezes: BERA rallied +50% (from $0.57 to $0.89), and Starknet is up +15% from local lows despite having near-zero transaction volume, maintaining a $500m+ valuation. Looking toward 2026, 99% of financial advisors allocating to crypto plan to maintain or increase exposure. As correlations with the stock market drop, crypto should drive independently, acting as a hedge against currency debasement while Gold and equities sit at all-time highs.

Strategically, MicroStrategy (MSTR) is positioned to be a big Q1 winner. Trading at a 0.87 mNAV discount, MSTR benefits from a “triple edge” force: increasing mNAV, rising Bitcoin prices, and a potential MSCI review approval. While MSTR is down -38% since the start of 2025 (compared to BTC’s flat -0.4%), it is currently trading at $179, up +20% from the lows. If the thesis plays out, MSTR could trade above $350 in a few months.

PumpFun reported positive business data with active addresses up 100% YTD. In Korea, KB Financial Group is applying for a patent for a hybrid payment solution utilizing stablecoins, signaling that Korea is opening its market to crypto.

Tesla FSD is now available exclusively to monthly subscribers, and Google launched two new models: Veo 3.1 for video and MedGemma 1.5 for medical image interpretation.

Noise raised a $7.1m seed round led by Paradigm to build a new kind the same prediction market platform.

What a day.