December Edition: November 2024 Market Context & Insight - US Election Implications & AI x Crypto
Golden Pear is an investor and educator in blockchain technology. Its Genesis Fund is an award winning, long-biased, open-ended, liquid token hedge fund exclusively available to accredited investors, family offices, and institutions. In 2025, Golden Pear is also offering Exclusive access to its Delta Neutral Strategy. Our team of technologists and crypto experts is dedicated to identifying strong opportunities within the blockchain ecosystem.
Two strong tailwinds are currently propelling Digital Assets forward, one obvious, one not so obvious. Arguably, the second force is even more interesting so make sure you read this entire note!?
First, and most obviously, the election in the United States has come and gone and the pro-crypto administration of Donald Trump is beginning to take shape. We issued a separate note about some of the implications of the election, but lets recap some of the highlights.?
From a macro point of view, the world's largest market is about to switch from an administration that was actively trying to stifle the innovation of blockchain technology through regulatory enforcement and other methods, towards one that will be encouraging adoption of the technology. One cannot understate how important regulatory headwinds shifting to tailwinds are to, not only adoption and price action, but crucially, to innovation. While investors are feeling euphoric, in developer communities, there is even more excitement as a cloud of very real fear has just completely dissipated. Sometimes it is these moments where zooming in too far is in fact detrimental. The sheer innovation that is about to be unleashed will be unparalleled in hindsight.?
The Trump administration's parry to a pro-crypto stance is also not just the position of the President himself. In fact, he has surrounded himself with wildly pro-crypto advisors who are now finding themselves in positions of power. Included are Elon Musk, Vivek Ramaswamy, RFK Jr., Howard Lutnick and Scott Bessent.?There will be two key elements to watch in the near future to see how the administration intends to foster blockchain innovation.
First, many people will have their eyes on whether Bitcoin becomes a reserve asset. However, there is a spectrum with regards to how this is executed. For instance, the administration could simply not sell the crypto (208k in BTC, $20B in crypto) that is already in their possession. They could also direct the Federal Reserve to create a digital reserve and potentially add significantly more Bitcoin (or crypto?) to their stash. Senator Lummis has already proposed a Bill to support the acquisition of Bitcoin and has suggested using the US gold reserves to pay for it. There is significant international game theory even by virtue of the suggestion of this possibility and it has already begun to play out as other governments try to front-run the US.?
Secondly, the community of builders has been under attack for the past several years. Stopping the attack is one element of the incoming administration, but perhaps more importantly, the community would like to see transparent, sensible rulemaking to allow for clear rules of the road. Whether a mostly bipartisan issue would be worth the administration's time to pass sensible legislation before the midterms is debatable. However, if Crypto is bereft of enforcement and also clear rulemaking, it would be an environment that would attract more bad actors.?
Regardless, it is undeniable that with the election on November 5th and the tailwinds that it produced, Digital Assets iced their standing as a new asset class that most investors should have exposure to and most are still extremely unexposed to.?
Lurking among all this bullishness and the accompanying price increase, however, is what we believe could be one of the most interesting technological developments in the history of Digital Assets. We all know that AI will revolutionize our society. A specific implementation of AI called AI Agents are particularly impressive and are being generated by the millions. AI Agents are specific pieces of AI built on certain data and with specific parameters set to accomplish certain outcomes. However, in order for these agents to coordinate, incent and operate, they need currency. As Digital Assets are native to the internet and are in fact code, they will be the chief mechanism for this economic coordination.?
In the last several weeks, the marriage of AI Agents and crypto has birthed an entirely new meta that is truly exciting. Platforms like Virtuals have been constructed so that people can spin up their own AI Agent, with specific data feeds, attributes, appearance, goals, and personality. At the same time, a token is created so that the agent can use it to coordinate activities.?
At Golden Pear, we have invested the time to understand this rapidly developing sector and have split the AI Agents X Crypto space into four investable categories: infrastructure, frameworks, platforms and agents. Understanding how these operate, the tech stack and how they will revolutionize digital assets and, in time, society, is perhaps the biggest opportunity in technology at the moment.??
Our thesis on blockchain technology is that as society continues to digitize, digital assets, and their ability to monetize code, will be an integral technological building block. With the marriage of AI and Blockchains, we are starting to see just how powerful this combination is set to become.?
If you want some interesting podcasts on the matter, have a look here:
If you are interested in learning more about AI Agents X Crypto, get in touch and lets have a chat!
#Bankless #Delphi #AI #ArtificalIntelligence #AIAgents #crypto #Blockchain #BlockchainTechnology #DigitalAsset
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In the News This Month
This section rounds up the key articles and news highlights of the month:
- Trump has proposed the most wildly pro-crypto cabinet in history.?
- AI Agents are starting to take over twitter and becoming more technologically advanced almost daily. There are several platforms where anyone can spin up an agent with its own token and those platforms and frameworks are constantly being upgraded. The next new interesting thing to watch out for could be these agents interacting with each other in a more robust way.?
- An AI Agent called Freysa was all the buzz recently. It was constructed with a small treasury ($40,000) and was the center of a game. Anyone could pay, with fees going to the prize pool, to try to convince the AI to send it the funds. In the end, a developer persuaded it to send the funds by tricking it into invoking its approveTransfer function. This was important for AI security researchers and will be the start of many such games.?
- Gary Gensler announced his resignation. The SEC Chair, in spite of his former role teaching blockchain at MIT, Gensler viciously pursued all crypto participants in an effort to quash the industry. Rather than focusing on bad actors, he went after the largest and most well known good actors, and played a role in operation chokepoint 2.0, an attempt to cut the industry off from banking services in the US. Marc Andreessen recently detailed this debanking in a podcast with Joe Rogan and it is now being more widely discussed and could be the subject of inquiries.?
- Democratic commissioner to the SEC Jaime Lizárraga also announced her departure from the agency.
- Ethereum, the prominent smart contract blockchain, has not performed in terms of its user experience and price for the last 18 months. However, new narratives surrounding AI Agents, L2s finally surpassing the threshold for paying for blob space, ETH being burned because of an influx of chain activity, and larger inflows in to the Ether ETFs in the US have given it new life.?
- Microstrategy, whose stock is up more than 500% this year, has gone on a Bitcoin buying spree, adding significantly to its stash of 386,700 BTC through the use of convertible bonds. Marathon, a massive Bitcoin miner, also announced significant raises to buy Bitcoin on their balance sheet.?
- Since the election in the US, lots of new applications for exchange traded crypto products have been submitted, including for; Solana, XRP, Litecoin (yuck) and some combination ETFs.
- Blackrock expanded their Buidl tokenized money market fund to five new blockchains.??
- Goldman Sachs, noted crypto skeptic, disclosed that they are the second largest holder of Bitcoin ETFs with $710M. Goldman also announced a spin out of its digital assets blockchain platform business,?
- Pennsylvania, Brazil, Vancouver governments all proposed adding Bitcoin to their reserves.??
- The US SEC lost a lawsuit over a dangerously ambiguous definition of "dealer" that would have made Decentralized Finance unsustainable in the US. OFAC also lost a suit, overturning its sanctioning of Tornado smart contracts. This further established the tenet that smart contracts are code, not property.
- Hong Kong proposed a series of incentives to attract crypto funds and family offices. Under the proposal, crypto gains would be exempted from capital gains.? ?
- UBS, Swift, Chainlink completed a pilot with the Monetary Authority of Singapore to extract cash from tokenized funds.??
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