Binance gets rekt

Hello and welcome to Alts Cafe

This is a quick-fire look at what’s driving your alts week.

What’s on deck today:

  • A four week rally in equities – is the risk trade back on?
  • All bad news in real estate.
  • Is there a private credit bubble?
  • Binance gets rekt.

Macro View

It was the fourth winning week in a row for US markets.

Bullish News

  • American consumers spent a lot – $9.8 billion – and traveled a lot (+3% YoY) last week.
  • The WSJ ​thinks​ investors are back on for the risk trade. I disagree.

Bearish News

Forecasts

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99%

​Chance the Fed will hold rates steady in December.​

📈

97%

​Chance credit card defaults will rise in Q3​

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1.95%

​National average house price increase in 2023​

The markets aren’t expecting any surprises in December.

What are we doing?

​ALTS 1​ Fund news:

We’re drawing up the paperwork for our art acquisition.

Real Estate

Bullish News

  • Nothing of note.

Bearish News

  • During the first nine months of 2023, ​only​ one out of three expiring securitized office mortgages were paid off.
  • Home sales fell to a 13-month ​low​ in October.
  • California housing ​affordability​ declined for the second straight quarter and dropped to the lowest level since 2007.

How to invest in real estate right now:

Don’t

Startups

Bullish News

  • Airbnb ​acquired​ stealth AI company GamePlanner.ai for $200 million.
  • Neuralink has quietly ​raised​ another $43 million.
  • How AI could ​power​ the climate breakthrough the world needs.
  • The ​share​ of U.S. venture funding going to companies in the San Francisco Bay Area hit a multiyear high this year, boosted largely by the AI boom.

Bearish News

  • 1/3 of startups have ​less​ than twelve months of runway.
  • 64% of finance execs think valuations have not yet hit rock bottom, with half of those predicting it will take a while until they do.
  • About half of finance executives reported high odds (over 50%) that their next round will be a down round.
  • TikTok owner byteDance has ​started​ laying off swathes of employees in its gaming division.
  • Unsurprisingly, Israeli VC deals have ​declined​ sharply since October 7th.
  • In completely unpredictable news, ChatGPT is obliterating lots of GPTWrapper ​shitcos​ as it continues to build out its own capacity.

How to invest in startups right now:

Pick up great copmanies raising down rounds.

Private Equity and Private Credit

Bullish News

  • Multistrategy hedge fund Third Point is ​loading up​ on private credit.
  • Nomura is ​looking​ to put down $1 billion from its own balance sheet over the next 18 months to participate on private lending deals.
  • Avenue Capital Group is ​raising​ between $600 and $800 to invest in environmental impact private credit.
  • Private credit funds are ​providing​ a record €4.5 billion ($4.9 billion) loan to back the buyout of Adevinta ASA.

Bearish News

  • Private equity firms are ​resorting​ to buying back companies they only recently took public in a bid to salvage investments that have struggled to perform on stock exchanges.
  • Saudi Arabia ​raised​ $11 billion through a syndicated loan, the biggest globally by a government this year, as it looks to finance a budget deficit amid weaker oil revenues.

How to invest in PE and Private Credit right now:

Do you smell that? It’s a private credit bubble.

Crypto & NFTs

Here’s what you need to know:

Markets pulling back slightly over the weekend.

Getting nervous here.

NFTs are quietly up over 20% this year.

Bullish News

  • Changpeng Zhao ​pled​ guilty to fraud and stepped down as Binance CEO.
  • He’s ​asked​ permission to flee travel outside the country ahead of his sentencing.
  • Investors have ​pulled​ nearly $1 billion out of Binance.

Bearish News

  • The SEC ​charged​ Kraken with operating its crypto trading platform as an unregistered securities exchange, broker, dealer, and clearing agency.

How to invest in Crypto & NFTs right now:

It’s accumulation season.

That’s all for this week

Cheers,

Wyatt

Disclosures

  • This issue of Alts Cafe was brought to you by our friends at ​Overlooked Alpha​.
  • We hold BTC and ETH in our ​ALTS 1 Fund​.
  • There are a couple of affiliate links above. If you click them, we may get a couple of bucks.

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Author

Picture of Wyatt Cavalier

Wyatt Cavalier

With a background in finance & intelligence analysis, Wyatt has an unhealthy obsession with finding the best blue chip investment opportunities. His previous newsletter, Fractional, resonated deeply with subscribers, bringing actionable insights and unconventional trading strategies. His rare book collection specializes in banned editions. He currently lives in Spain with his beautiful wife, three young boys, and dog Monty.

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