The world just set a new record for sneakers

Hello and welcome to Alts Cafe

Back to our normal programming after the Easter break. Keep reading for everything you need to know about what’s going on in alternative investing this week.

TLDR:

  1. It was a great week for crypto (and possibly the right time to look at alt coins)
  2. Startups funding in Q1 2023 was down 32% drop QoQ and the lowest quarterly level in 6 years
  3. The sports memorabilia and trading card industry is set to reach $35 billion this year, up $2 billion from 2022

Caffeine up and let’s go.

Wyatt

Macro View

The economy (inflation, jobs, production) is showing signs of cooling, which is a good thing if you want lower rates. The pain will continue until morale improves.

Bullish News

  • U.S. inflation eased in March to its lowest level in nearly two years.
  • The labor market is showing signs of cooling as hiring continues to slow.
  • U.S. supplier prices fell in March by the most in nearly three years.

Bearish News

  • Americans said last month that access to credit was at its toughest level in nearly a decade.
  • The Fed is projecting a “mild recession”
  • China’s consumer inflation hit an 18-month low and factory-gate price declines sped up in March as demand stayed persistently weak.

What are we doing?

ALTS 1 fund news:

Happy to announce we’re finalising negotiations to take the lead investment slot in an income-producing alt opportunity. More to come soon.

Real Estate

Bullish News

  • According to the completely unbiased Mortgage Banker’s Association, maybe the impending commercial real estate apocalypse isn’t really going to be that bad.
  • Blackstone has raised over $30B to close the largest real estate drawdown fund ever.
  • Mortgage applications increased 5.3 percent from one week earlier.

Bearish News

  • Office space available for lease in the U.S. is at a record high.
  • In February, mortgages on second homes were down 52% YoY to the lowest levels since 2016. Primary home applications were off 13%.
  • US residential rents continue to cool.

How to invest in real estate right now:

I’m still out of the real estate market [no change].

Crypto & NFTs

Here’s what you need to know:

ETH smashed it while BTC continued its march upward.

Getting greedier and greedier.

Buoyed by ETH’s march upward, NFTs rose as well last week.

Great week for Fidenza

Bullish News

  • Bitcoin saw $56 billion of inflows last week, which accounted for 98% of all investments into digital asset investment products.
  • Crypto companies are still hiring for stupid roles, which must mean there’s still money there somewhere.
  • Shapella, Ethereum’s first major upgrade since The Merge, is now live.
    • The upgrade pushed ETH prices past $2k.
    • Ethereum’s developers will now prioritize delivering significant improvements to scalability.
  • Apple let Uniswap’s wallet app out of ‘jail’.
  • Crypto trading is coming to Twitter.
  • A CoinDesk subsidiary is starting the Bitcoin Trend Indicator (BTI), an online tool to help investors determine where the price of bitcoin (BTC) is going.

Bearish News

  • An Ex-Deutsche Bank investment banker was charged in US with crypto fraud.
  • FTX is trying to make a comeback (lol).
  • Gamers in Asia are predicted to make up 80% of the Web3 gaming market, which leads to some questions about the medium’s popularity elsewhere.

How to invest in Crypto & NFTs right now:

It’s beginning to feel a lot like crypto summer as both ETH and BTC continue to push forward. It may be time to look at alt coins if that’s your bag.

Startups

Another week, another in-depth wrap up of a shitty first quarter. This week’s report comes from CBInsights.

I read it so you don’t have to:

Both the number and size of deals were off slightly from the end of 2022, and enormously from their 2021 peaks.

This looks like the new normal now:

Party like it’s 2019

[Wyatt note: yeah it looks like we’re back to normal, which might make you think it won’t get worse. But remember the economy was pretty good in 2019, and it’s going to be pretty shitty in 2023 and 2024. It can always get worse.]

While funding levels were pretty flat in the US in Q1, the rest of the world felt some pain.

  • LatAm: -54% QoQ
  • Asia: -27% QoQ
  • Europe: -12% QoQ

Q1’23 saw the birth of only 13 unicorns (companies valued at $1B+), a 32% drop QoQ and the lowest quarterly level in 6 years.

  • Four of the 13 unicorns were AI companies.
  • Only one came from Europe.

The median deal size for late-stage rounds fell 45% from $27.3M in 2022 to $15M. Early stage was down 8%.

Q1’23 only saw 86 IPOs, a 47% fall QoQ and the lowest total since Q4’13. While Asian IPOs were down 58% QoQ, its was the only region that did much of anything. In fact, the top 10 global IPOs by valuation were all China-based companies.

[Wyatt reiterating note: Saying it once more for those in the back — prior to 2019, the most money  ever  invested in startups in one quarter was $30B in 2018, and we’re now counting $58B as a significant drawdown. THINGS CAN GET MUCH MUCH WORSE.]

Bullish News

  • AI companies are still raising a shitload of money.

Bearish News

  • Emerging VC fund managers are having a heck of a time.
  • Global venture funding for crypto companies hit its lowest level in two years.
  • Rishi Shah, who founded Outcome Health and led it to a $5.5 billion valuation was found guilty of mail fraud, wire fraud, bank fraud and money laundering.
  • SoftBank Group agreed to sell SoftBank Ventures Asia.
  • KPMG LLP gave Silicon Valley Bank a clean bill of health just 14 days before the lender collapsed.

How to invest in startups right now:

Even solid companies with actual profits are struggling to raise money right now if they’re not in the AI space. Look there, especially if they’re early stage and won’t be affected by the IPO graveyard.

Quick Hits

Collectables

A pair of Air Jordans worn by Michael Jordan became the world’s most expensive sneakers on Tuesday when they sold for $2.2 million at a Sotheby’s online auction.

The sports memorabilia and trading card industry is set to reach $35 billion this year — $2 billion more than the previous year.

Gold

The per-ounce price of gold topped $2k for only the second time ever last week, though it’s nowhere near the top on an inflation-adjusted basis.

Gold is stupid.

It’s got another 40% to go before topping the early 1980s.

That’s all for this week. I hope you enjoyed your coffee and this edition of Alts Cafe.

If you have any comments, questions, or concerns – let us know.

And, at the risk of boring you, please share this wherever you have a platform. Twitter, LinkedIn, the pub… I’m not fussy.

Cheers,

Wyatt

Disclosures

  • This issue of Alts Cafe was brought to you by our friends at Cult Wines and Otherweb
  • We are holding BTC and ETC in our ALTS 1 Fund. Apart from those, we don’t own any other assets or vested interests in the companies mentioned in this email.

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Author

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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