Trump fully commits to crypto while China surprises again with AI

This week was all about crypto and artificial intelligence. President Trump put crypto at the center of the political agenda with the announcement of an American Bitcoin Strategic Reserve, while the Chinese Alibaba surprised with a more efficient AI model that not only threatens American competitors such as OpenAI and Anthropic but also DeepSeek-R1, also of Chinese origin.

Crypto market in the grip of macroeconomics

For years, crypto investors rubbed their hands with glee when stock prices and bonds fell due to increased interest rates or rising inflation, while the crypto world seemed untouched by this type of old-school economy. This week it became clear how closely the crypto market is now linked to broader macroeconomic developments. Bitcoin and his consorts, the so-called altcoins, move almost directly with interest rate hikes and geopolitical tensions such as the war in Ukraine and the threat of higher international trade tariffs. This makes the idea that it makes sense to hedge investments in traditional asset classes by investing in crypto completely obsolete.

Left of President Trump the Secretary of the Treasury; right the AI & Crypto Czar

Trump puts crypto high on the political agenda

The kick-off was downright hilarious: the crypto summit at the White House began Friday with President Trump’s request to FIFA President Gianni Infantino to address the audience. Trump won’t do that a second time, because Infantino went on and on about the FIFA Club World Cup, a sporting monstrosity with a matching hideous trophy that would remain unsaleable even on eBay; until Infantino suddenly asked those present to participate in the development of a FIFA coin, whatever that may be. President Trump responded as only he can: “That coin may be worth more than FIFA in the end. It could be quite a coin, actually. Thank you Gianni. Great job.”

Trump then announced the creation of a US Bitcoin Strategic Reserve and Digital Asset Stockpile. For years, even the rumor of such an action was enough for a rise in all cryptos, but the looming trade war overshadowed everything and crypto prices even fell slightly. The value of the crypto summit, set up as a big press moment, was not so much in the announcement that the US will henceforth store all seized Bitcoin and other crypto instead of selling it, but in the symbolism that was personified by the people who flanked President Trump.

Crypto-tsar leads the revolution?

In an era in which politics has become synonymous with short-term symbolism, captured in pictures, talks and Tik Tok videos, it was not so much striking that Treasury Secretary Scott Bessent was sitting to the left of Trump, but that former tech investor David Sacks, bearing the title ‘White House AI and Crypto Czar’, was prominently placed to the right of Trump.

Even in the country where restaurants call the main course ‘entree’, it is ironic that the crypto revolution is being led by someone with the title ‘tsar’, not exactly a professional group that excelled in decentralization and revolutions. The appointment of Sacks indicates how seriously digital technologies are now being taken by the American government and it is a matter of time until Sacks, in consultation with the SEC, will come up with proposals for legislation that will specifically apply to crypto.

Memecoins bad kind of musical chairs

It will probably forever remain shrouded in mystery why the Biden administration was so rabidly anti-crypto. Was it donations from the big banks threatened by crypto, or an overreaction to crypto fraud? Memecoins, tokens without any underlying value or economic activity, should be subject to specific regulation just like casinos. But are memecoins a legitimate reason for the SEC to plague companies like Coinbase with legal proceedings for years, while Coinbase does not trade memecoins?

On Joe Rogan’s podcast last week, Elon Musk discussed the rise and impact of memecoins, which Musk compared to casinos. Critical commentator Coffeezilla responded by warning that memecoins are more like musical chairs than casinos, where only the organizers know when the music stops and insiders profit at the expense of regular investors.

Why crypto requires specific legislation

In an excellent piece, Scott Walker of investment firm Andreessen Horowitz cites three reasons why crypto requires specific legislation to protect investors and stimulate innovation at the same time, instead of ruling with the SEC’s saber, as under the previous boss Gary Gensler:

Walker highlights three main issues with the SEC’s current strategy:

1. Ambiguity in Terminology: The term “crypto asset securities” lacks clear definition, creating uncertainty about which assets fall under SEC jurisdiction.

2. Failure to Recognize Differences: The SEC’s rules do not account for the distinct characteristics of crypto assets compared to traditional securities, necessitating tailored regulations.

3. Insufficient Industry Consultation: The SEC has not adequately engaged with market data and industry input, resulting in rules that may be impractical or harmful to technological advancement.

Walker emphasizes that the unique attributes of blockchain and crypto assets require bespoke regulatory frameworks to protect investors effectively while fostering innovation.

Example: issuance of tokens vs. shares

Take, for example, the issuance of shares: when companies do this, a lot of information must be shared with potential investors through financial reports and risk analyzes. The legislation assumes that there is always a company responsible for providing this information.

But with many crypto projects there is no central company, for example with decentralized organizations (DAOs) or cryptocurrencies such as Bitcoin. After the start, there is no single manager responsible for sharing information. There is no CEO of Bitcoin. It is even unknown who the author is of the smart contract and the famous Bitcoin white paper, although there is a nut who continues to claim in court that he is the prophet, as is often the case with religions.

It is impossible to apply the standard rules for sharing information to these crypto projects. Those rules are made for companies, not for systems without a boss. Unfortunately, the impression often arises that the crypto sector does not accept regulation. That is not correct; the only wish is for specific, transparent and applicable legislation. The legislation and regulations must fit the new way in which these projects work. At the moment it looks like the US, after pioneer the United Arab Emirates, will quickly come up with practically applicable regulations and Europe will once again lag behind.

Amy Webb warns of ‘living intelligence’

The recognition of the strategic value of artificial intelligence and cryptocurrencies by political leaders such as Trump evokes memories of the internet revolution in the late 1990s, which was initially missed by almost every ruler and experienced entrepreneur due to a dire lack of awareness of the value of digitization.

Ten years later, politicians and entrepreneurs made the same mistake again, by mainly underestimating the social impact of the combination of mobile internet and social media.

Today we have to ask ourselves how AI and digital assets are changing our society, business models and geopolitical relations. Futurist Amy Webb pointed out yesterday at SXSW in Austin in her presentation of the latest version of the annual Tech Trends Report, in particular the danger of ‘living intelligence’: a new era in which artificial intelligence, biotechnology and advanced sensors merge and create unprecedented opportunities and challenges.

There is some irony in the words of a futurist who points to the danger of living intelligence, in an era in which we are mainly confronted with the consequences of a lack of living intelligence.

Alibaba launches QwQ-32B and threatens DeepSeek

Things can go fast in the tech sector. DeepSeek was the sweetheart of the month of February, but it is now March and, simsalabim, there is Alibaba with its new AI model: the QwQ-32B. Not a name you’d expect from a company called Alibaba, but the bottom line is that this model is more energy and cost efficient than DeepSeek’s R1 model while still delivering comparable performance. This announcement led to an 8.4% rise in Alibaba’s shares on the Hong Kong stock exchange.

A fascinating scenario is now unfolding, in which ‘traditional’ AI companies such as OpenAI with ChatGPT, Anthropic with Claude and X.ai with Grok, are hit at the heart of their business model by DeepSeek, which delivers comparable results at much lower costs; only DeepSeek is then overtaken on the left by Alibaba, which performs at even lower costs.

This latest generation of Chinese AI developers is thus hitting the core of AI based on Large Language Models (LLMs). Investors, and increasingly also customers, do not see major quality differences between the different providers, but they do see huge differences in the costs that AI companies incur and pass on to customers.

If we were to represent AI models as cars, investors and customers would now see all kinds of manufacturers making cars that can travel a thousand kilometers. Some just do it faster. The question now is how big the market will become for the most high-quality AI models and especially at what price.

The story that Ferrari makes four times as much profit per car sold as the manufacturers of solid middle class cars is well known. One of the most profitable airlines in the world, Southwest Airlines, does not have a business class. The question is increasingly: is AI a market for Ferraris… or for discount airlines?

‘Inspired’ by Porsche and Tesla: the Xiaomi SU7

Xiaomi succeeds where Apple failed

There was also car news from China. Xiaomi, originally known for consumer electronics and especially Android phones, is making great strides in the EV market. The Wall Street Journal is impressed by the fact that a phone maker managed to develop an electric car in a few years that is so good that a Ford executive said he never wanted to be without it.

What even Apple failed to do, develop a good electric car, Xiaomi succeeded with the SU7. It’s a hefty touch of Porsche mixed with Tesla, unfortunately also available in Smurf blue, Milka purple and Fanta orange in terms of colors.

Also new from China: Manus

While Microsoft is increasingly trying to break away from OpenAI in order to be able to chart its own technological and commercial course in the field of AI, this week from China came not only the sexy model QwQ-32B from Alibaba but also the AI agent **Manus**. It is an innovative AI agent designed to independently perform various everyday and professional tasks, which has the potential to significantly increase human productivity. The video and demos are downright impressive, unfortunately I’m still on the waiting list so I haven’t been able to test anything yet. I’m very curious!

A sharp look at tech and crypto: Nisheta Sachdev in the NFA Podcast

NFA Podcast: Trump’s Bitcoin Reserve, BitTensor’s AI Network and Bitcoin vs. Altcoins

In this week’s NFA Podcast, Nisheta Sachdev and I discuss the wild week in technology and crypto. Nish covers China’s impactful stimulus measures, clarifies misconceptions about the Bitcoin adoption of a Brazilian fintech company and highlights the new crypto regulations in Vietnam.

I myself elaborated on President Trump’s strategic Bitcoin reserve and digital asset “stock” and the implications for crypto markets. I remain positive about Nvidia despite doubts about the AI sector, while Nish introduces BitTensor (TAO), an innovative decentralized AI network. Together we discuss how to deal with the volatility in crypto investments, weighing altcoins against Bitcoin in an uncertain market.

Season 1, Episode 6 of the NFA Podcast is out now:

· On YouTube

· On Spotify

· On Apple Podcasts

The NFA podcast is intended for educational and entertainment purposes only and is not financial advice.

· You can subscribe to the special NFA Podcast newsletter, which keeps you informed of every new episode, here via Linkedin.

· You can subscribe here to this newsletter, Frackers on Tech, on LinkedIn.

· The weekly NFA Podcast with dr. Nisheta Sachdev is available on Youtube, Spotify and Apple Podcasts, among others.

· This newsletter does not contain investment advice but only a personal opinion based on knowledge, experience and self-overestimation.

· The overview with previous newsletters is on Frackers.com.

· Follow me on LinkedIn, X, Instagram or TikTok. Or not, that’s also free of charge.