😬 Deep Value in Dip Buying or Seeking Our CVs?

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There we have it—the line in the sand, $100k BTC, was breached, and the whole tech sector is being sent into a panic with the Chinese release of Deep Seek AI, which erased around $2 trillion from the markets in just a day. 

While this primarily impacts the Western AI markets, our bags are definitely feeling it, too.

It’s time to look forward now. This week is definitely one of the Big Ones, as we have the first FOMC of the year coming up on Wednesday. In the past, FOMC meetings always served as inflection points in the markets. As long as we don’t get a massively hawkish Powell, it’s safe to say a higher low for Bitcoin should be created sometime around that time.

Moreover, the underlying factors for this bull run, such as rising M2 money supply and global liquidity, are still growing. These are critical metrics to watch as they provide the real fuel for the markets.

Retail interest has now been completely flushed out, for better or worse. Overall, this seems like the end of a much-needed reset.

The only ones still bullish seem to be Saylor and Trump’s project World Liberty Financial, which continuously stacks wrapped Bitcoin on Ethereum and ETH itself.

Let’s hope Raoul Paul saying “don’t fuck this up” here isn’t the one actually fucking it up. As for me personally, I think February is where we can put this all behind and head higher.

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VIX/VIX3M 1D

Today is another day for crypto, and TradFI is going to matter. I write this 25 minutes pre-US open. It will likely be bloody, given that Nvidia is getting smoked by the news that China has a genuinely innovative LLM in DeepSeek.

Today’s chart shows the S&P volatility index. It’s the daily chart divided by the 3-month index.  We’re in the reversal zone now. When the VIX tops, stonks recover, and crypto, a risky asset, is likely to recover, too. We’re above the white line, which is where it typically reverses. Down is good.

Just be careful, as today there could be pain. I think mid-week is when reversal becomes more likely. Gib bullish FOMC on Wednesday. It’s also probable that Trump will rise to the challenge of a number-go-down stock market with some form of bull posting.

Come by the Lucky Luke Discord channel for comments, to roast my picks or to pump your own bags. All banter is welcome any time!

Smart-money movements of the day.

Market sentiment peaked in December.

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AI Corner

DeepSeek is shaking up the AI world with ripple effects everywhere, starting with Nvidia. It’s open source. I’m seeing Chinese skeptics in disbelief that they made some good tech, but most of their claims can be tested by deploying the code. It seems likely they told a fib about the training costs.

But does this really matter in the grand scheme of things? Anyone can download the model, jailbreak the onboard CCP censorship, fork it, build on top of it, and add dancing hamburgers if you want to.

Things are looking bearish for AI crypto in the short term, mainly due to a sympathy selloff correlated to trade. The whole US stock market is heavily indexed to NVDA performance. However, once the recovery is in, things will look better than ever for small AI teams and open-source AI projects. 

Ultimately, most crypto agent projects can trivially swap their LLM base models to DeepSeek if that’s the best option now. Some, like Datawitch and REGENT, are already using it. We just need risk assets to power through this stock market-driven shakeout. Look for Wednesday and a potentially dovish FOMC as a catalyst to start buying the dip.

New content to study.

• The Battle for Agents Launchpad Supremacy by 0xJeff

• The AI Dispatch #3 - RIP AI Coins by Castle Labs

• Deepseek R1: The Open-Source Breakthrough Igniting DeFAI ’s Next Era by Daniele

New updates & projects.

• Primus (AI agent)

• Omi AI (AI wearables)

• Lumo Labs (Solana AI)

• Nuvon (AI)

The important bits.

• Tannsi (DeFi) - Publishes a Weekly Recap

• Yeet (Berachain NFT) - Explains why Yeet uses the Ramen Finance Price Discovery Mode

• Hermes (DeFi) - Staking with cross-chain liquidity on Sonic now available

• Vana (Data, AI) - Explains how self-sovereign AI agents powered by Vana are built

• Sophon (Entertainment layer) - .TVL tracking now available on DeFiLama

• Mode (L2) - Announce Mode DeFAI copilot

• Abstract (L2) - Announced mainnet for tomorrow

• Etherealize (ETH marketing) - Explains their institutional pitch

• Virtuals (AI) - Now expanding to Solana

Even more important bits.

• Eric Trump has confirmed that US-based crypto projects will benefit from a 0% capital gains tax

• Ethereum’s upgrade Pectra is scheduled to March

• BlackRock just filed for “in-kind redemption” for IBIT Bitcoin ETF

• Crypto czar David Sacks says NFTs and memecoins are collectibles

• Elon Musk's D.O.G.E. meets with public blockchain reps to evaluate their technology

Charts and stats of the day.

• Hyperliquid accounts for ~50% of DEX perp volume

• BTC retail investors with <1 BTC are selling, while the others with ≥1 BTC are buying

• Stats show that TRUMP launch wasn’t a good onboarding event

• Capital inflows into the Bitcoin network starting to climb again

Life gets busy so here’s what you’ve missed.

ICYMI: Weekly Content Round-up by blocmates.

Podcast/Research

Catch up on everything we covered last week! Brew a coffee or open a pint; it’s a lot.

Read More →

• ETH Strategy (Microstrategy for Ethereum)

• HeadtoHead (Hyperliquid social betting)

• YapTrade (Trading Kaito Yaps)

• Liquid Launch (Hyperliuqid launcher)

• Nottelabs (Redesigning internet interactions)

To save you doom scrolling.

Here’s some hopium straight to the vein; I know it’s needed at times like these.

Think it’s safe to say we’ll see how this fuckery turns out by this week’s end. It’s just as Alex said today: “… you know, you can’t ever trust the Chinese anyway”.

I mean, if you haven’t already, watch the China Hustle. It explains a lot about the Chinese attitude towards markets.

stay safe homies,

Hix0n 🫡