Market Updates

After months of speculation, the SEC approved the first spot Bitcoin ETFs. In all, it approved 11 different ETFs, including some from big names such as Fidelity, BlackRock and Grayscale. ETFs carry the promise of making Bitcoin more accessible to mainstream investors, who can now just buy shares in a publicly-traded listing rather than having to purchase and custody the cryptocurrency themselves. This could lead to major capital inflows and a long-term rise in price, rewarding early investors, as advocates see the possibility of Bitcoin becoming a staple in retirement plans. There was a short-term spike in price, but it has since retreated to the level it was at before the approval. Many of the ETF providers have been offering low fees to start, while some major money managers, such as Vanguard, have pledged not to carry them at all. In the first day of trading, $4.6 billion of shares were traded, marking a new era for crypto and the financial system as a whole.

The national office space vacancy rate hit 19.6%, the highest level on record. This comes from a report from Moody’s Analytics, which had previously recorded highs of 19.3% in 1986 and 1991. The rate jumped 0.4% last quarter, the highest increase in nearly three years, bringing the office market into “uncharted territory.” With hybrid and remote work here to stay, this could be the new normal for office space, making the long-term outlook for office buildings hazy. Suburban building owners are responding by converting office space into industrial space, such as warehouses, distribution centers, and storage facilities. The conversion rate has risen by 33.7% in the past two years, as demand for office space has declined.

Russian billionaire Dmitry Rybolovlev is suing Sotheby’s for alleging defrauding him. It all stems from over $2 billion he invested in artwork, some of which was purchased through Sotheby’s via his art advisor Yves Bouvier. Apparently, Bouvier inflated the prices by neglecting to mention that he owned the artwork and pretending to negotiate on the Russian’s behalf with non-existent sellers. The collection included works by Picasso, Magritte, Klimt, Rodin and famously, Da Vinci’s “Salvator Mundi”, which Rybolovlev sold for $450 million after buying it for $127 million with a $44 million markup by Bouvier. Sotheby’s is accused of being in league with Bouvier, and the trial is showcasing the often opaque and unregulated high-end art market while reminding everyone to always be vigilant in all their investment dealings.

Venture investments in North American startups dropped 37% in 2023. This follows another big decline in 2022, as funding has now dropped nearly 60% from its 2021 peak. The $29.3 billion raised in Q4 represented the worst quarter of a rough year overall and the lowest of the last three years. The decline was particularly felt in late-stage funding, as valuations have dropped and exits, particularly IPOs, have become rarer. The bright spots came in AI, cleantech, biotech and next-stage manufacturing. It’s not just North America - venture capital deals in Asia have dropped as well, to the lowest level since 2015.