Good morning. Andrew here. Keep your eyes on the price of cryptocurrencies during this holiday-shortened trading week. Bitcoin, which fell below $81,000 on Friday, has become a signal of investors’ risk appetite — and its tumble could also affect broader markets, given questions about leverage in the crypto ecosystem. Also: Worries about A.I. bubbles have expanded to China; we’ve got the details. And we take a look at two under-the-radar associates of Jeffrey Epstein. (Was this newsletter forwarded to you? Sign up here.)
The fallout from crypto’s tumbleAfter a brutal and volatile week, Bitcoin is down slightly this morning. Crypto tokens have lost more than $1 trillion in market value since their October peak, according to Deutsche Bank, stoking fears that the sell-off has further to run. Crypto die-hards have been here before, in the “crypto winter” of 2021 and 2022 and the collapse of Sam Bankman-Fried’s FTX. But the market is much bigger today — around $3 trillion globally — after the S.E.C. last year approved spot Bitcoin exchange-traded funds and the Trump administration embraced digital tokens. The increased exposure has given rise to fears of a crypto rout slamming Wall Street this time, Bernhard Warner writes. “This is no longer a hobbyist asset class,” Lisa Shalett, the chief investment officer at Morgan Stanley Wealth Management, told DealBook. Asset management giants, including BlackRock and Fidelity, have helped take crypto mainstream. Harvard and the Czech central bank have stocked up on digital tokens, too. The rise of E.T.F.s tied to Bitcoin and other digital assets has “democratized the ownership,” Shalett said. It has also spread the risk.
The downside was on full display last week. Investors yanked money from Bitcoin E.T.F.s at a frenzied clip as the price briefly fell below $81,000. Roughly $3.8 billion flowed out of crypto E.T.F.s from Nov. 1 to Nov. 19, according to Morningstar. But the outflows are not at the level of 2022, Bryan Armour, the Morningstar director of E.T.F. and passive strategies research for North America, told DealBook. There’s also more borrowed money in the market lately, analysts say. That could amp up the volatility, as was the case last month during a record $19 billion wipeout. Even a smaller crash could dent other parts of the market, especially if investors were forced to sell other assets, including stocks, to cover their crypto positions. That fear grew after a stock market plunge on Thursday that followed a drop in crypto prices. Steve Sosnick, the chief strategist at Interactive Brokers, wrote in a note to investors that Wall Street pros now see Bitcoin volatility as “a signal” for wider market instability. Could crypto foretell a wider market correction? “A lot of bigger, stickier money” — as in buy-and-hold institutional investors — has moved in, Armour noted, which may explain why the outflows this month are tamer so far than in 2022. (Also worth watching: Will the next price plunge invite a new wave of buying?) Don’t count out crypto’s potential to move markets. “I don’t think this is a big systemic risk,” Shalett added. “But I do think there is bleed-over.”
A White House peace proposal on Ukraine raises big questions. President Trump harangued Ukrainian and European leaders on social media after they expressed doubts about the plan, which would require Kyiv to cede territory to Russia and reduce the size of its military. That said, Secretary of State Marco Rubio expressed optimism that a deal could be reached after meeting with Ukrainian officials in Geneva, and Trump appeared to back away from parts of the plan, calling it “not my final offer.” Data shows a Novo Nordisk drug fails to slow the advancement of Alzheimer’s disease. The Danish drugmaker said patients in two large studies who took the pill version of semaglutide — the active ingredient in the blockbuster diabetes and weight-loss treatments Ozempic and Wegovy — didn’t see their disease progress more slowly. Novo Nordisk, which has sought to find a new market, saw its shares plunge more than 10 percent on the news. BHP ends its bid for Anglo American. The Australian mining giant said this morning that it was “no longer considering a combination” with Anglo after the London-based rival had rejected its offer, dashing a plan to create a copper-producing powerhouse. BHP’s abandoned bid — not its first for Anglo American — paves the way for Anglo to move ahead with its offer to merge with Canada’s Teck Resources. DOGE disbands. The White House’s government cost-cutting initiative, initially led by Elon Musk, “doesn’t exist,” a Trump administration official told Reuters. (The original mandate stipulated it would operate through July 2026.) Despite Musk’s claims that initiative cut billions of dollars in spending, its true impact could be hard to assess as the group did not provide detailed accounting. China’s own alarms about A.I.Fears of an artificial intelligence bubble have gone global. While the Nasdaq melted down last week, the CSI 300 Index, a Chinese benchmark, fared worse. It tumbled nearly 4 percent, reigniting spending and valuation concerns about the sector that closely mirror those in the U.S., Grady McGregor writes. This year’s Chinese stock rally was bolstered by DeepSeek. Since the chatbot’s splashy debut in January, rolling out A.I. across the economy has become a government and business imperative, helping drive a surge in equity prices. But it comes at a steep cost. China is expected to spend up to $98 billion on A.I. infrastructure expansion this year. That undershoots the spending by American tech giants, but Chinese companies are making significant wagers:
Some investors are wary. Brock Silvers, the managing director of the Hong Kong-based private equity firm Kaiyuan Capital, warned that China’s recent A.I.-driven stock rally had been built on promises of heavy spending and giant returns. “That usually ends with an unpleasant backlash,” Silvers told DealBook. China’s tech giants often take their cues from Beijing. Bank of America has projected that the central government will invest about $56 billion in A.I. infrastructure this year alongside Beijing’s “A.I. Plus” plan to have A.I. power 90 percent of the economy by 2030. A growing number of Chinese academics and policymakers are getting worried. Skeptics fear that the local authorities may be overspending on A.I. projects. Another big concern will sound familiar to those in the West: Rapid adoption could put many out of work. “There’s a lot of pushback against the idea that A.I. is going to be the magic pill for all of China’s economic ills,” Daniel Fu, a research associate at Harvard Business School, told DealBook. But President Xi Jinping of China is facing pressure from industry and government officials to go all in on A.I., in large part to keep pace with Washington. “There’s a huge cabal of accelerationists in China who are saying, ‘Let’s ditch any notion of safeguards — this is our chance to beat the U.S.,” Fu said.
Google’s A.I.-driven comebackSome analysts speculated this year that Google was destined to become, in the words of one observer, “A.I. roadkill.” Its Gemini chatbot was badly trailing those of competitors like OpenAI and Anthropic in both abilities and usage, and the path out of that stasis was unclear. Fast-forward to last week, when Google released Gemini 3. The model has blown past OpenAI’s ChatGPT and Anthropic’s Claude on several measures, including reasoning and coding. And it will power a newer version of Google’s image-generation tool that has been growing in popularity. All that is translating into a jump in investor hopes for Google: The company’s stock price has jumped over the past five days, far outpacing other Big Tech rivals and defying broader concerns about the artificial intelligence boom. The prospect of Google, one of the most profitable companies in the world, regaining its mojo is also weighing on younger competitors. Sam Altman, OpenAI’s C.E.O., warned colleagues last month that he expected “the vibes out there to be rough for a bit,” and that he expected Google to “create some temporary economic headwinds for our company,” according to The Information. Altman added that he still expected OpenAI to come out on top. But a newly resurgent Google, ready to deploy its enormous wallet, is yet another worry for the company as it already grapples with issues like how to keep expanding its business — and fend off questions about issues like user safety. The other Epstein associatesNew revelations from emails sent by the convicted sex offender Jeffrey Epstein have reverberated through the business and political worlds, including the retreat of Larry Summers from most public-facing roles. Amid the renewed scrutiny, The Wall Street Journal has taken a look at how a machine with multiple associates made Epstein’s widespread abuse possible. The Journal focuses on Darren Indyke, a lawyer who started working exclusively for Epstein around 1996, and Richard Kahn, who became Epstein’s in-house accountant in 2005. Both men denied knowledge of wrongdoing by Epstein or taking part in or willingly facilitating criminal activity. From The Journal’s report: While their boss was alive, part of their job was keeping his financial activities private. Indyke and Kahn created or were officers of entities that obscured transactions. Kahn managed the expenses, and Indyke withdrew cash in amounts that didn’t trigger federal reporting and pushed to relax travel restrictions that came with Epstein’s sex-offender status. Both explained away suspicious transactions in Epstein’s accounts when banks asked questions. Another part of the job was dealing directly with women later revealed to have been caught in Epstein’s web. They facilitated marriages that turned out to be shams, sent payments to women who have since said they were abused and monitored the personal expenses Epstein was paying for. Despite Kahn and Indyke’s denials, the two stand to potentially receive tens of millions, as beneficiaries of a trust tied to Epstein’s estate. Some of Epstein’s victims told The Journal, they have had traumatic negotiations over payouts, which included the requirement that they sign releases barring them from bringing claims against Kahn and Indyke: They said lawyers for Indyke and Kahn worked to keep payouts low and shamed victims over their correspondence with Epstein. This was especially painful, they said, given that the effect of Indyke and Kahn’s work had helped keep women trapped and the pair stood to benefit from keeping the payouts low. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
Deals
Politics, policy and regulation
Best of the rest
Thanks for reading! We’ll see you tomorrow. We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com. |
