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A few months ago I read Number Go Up: Inside Crypto's Wild Rise and Staggering Fall by Bloomberg journalist Zeke Faux. Written in 2023 amid the carnage of the FTX collapse—alongside blow-ups like Luna/Terra and Celsius—it takes you backstage into crypto’s scheming and debauchery.

When you read the book, you realise how silly many of the people who lost a lot of money were. The problem was and still is, that when you are in the midst of the euphoria of “number go up”, it is very hard to see the craziness that you are a part of.

You are probably wondering why I am bringing this up now, as clearly Zeke got it wrong. Since his book was released, crypto-land, led by Bitcoin, has recovered to dramatically new all-time highs, as you can see clearly in the chart above.

Zeke Faux really set out in this book to uncover what many people think is the largest fraud of all time: Tether. Tether is about to make an IPO at a staggering $500 billion valuation, looking to raise $20 billion. The company is super profitable, so it says, making $4.9 billion in its last quarter with a profit margin of 99%. I guess this is another one Zeke got wrong. I have long believed this to be a fraud, ever since I read a salacious article about the secretive plastic surgeon turned crypto evangelist Giancarlo Devasini, who co-founded Bitfinex and has been a key figure in Tether’s operations. We will need to revisit the whole Tether story another time.

I am bringing up the whole crypto-land circus from the early 2020s era now to highlight what is now the talking point among many market strategists. Is AI in a bubble?

It is impossible to know with absolute certainty.

With absolute certainty it is impossible to time when a bubble, that is, if you can tell it's one, will pop.

OpenAI’s valuation just reached $500 billion, so that certainly adds to my feeling of this being a bubble.

I am a huge believer in the advantages that we will get from AI, but I am also very wary of the short- to medium-term effects of the job losses that will come from this truly revolutionary type of technology.

Sam Altman and Dario Amodei two of the biggest players in the AI space, have been warning about the impact this technology will have on jobs. Yet despite some major companies announcing thousands of layoffs, the numbers at the macro level still do not suggest a major problem in the jobs market.

Research from Yale Budget Lab and the Brookings Institution finds that nearly three years after ChatGPT’s November 2022 launch, generative AI has yet to cause widespread job losses in the US. The job market, researchers say, remains “a story of continuity over change.” AI adoption hasn’t disrupted employment more than earlier waves like computers or the internet.

I have been a bit wordier than usual with a few more twists and turns to make my point.

I believe the impact on jobs will be dramatic, with the true unemployment numbers taking time to filter through. I stick to the view that we will see a massive wave of unemployment. Previous technology was able to assist you; the current technology can, in many instances, replace you.

I would like to end on a more optimistic note: like Bitcoin’s 76% drawdown in 2023, bubbles feel apocalyptic when they burst. But cycles end, and new eras rise again. I expect the same with AI: excess will be shaken out, but the long-term promise remains intact. And yes, even more entertaining books will be written about it all. And yes, we will think, 'How could people have been so dumb.’

Just a quick update on my long China (via Hang Seng) and short US: the trade continues to remain profitable. I am anticipating the trade will make new profit highs or ratio lows once the S&P 500 is firmly in correction mode. In other words, I am anticipating China being more defensive.

I did some serious scraping of data to add a lot of history to the short data release from the IMF showing the current (Q2: 2025) % US dollar share of global reserve currencies. It’s at recent multi-decade lows, but I wanted to bring in more history to give you a perspective that it has been much lower and has recovered.

The US dollar is having a terrible year, one of its worst in modern history, down -10% for the year. I am not a perma dollar bear. I think that there is potential for a meaningful dollar rally, but I need to address how this conflicts with gold and bitcoin. I will save that for another time.

There were so many new all-time highs on global stock markets yesterday. The one that caught my eye is that even the STOXX50, Europe’s top 50 stocks, managed to make a new all-time high, only just recently breaking above its 2000 high.

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