Here’s what you’ll find in today’s edition:

• With an FOMC decision looming, investors are mostly concerned about AI stocks.

• Executives’ optimistic outlook for US crypto growth includes some skepticism, survey finds.

• A crypto advocacy group’s “consensus position” on market structure policies.

It’s Fed Decision Day Eve. All anyone can talk about is the AI selloff.

Well, not everyone. 

The FOMC kicked off their two-day meeting this morning, and while we know they are busy discussing inflation and the labor market, I’m also willing to bet they have one eye on equities. 

And the market, at least right now, is overwhelmingly dominated by the AI trade. 

Chinese AI startup DeepSeek spurred a $1 trillion rout in US and European tech stocks yesterday. 

Nvidia was a top loser. Shares closed 17% lower on Monday. Meta actually fared surprisingly well, paring losses early in Monday’s session after opening 3% lower. 

Microsoft lost more than 2% and Alphabet closed more than 4% lower. In Europe, Siemens energy plummeted as much as 19%. 

Lots to unpack here. First, what has investors so spooked? 

DeepSeek claims it trained its new AI model for cheap. Like, really cheap. $5.6 million to be exact. 

If that doesn’t sound like a deal, here’s a comparison to put things in perspective: Anthropic CEO Dario Amodei says building their models costs between $100 million and $1 billion. OpenAI said training GPT4 came with a nearly $100 million bill. 

Even if you don’t buy DeepSeek’s $5.6 million claims — and to be clear, we should all take this self-reported figure with a massive grain of salt — the company does seem to be operating with an efficiency that US-based AI companies just don’t have. 

DeepSeek also says it’s using a fraction of the computing power it takes to run other models, like Meta’s Llama, which ironically helped train R1. Thanks, open source. 

On that note, Mark Zuckerberg reportedly has assembled four different “war rooms” at Meta, each dedicated to analyzing DeepSeek. With earnings season looming, we expect most AI firms to have a similar set up. 

The “chip issue" is another pain point for US investors. Biden-era export restrictions on GPUs may not be working as well as we’d hoped. Or Chinese companies are finding other work-arounds. Either way, this raises concerns not only about demand for chip providers like Nvidia, but also about national security. 

Doom and gloom aside, investors apparently woke up this morning in a better mood. Or in the mood to take advantage of a discount, at least. Nvidia shares were back in the green, trading 7% higher at 2 pm ET. 

“Despite DeepSeek’s promise, we doubt the leading cloud vendors and AI builders will pause their plans, although it’s a risk that certainly bears watching,” Morningstar equity analyst Brian Colello said. 

“We believe AI GPU demand still exceeds supply, so while slimmer models may enable greater development for the same number of chips, we still think tech firms will continue to buy all the GPUs they can as part of this AI ‘gold rush.’”

Nvidia execs will have some tough questions to answer on their Q4 earnings call. Lucky for them, they have about four weeks to prepare. 

As far as tomorrow’s FOMC decision, markets are overwhelmingly expecting central bankers to hold interest rates steady. I doubt Powell will comment much on the AI situation, but I wouldn’t be surprised if he’s asked about it during the press conference. 

Keep an eye on your inbox tomorrow for updates. 

— Casey Wagner

The regulatory landscape is shifting. As the US explores a strategic digital asset reserve, the implications for markets, monetary policy, and investment strategies are enormous.

At DAS NYC, join the leaders shaping this transformation — from BlackRock’s perspective on institutional adoption to Ripple and Solana’s insights on blockchain’s expanding role in finance.

Explore how these changes are shaping portfolios, shaping markets, and influencing the global financial system. If you’re navigating this evolving landscape, you can’t afford to miss these conversations.

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The Consumer Confidence Index for January showed another monthly decline, coming in at 104.1. December’s figure did get an upward revision to 109.5, but this is still 3.3 points lower than November. 

Both the present situation and expectations indexes, which reflect consumer’s immediate and short-term economic outlooks, respectively, declined over the month as well.

A new survey weighing industry leader sentiment shows an optimistic outlook for crypto — with a dose of skepticism too.

It includes opinions from some 230 executives gathering at the CfC St. Moritz 2025 conference. Among them are the CEOs of Binance and Ripple, chair of the CFTC, and executives at TradFi giants like BlackRock, Fidelity and Franklin Templeton.

The biggest opportunities are going to be in the US, 61% of survey respondents agree — followed by the APAC region, then Middle East and Asia. That comes despite America being back of the pack on the favorable jurisdictions list (as legislation sits today), behind the UAE, Singapore, Switzerland, Hong Kong, the EU and the UK.

Developers moving or staying in the US will be a crucial piece to the country’s chance to leapfrog others, an anonymous respondent noted. The person pointed to a year-old report showing 19.6% of developers in Western Europe and 19.2% in North America (the two top spots). 

The popularity of crypto ETFs in the US also contributes to the bullishness for growth there. To that point, 57% expect such wrappers around the top 20 coins in the not-so-distant future. A refresher on proposed funds in front of the SEC can be found here. 

Other interesting tidbits:

• 76% say the global macroeconomic backdrop is either “highly favorable” or “conducive” for the crypto industry’s growth.

• The most interesting opportunities are in fintech, payments and trading tech (tokenization/stablecoins is the runner-up).

• About a third of respondents expect TradFi institutions to take over the crypto space, while roughly another third believe there will be a 50/50 retail-TradFi split.

Back to regulations, there’s a big “but” coming — as optimism doesn’t cover all feelings. 

Roughly 70% believe supervisory scrutiny remains just as intense, or that those risks could even increase.

On the task ahead of the new US administration, ex-CFTC Chair J. Christopher Giancarlo is quoted as saying: “It's one thing to end bad policy, but it's an entirely different thing to create good policy.”

— Ben Strack

Blockchain Association published its “consensus position” on digital market structure policies amid optimism of legislative/regulatory progress from a pro-crypto Congress and revamped SEC. 

The advocacy group crafted these with help from its 100-plus member companies.

The 12 points are not exactly groundbreaking; we’ve heard most or all of them before. But I could see it being helpful to lawmakers and regulators needing a refresher on priorities.

One bullet calls for a regulatory framework that positions the US as the “preferred hub” for investment and technological advancement. Another seeks to safeguard the right to self-custody digital assets using non-custodial wallets.

Further down: “Policies should be carefully designed to avoid favoring specific solutions and focus on regulating specific activities rather than foundational infrastructure.”

Then there’s one stressing that developers of open-source software should be protected from liability when the software’s used by separate, bad actors. Does that remind anyone else of the Tornado Cash saga?

Another point with a clear link to the past is making sure there’re clear classifications for tokens — “delineating securities, commodities, and other asset types with precision.”

You might remember Gary Gensler not giving a straight answer to whether ETH is a commodity or a security. Or the SEC lawsuits against Coinbase and Binance for alleged securities violations. The agency earlier this month moved ahead with an appeal in its case against Ripple… and the list goes on.   

The new SEC crypto task force appears to be a step toward change, but what Congress-crafted crypto legislation ends up looking like will be key. The bottom line: Lawmakers might want to give these principles a read.

— Ben Strack

• The Senate Banking Committee will hold a hearing on debanking on Feb. 5. On the Republican witness list is Anchorage Digital CEO Nathan McCauley.

• New orders for durable goods fell again in December, losing $6.3 billion or 2.2% from November. 

• French investigators opened a probe into Binance concerning alleged money laundering and tax fraud.