#405: Approaching An All-Time High In Price, Bitcoin’s Volatility Is Increasing, & More

Approaching an all-time high at ~$68,000, the price of bitcoin (BTC) increased ~44% in February, its best month since December 2020. Contributing to the bull market was the launch of spot bitcoin ETFs in January that collectively closed the month at $47.7 billion USD in assets under management (AUM) or ~766,000 BTC. At the end of February, the spot bitcoin ETFs accounted for 3.9% of bitcoin’s supply outstanding. 

On January 11, the date on which all 11 ETFs launched, bitcoin’s volatility began to increase for the first time in more than 16 months, as shown in the chart below. Prior to the first quarter, bitcoin’s quarterly volatility had been falling relative to its annual volatility for more than a year, suggesting: 1) that cycle-to-cycle, bitcoin’s volatility is declining, and 2) that, on the other hand, incremental demand and momentum are expanding the market today.

Note: Realized volatility is measured by multiplying the standard deviation of daily returns over the time horizon times the square root of 365. Source: ARK Investment Management LLC, 2024.[i] Past performance is not indicative of future results. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Information as of February 29, 2024, with data from Glassnode.

In April, bitcoin should continue to benefit from the “halving” that will cut its supply growth from ~1.8% per year to ~0.9%. For more information on bitcoin’s market and on-chain dynamics, stay tuned for ARK’s February Bitcoin Monthly which we will publish this week. 

Last week, Klarna disclosed[ii] that, during their first month of operation, its OpenAI-powered customer service agents handled work equivalent to that of 700 full-time human agents, or two-thirds of all customer support chats. Resolving tasks in fewer than 2 minutes instead of the 11 minutes necessary for human agents, the AI agents achieved customer satisfaction scores “on par” with those of human agents.  

According to our estimates, Klarna’s 700 human agents supported 2.3 million conversations at a cost of $3.6 million per month, or $1.58 per conversation. Addressing the same number at 2 minutes per chat, an OpenAI-powered agent would cost no more than ~$9,000 per month, or $0.004 per conversation, based on the current pricing structure of GPT-4.[iii]  In other words, by switching from human agents to AI agents, Klarna could save nearly 100% in labor costs.  

While Klarna and other consumer-facing companies probably will retain human-in-the-loop systems to resolve customer-support cases that AI cannot, AI-related efficiency gains are likely to reduce the number of humans in customer support positions significantly. In fact, we believe that all language-centric knowledge work associated with enterprise sales, technical support, and customer success will face significant disruption.  

Last week, Figure AI secured $675 million in funding at a valuation of $2.6 billion from Open AI, Microsoft, NVIDIA, ARK Invest,[iv] and other investors to support the deployment of its autonomous humanoid robot, Figure 01. The company also struck a partnership with Open AI to develop next-generation Artificial Intelligence (AI) models for humanoid robots.[v] 

Thanks to recent breakthroughs in AI and computer vision, robots should be able to operate cost-effectively in unstructured environments, as opposed to the structured domains that traditional robots have dominated. ARK’s research suggests that generalizable robots, operated at scale, represent a revenue opportunity of ~$24 trillion globally, as shown below.[vi] Currently, ARK has significant exposure to humanoid robots through investments in Figure AI and Tesla.

*Note: the cells highlighted in green represent what ARK believes to be a reasonable or likely outcome. Source: ARK Investment Management LLC, 2024.[vii] This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

[i] ARK Investment Management LLC, 2024. “Big Ideas 2024: Disrupting The Norm, Defining The Future.”

[ii] Klarna. 2024. “Klarna AI assistant handles two-thirds of customer service chats in its first month.”

[iii] For this exercise, we assume that half of the two-minute chat is allocated to writing while the other half is dedicated to reading. We assume an average of 40 words (or ~53 tokens) per minute inputted by the end user and an input-to-output ratio of 1:2.

[iv] Adcock, B. 2024. “Excited to share: Figure raises $675M at $2.6B Valuation.” X.

[v] Adcock, B. 2024.”In addition, OpenAI & Figure signed a collaboration agreement.” X.

[vi] ARK Investment Management LLC, 2024. “Big Ideas 2024: Disrupting The Norm, Defining The Future.”

[vii] Ibid.