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[OPINION] China DeepSeek Artificial Intelligence Model Shocks the AI World - Sonny Iroche
After completing my Senior Academic Fellowship at the African Studies Centre at the University of Oxford in 2023, I decided to pursue a one-year postgraduate program in Artificial Intelligence for Business at the Saïd Business School of the University of Oxford. This decision has significantly intensified my interest in AI, prompting me to author several articles on the subject.
In my piece titled "The Race for AI Supremacy," published in Thisday newspapers on May 2, 2024, I noted, “AI has emerged as a transformative force in the modern world, revolutionizing industries and reshaping economies. In the rapidly evolving AI landscape, leading nations such as the USA, China, the UK, India, the EU, and Israel have made substantial advancements in AI development. Consequently, the regulation of AI has become essential to ensure its responsible and ethical application...”.
The launch of ChatGPT by OpenAI in November 2022 positioned the USA as a clear frontrunner in the AI arena, especially alongside the major chip manufacturer, Nvidia. The foremost AI companies are primarily based in the USA. However, this status quo seems poised for a shift beginning in January 2025, when the AI community was taken by surprise with the introduction of DeepSeek, an obscure and hitherto unknown Chinese firm, and its R1 model, an Open Source platform. On the debut of DeepSeek R1 model, Nvidia lost about $500billion of its stock valuation, while the NYSE lost over 17% of its share value, ever one-day loss in the history of the Stock Market.
In the February 1st-7th 2025 edition of The Economist, it was reported that: “….DeepSeek’s origins lie in an effort to improve High-Flyer’s algorithms. In 2019 the firm invested 200million Yuan to set up a separate unit to develop its own deep-learning platform, called “High-Flyer 1”. The fund poured 1billion Yuan into the effort in 2021 in order to launch a second iteration armed with 10,000 of Nvidia’s A100 graphics- processing units. This made High-Flyer an outlier: at the time just four other firms in China held such large arsenals of powerful chips, all of which were tech giants such as Alibaba. DeepSeek was made a standalone company in 2023.
It delivered its first jolt to the market in May last year, when it released an ultra cheap chatbot based on its V2 model”.
“…DeepSeek’s new R1 model, which has shocked the West, suggests it is making progress. The company says it cost less than $6 million to train a tiny fraction of comparable models from firms such as OpenAI, maker of ChatGPT. Sam Altman, OpenAI’s boss, has called R1 “impressive”. There is also speculation that DeepSeek has trained its models by studying the results of American ones, a process known as “distillation”. OpenAI has said it has evidence that point to DeepSeek distilling its models, in violation of its terms of service”.
Such claims have been dismissed by some AI analysts, as a case of sour grapes.
I will not join that school of thoughts of those who quickly dismiss the accusations of OpenAI, neither would I lend credence to the accusations, I will rather opine that if OpenAI has any substantial evidence or proof to that effect, it should seek redress in a court of competent jurisdiction.
Now a number of non-AI people may be wondering what distillation is all about.
Let me try to explain what it is in as simplest of terms that one could.
Distillation is a powerful technique in AI design and development that allows practitioners to leverage the strengths of large models while creating more efficient alternatives. By understanding and effectively implementing the distillation process, developers can build models that maintain high accuracy while being suitable for real-world applications where computational and financial resources are a concern.
Distillation in AI design and development can be likened to a process where a smaller, more efficient model (often called a "student" model) is trained to replicate the performance of a larger, more complex model (known as the "teacher" model). This technique is especially useful in scenarios where deploying large models is impractical due to resource constraints, such as memory, computation power, or latency requirements.
Below is a detailed description of the distillation process and its various aspects:
• Understanding the Models
- Teacher Model: This is typically a large, high-capacity model (like a deep neural network) that has been trained on a specific task and achieves high performance metrics. It captures complex patterns and relationships in the data.
- Student Model: This is a smaller, more efficient model that aims to approximate the performance of the teacher model while being less resource-intensive. The student model can be a smaller neural network or a different architecture altogether.
• Data Preparation
- Dataset Selection: The dataset used for distillation should ideally be the same or similar to the one used to train the teacher model. This ensures that the student model learns from the same data distribution.
- Input Processing: Data preprocessing steps (normalization, augmentation, etc.) are applied to the input data to maintain consistency between the teacher and student models.
• Output Generation from the Teacher Model
- Soft Targets: Instead of using the hard labels (e.g., class labels) from the original dataset for training the student, the outputs (predictions) of the teacher model are used. These outputs often include probabilities for each class, which provide more nuanced information about the data distribution.
- Logits Extraction: The logits (raw output scores before applying softmax) from the teacher model can be used to generate soft targets, which provide richer information about class relationships and can help the student model generalize better.
• Training the Student Model
- Loss Function: The training process typically involves a modified loss function. A common approach is to use a combination of two losses:
- Distillation Loss: This measures how closely the student model's output matches the teacher model's soft targets. It often uses Kullback-Leibler (KL) divergence or cross-entropy loss.
- Hard Target Loss: This measures how well the student model predicts the true labels from the dataset. This is typically a standard cross-entropy loss.
- Temperature Scaling: A temperature parameter is used during the softmax computation of the teacher model's outputs. Higher temperatures soften the probability distribution, allowing the student model to learn from the relative differences between classes rather than absolute probabilities.
- Training Procedure: The student model is trained using the combined loss function, iteratively updating its weights to minimize this loss. The training process may involve techniques such as backpropagation and gradient descent.
• Evaluation and Fine-tuning
- Performance Evaluation: After training, the student model is evaluated on a validation dataset to assess its performance. Key metrics might include accuracy, precision, recall, and F1 score.
- Hyperparameter Tuning: Based on evaluation results, hyperparameters (like learning rate, batch size, etc.) can be adjusted to improve the student's performance.
- Fine-Tuning: In some cases, additional fine-tuning of the student model may be performed to further enhance its performance on specific tasks or datasets.
• Deployment
- Model Compression: The trained student model is often more compact and faster to execute than the teacher model, making it suitable for deployment in environments with limited resources, such as mobile devices or edge computing.
- Inference Optimization: Techniques like quantization and pruning can be applied to further optimize the student model for inference, reducing memory footprint and increasing speed.
• Monitoring and Iteration
- Real-World Performance Monitoring: Once deployed, the performance of the student model should be monitored in real-world applications. Any drift in data distribution or performance can necessitate re-training or further distillation.
- Iterative Improvement: The distillation process can be iteratively refined by using feedback from real-world performance, adjusting the architecture of the student model, or retraining with updated datasets.
Having briefly highlighted the AI supremacy race between the USA and China, it will be interesting to focus attention on AI development in Africa by looking the state of the subject matter in the context of Africa.
The State of AI Preparedness and Development in Africa: Challenges and Opportunities
The potential of Artificial Intelligence (AI) to transform economies and countries is immense, yet many African nations, particularly the leading economies on the continent such as Nigeria, South Africa, Morocco, Egypt, Algeria, Kenya, Ethiopia, Ivory Coast, and Rwanda, face significant challenges in their preparedness and adaptation of AI. The extreme lack of resources, infrastructural deficits, unreliable data, and inadequate computational power severely hinder the development and adoption of AI technologies on the continent. Let me delve into some of these challenges, highlights the current state of AI capabilities in these countries, and suggests how African nations can leverage their limited pool of trained professionals to drive an AI revolution. A few of the African countries, Egypt, Morocco, and Algeria may be better equipped than the others for an AI revolution, but their inputs in world AI technologies have been negligible, to say the least.
Theses are some of the Challenges to AI Development in Africa.
First; Lack of Resources:
Many African countries struggle with limited financial resources that can be allocated to AI research and development. This lack of funding affects various levels of AI initiatives, from academic research to the establishment of startups focused on AI solutions. Governments often prioritize immediate socio-economic challenges—such as healthcare, education, and infrastructure—over long-term investments in technology. As a result, AI initiatives often lack the necessary financial backing to thrive.
Secondly, Inadequate Infrastructure:
The infrastructural deficit in many African countries poses a significant barrier to AI development. Reliable electricity, high-speed internet, and modern computing facilities are prerequisites for AI research and deployment. Unfortunately, many regions still experience frequent power outages and have limited access to the internet, which hampers the ability to conduct data-intensive AI research or run complex algorithms effectively. Without a robust infrastructure, the potential for leveraging AI to address local challenges is severely diminished.
Thirdly; Data Reliability and Availability:
High-quality, reliable data is the lifeblood of AI systems. However, many African countries suffer from a lack of comprehensive data collection mechanisms, resulting in poor data quality and availability. Government databases may be underdeveloped, and private sector data collection may not be standardized or systematically managed. This lack of reliable data significantly hampers the training of AI models, which require vast amounts of high-quality data to function effectively.
Fourthly; Limited Compute Power:
AI development relies heavily on advanced computational power, often provided through powerful GPUs and cloud computing resources. Many African countries lack access to these essential technologies, limiting their ability to develop sophisticated AI algorithms and conduct meaningful research. The high costs associated with acquiring cutting-edge computing infrastructure further exacerbate these challenges, making it difficult for local researchers and startups to compete on a global scale.
Fifthly; Insufficient Support for AI Research:
The absence of a supportive ecosystem for AI research—comprising funding, mentorship, and collaboration opportunities—hinders the growth of AI capabilities. Research institutions often lack the necessary frameworks to attract and retain talent, resulting in brain drain as trained professionals migrate to countries with better opportunities. This issue is particularly pronounced in leading economies like Nigeria and South Africa, where despite having a pool of talent, the environment for research and innovation can be stifling.
How can Africa scale its AI involvement?
Leveraging Trained Professionals
Despite these challenges, Africa has a unique opportunity to capitalize on its growing number of citizens who have been trained in reputable AI research institutions and universities worldwide, such as the University of Oxford, MIT, Imperial College, Cambridge, and the University of Toronto, just to name a few. These individuals possess the skills and knowledge necessary to drive the continent's AI initiatives forward. Here are ways to leverage this talent pool:
Encouraging Return Migration:
African governments can create attractive conditions for trained professionals to return and contribute to local AI ecosystems. This could involve offering competitive salaries, research grants, and tax incentives for those who establish AI startups or collaborate with local universities and research institutes.
Building Academic Partnerships:
Collaboration between local universities and top-tier institutions abroad can facilitate knowledge transfer and create research opportunities. Programs that allow for exchange visits, joint research projects, and workshops can enhance the skill sets of local researchers and elevate the quality of AI research conducted in Africa.
Establishing AI Incubators and Hubs:
Creating innovation hubs and incubators that specifically focus on AI can foster collaboration among researchers, startups, and government agencies. These hubs can provide the necessary resources, mentorship, and networking opportunities to accelerate AI development and support the commercialization of innovative solutions.
Government Support and Policy Frameworks:
The governments of leading economies like Nigeria, South Africa, Morocco, Algeria, Kenya, and Ivory Coast must develop comprehensive policies that prioritize AI development. This includes investing in research funding, establishing regulatory frameworks that encourage innovation, and creating public-private partnerships to facilitate AI projects.
Focusing on Local Challenges:
By directing AI research towards solving local challenges—such as healthcare delivery, agriculture, security, banking & financial services, and urban planning—African nations can ensure that AI technologies are relevant and beneficial to their populations. This localized approach can also attract funding and support from international organizations and investors interested in impactful projects.
The state of AI preparedness in many African countries, particularly among the leading economies in the region is characterized by significant challenges stemming from inadequate resources, infrastructure deficits, unreliable data, and limited computational power. However, by leveraging the skills of trained professionals and fostering an environment conducive to AI research and development, these nations can position themselves at the forefront of the AI revolution. With strategic investments, supportive policies, and a focus on local challenges, Africa can harness AI to drive economic growth, enhance public services, and improve the quality of life for millions. The potential is vast, but realizing it will require concerted efforts and collaboration between governments, academia, and the private sector.
Sonny Iroche is a Senior Academic Fellow, African Studies Centre 2022-2023 and Post Graduate AI for Business Saïd Business School. University of Oxford. UK
I Tested 4 Chrome Browser Extension AI Chatbots, and This Is the Best One
There are so many AI chatbot extensions for Google Chrome that finding a good one in the stack of poorly designed tools is an overwhelming task. So, I've tested four of the most popular AI chatbot extensions to find the best one.
The Google Chrome AI Chatbot Extensions I Tested
I tested the Monica, Merlin, and ChatGPT Sidebar extensions for Chrome. These AI chatbot extensions have millions of users with ratings of 4.8 and 4.9 stars out of 5. I also added Perplexity AI into the mix as I liked using its AI chatbot and am curious whether its extension is as good. I also checked the safety and legitimacy of these Chrome extensions before installing them, and all of them should be safe to install. So, all in all, we have four extensions to try and compare.
AI Chatbot Extensions Head-to-Head Comparison
I compared features, ease of use, and performance to determine the best AI chatbot extension. Note that these tools each have a full-featured web app separate from the extensions. I only compared them based on the extensions' features. So, features that require you to visit the AI chatbot website are not included.
Also, output quality and speed performance depend heavily on the specific AI model. This does not directly reflect the extension itself. So, we will base performance on factors such as the models they support and the number of queries you can do for both basic and advanced models.
Extension |
Features |
Ease of Use |
Performance |
---|---|---|---|
Perplexity AI |
Quick and lightweight. Instant page summaries, real-time Q&A. |
User-friendly interface with straightforward toolbar integration. |
Unlimited queries. It uses real-time web search and Claude 3 Haiku to provide quick and accurate information. Best used for queries requiring short answers. |
Monica |
All-in-one extension. The comprehensive suite of features includes chat, search, writing assistance, file uploads, translation, and creative capabilities like image and video generation. |
Cluttered. UI can be overwhelming for new users but can be easier to use with proper setup and keyboard shortcuts. |
Unlimited queries on lots of popular basic models like DeepSeek R1(small), GPT-4o mini, and Gemini 2.0 Flash. Does not provide free credits for premium models. |
Merlin |
Well-curated set of features. Focuses on productivity enhancement with quick answers and content summarization. |
Simple interface focusing on quick access to AI assistance. UI is good but can feel outdated. |
Provides a substantial amount of queries (free 100 credits per day). Lacks the latest models like DeepSeek and GPT-o1 but provides free credits to other advanced models like GPT-4o, Claude 3 Sonnet, and Mixtral. Good for research and coding assistance. |
ChatGPT Sidebar |
All-in-one extension. It features a comprehensive suite of AI features and utilities like AI web search, chat, translation, file converters, file uploads, and image and video generation. |
Clean layout. Core features are easy to navigate, while more advanced features can be accessed in the sidebar. |
Limited (30 credits per day). No free credit for popular advanced models. |
Perplexity AI Extension
Perplexity was the simplest and easiest to use out of the four. You can only do two things—ask a question and ask for a summary. I like its focus feature, which allows you to choose where Perplexity sources its answers, whether it be the web page you're currently on, the entire website, or the internet.
Monica
Taking an entirely opposite approach, Monica feels more like a full-featured app rather than a Chrome extension. It stands out as the most versatile extension, offering a wide range of AI capabilities, including writing, search, translations, and even image/video generation. These AI features are further improved with context memory, file uploads, live voice, real-time search, and the ability to choose between popular AI models. My favorite feature is the free and unlimited use of basic models like GPT-4o mini, Claude Haiku, and DeepSeek R1 (small).
Due to its massive amount of features, Monica does feel very cluttered and can be confusing for new users. However, I do like that it provides options for keyboard shortcuts and toolbar preferences, which makes it much easier to use in the long run.
Merlin
Merlin provides a good middle ground between Perplexity's simplicity and Monica's assortment of features. I enjoyed using it as its UI feels simple and intuitive while still packing enough features for me to do a good deal of productivity with just my browser. What I find limiting with Merlin is that it only gives you 102 credits to use per day. Although quite substantial when using small models like GPT-4o, which uses one credit per query, the daily free credit does feel very limiting when you start using advanced models like GPT-4o, which uses 15 credits per query.
ChatGPT Sidebar
ChatGPT Sidebar provides roughly the same features as Monica while being much less cluttered. However, my biggest problem with ChatGPT Sidebar is that it only offers 30 credits per day, even with smaller AI models like GPT-4o mini, DeepSeek R1 70B (small), and Claude 3.5 Haiku, taking one credit per query. It doesn't offer any free credits for advanced models like GPT-4o and Claude 3.5 Sonnet like Merlin does. However, it does allow you to try "super advanced" models like GPT-o1 at 15 credits, GPT-o3 at three credits, and DeepSeek R1 (big) at two credits per query.
This Is the Best Chrome AI Chatbot Extension
There are many AI-powered Chrome extensions for productivity, but after testing some of the most popular AI ones, Monica stands out as the best Chrome AI chatbot extension.
Monica provides the most features and best performance without paying for any subscription or worrying about credits. Although I dislike its cluttered UI, I find that its sheer amount of features and the versatility of its free AI models allows me to do a lot more than any of the AI extensions I've tried. With real-time web research available in Monica, having access to small AI models like GPT-4o mini is enough to provide accurate answers, making it a great free AI tool that saves me money on premium AI subscriptions.
ChatGPT Sidebar seems to provide the best set of features with a very clean and intuitive UI, but its low daily credit makes it very limited. I recommend Merlin over ChatGPT if you're a free user. At least Merlin provides a good amount of credit for using basic AI models while still having all the useful features you'd want in an AI extension.
If you're willing to pay a premium for a monthly subscription, the ChatGPT Sidebar extension is the best-paid option out of the four. Remember that these extensions do not allow you to use your existing premium subscriptions to any AI chatbot you may have. This means that your already existing subscription to premium AI services like ChatGPT Plus cannot be used within these extensions.
So, if you're already subscribed to any premium AI chatbot service like ChatGPT, it might just be better for you to directly visit the web app and supplement it with the Perplexity AI extension for quick Q&A and summaries.
As for me, I'll continue to use Monica as my all-in-one AI extension for Chrome.
[makeuseof]
Apple to launch new lower-cost iPhone to capture a broader market
China’s DeepSeek has taken the world by storm. Here are the brains powering the AI sensation
- DeepSeek’s founder, Liang Wenfeng, has been dubbed by some in Western media as the “Sam Altman of China.” But unlike his Silicon Valley counterpart, he has maintained a low public profile.
- Last month, Liang received a hero’s welcome in his hometown of China and was spotted at a roundtable hosted by Chinese Premier Li Qiang, and most recently at a closed-door symposium chaired by President Xi Jinping earlier this week.
- Outside of its core technology developers, DeepSeek has mostly shared the senior management team, operation staff, human resource department and financial accountants of its mothership High-Flyer, according to people familiar with the company.
Artificial intelligence startup DeepSeek has rocketed into global prominence, shaking up the AI world, but the team behind it is relatively unknown outside China.
DeepSeek’s founder, Liang Wenfeng, has been dubbed by some in Western media as China’s Sam Altman. But unlike his Silicon Valley counterpart, Liang has maintained a low public profile.
Liang’s team, comprising young graduates from some of the country’s leading universities, is also little known. The team consists of fewer than 140 people, according to Chinese state media, though a research paper on its latest R1 reasoning model lists about 200 contributors. CNBC has been unable to confirm the official size of the team.
Outside of its core technology developers, DeepSeek has mostly shared the senior management team, operation staff, human resource department and financial accountants of its mothership High-Flyer, according to sources familiar with the company.
Here’s an overview of the people behind the AI sensation and how the startup came into being.
Liang Wenfeng
Liang has received the lion’s share of media attention in recent weeks as DeepSeek’s chatbot ascended to the top of global app charts.
Last month, he reportedly received a hero’s welcome in his hometown of China and was spotted at a roundtable hosted by Chinese Premier Li Qiang, and most recently at a closed-door symposium chaired by President Xi Jinping earlier this week.
The 40-year-old founder of DeepSeek has been quite media-shy, apart from two rare interviews with Chinese media outlet 36Kr in July last year and in 2023.
The interviews paint a picture of an idealistic leader set on achieving artificial general intelligence (AGI) — a type of AI that mimics human capabilities — and transforming China into a technology innovator.
Born in 1985, Liang grew up in Zhanjiang, a port city and trade center in southern China. He was a straight-A student who was particularly gifted in mathematics, according to local media reports.

After teaching himself calculus in junior high school, he was admitted to Zhejiang University in 2002 and later received a bachelor’s and master’s degree in information and communication engineering in 2010.
With a specialization in machine vision research, in 2008 Liang started writing machine-learning algorithms to analyze market trends and macro data to make investment decisions, according to Chinese technology-focused media outlet 36Kr, which had interviewed Liang.
AI was not a typical quant strategy at the time, but Liang drew inspiration from Jim Simons, a pioneer of quantitative investing who founded Renaissance Technologies, one of the world’s most successful funds, Liang said in the introduction to the Chinese version of Simons’ biography.
High-Flyer fund manager
In 2015, Liang and college friend Jin Xu founded High-Flyer Asset Management, a quantitative hedge fund that uses complex mathematical algorithms to predict market trends and make investment decisions.
Xu was a graduate from Zhejiang University’s Chu Kochen Honors College, which selects top students at the elite university.
There, Xu focused his PhD studies on robot autonomous navigation and machine learning — similar to Liang’s focus of postdoctoral research — and was a key member of the visual navigation research project for China’s lunar exploration program.
Xu, who once worked at Huawei Technologies’ software development in the early 2010s, now leads High-Flyer’s technology development and crafts trading strategies, his profile page on private equity database PaiPaiWang showed.
Zhengzhe Lu, the chief executive officer of High-Flyer, graduated from the same university as Liang and Xu, before earning a master’s degree from the London School of Economics and Politics.
Prior to High-Flyer, Lu worked at the state-backed China Merchants Bank, where he was engaged with macro research and overseas derivative investment.
In an interview with Chinese state media in 2023, Lu said: “We have set up a new team independent of investment, what is equivalent to a second start-up” — which later grew to become DeepSeek. “We want to do things with greater value and things that go beyond investment industry.”
The pair manage some of the best performing funds under the company’s portfolios, with averaged returns over 20% in 2024, according to PaiPaiWang. That was above gains of about 15% in the CSI 300 index last year, a 5% rise in the small-cap CSI 500.
The quant fund’s profits were partially channeled to fund the rise of DeepSeek, Liang told 36 Kr in 2023.
Brains behind DeepSeek
In 2023, High-Flyer spun off DeepSeek as an independent enterprise, expanding its remit beyond investment and focusing on pursuing AGI.
The team consists mostly of local engineering, computer science and AI graduates from top universities in China — such as Tsinghua University and Peking University — many of whom have published recent papers on subjects such as language models and machine learning.
A number of team members are also graduates from top American universities with experience at Nvidia and Microsoft who decided to return to China’s growing AI industry, according to their LinkedIn profiles.
A key attribute that sets the team apart is age, as DeepSeek favors graduates with less work experience.
Instead, “they emphasize academic degrees, awards at international programming competitions, research papers published at top industry journals,” a headhunter for DeepSeek told CNBC.
In the interview in 2023, Liang said experience is less important in the long run and “foundational abilities, creativity, and passion are more crucial.”
In 2024, he said that while the top 50 talent in AI may not have been in China, DeepSeek was aiming to cultivate its own.
Top graduates also appear to be attracted to the firm because of its reportedly higher salaries and greater degree of bottom-up management than what might be found at a larger tech firm.
[CNBC]
Bitcoin Price Faces Volatility as Market Braces for Potential $85K Breakdown Following August 2023 Pattern
Bitcoin's price is showing signs of volatility, with recent fluctuations sparking comparisons to its movements in August 2023. On Feb. 17, research from on-chain analytics platform CryptoQuant pointed out that Bitcoin's price action has become increasingly rangebound, signaling a potential shift in market behavior. The Choppiness Index, a measure of market volatility, has reached high levels, indicating that a significant price movement could be imminent.
The current range for Bitcoin has been hovering around 16% over the last 90 days, with a noticeable lack of trend in its price action. The Choppiness Index, which stands at 62 on the daily chart and 72 on the weekly chart, shows instability and an urgent need for Bitcoin to break out of its stagnant price range. According to CryptoQuant contributor Percival, such conditions often precede a larger market move. He notes that similar behavior was observed in August 2023 when Bitcoin experienced a sharp drop before beginning a sustained uptrend.
In 2023, before Bitcoin's price surged, the market had seen relatively low volatility, which caused many traders to abandon their positions. Percival suggests that the current situation could lead to a liquidity grab, where market participants holding positions on the wrong side of the trade are cleared out before a potential price rise. His analysis highlights that Bitcoin's price movements are currently erratic, with alternating periods of rapid gains and consolidations.
While Bitcoin is facing short-term uncertainty, long-term prospects remain positive. The increasing adoption of cryptocurrencies and institutional interest in digital assets like Bitcoin has led to an overall bullish sentiment. However, Bitcoin's price action is still subject to significant volatility, and investors are advised to remain cautious and well-informed about market developments.
Regarding potential price levels, the short-term holder (STH) cost basis of $92,000 is being closely monitored as a key level of support. If Bitcoin fails to hold this level, attention will shift to the 200-day exponential moving average (EMA), which is currently at $85,000. This could serve as a critical support zone if the market continues to experience downward pressure.
Bitcoin’s price action is in a highly volatile phase, with significant potential for movement in either direction. While market sentiment is mixed, some analysts believe a major price move is on the horizon. Investors are advised to watch key levels like the $92,000 cost basis and the $85,000 EMA as critical indicators of Bitcoin’s next move. As the situation develops, staying updated on market trends and adjusting strategies accordingly will be essential for navigating the unpredictable nature of Bitcoin's price.
[Yahoo finance]
If There's Ever a Recession, Should You Buy XRP or Bitcoin?
If you hold cryptocurrencies like XRP (CRYPTO: XRP) or Bitcoin, (CRYPTO: BTC) you're probably not sure how they'd hold up in the event of an economic recession. Whether it would make sense to buy more of either asset in such a scenario is an even bigger question, as a timely purchase during hard times might pay off significantly when conditions improve down the line.
Are either of these assets worth buying if the economy starts to recede? Or would it make more sense to dump both? Let's unpack this issue and make a game plan so that you'll be prepared if something happens in the coming years.
Here's how a tough economy could impact these coins
In the U.S., an economic recession is generally defined as a period of at least two consecutive quarters in which the gross domestic product (GDP) decreases rather than increases as normal. Usually recessions are accompanied by higher unemployment, reduced consumption of goods and services, reduced international trade volume, and falling asset prices, particularly in more liquid assets like stocks and cryptocurrencies, but often in harder assets like real estate as well.
It's unpleasant to think about but consider the mechanism for why asset prices decline when the economy is having trouble. People believe that they'll be better off having cash in hand than seeing their capital eroded as assets become harder to offload and priced lower than before. In many cases, people need to liquidate their investments to pay their bills, as their sources of income dry up while the economic tide withdraws.
In such a scenario, the easiest assets to liquidate are the most likely to get sold first. That means stocks and cryptocurrencies would be on the chopping block before safer and harder-to-transfer assets like real estate. And typically, it's the riskiest assets that start taking the deepest hits the soonest in a recession, as risky plays tend to assume that the economy will continue expanding, as it's an expansionary phase that supports the drive to explore new horizons of business and industry in the first place.
So what does that mean for holders of less-risky cryptocurrencies like Bitcoin and XRP?
While it depends on the length and depth of the recession, they're very likely to get hosed. Declines of 80% or more wouldn't be surprising during a longer recession. But for those who could retain some capital and load up on one of these two coins, there could be a big opportunity in store.
There's a correct choice here if you can make it when it counts
XRP is not the coin to buy if there's a recession. Here's why.
XRP gains value by capturing fees when the users of its network perform international money transfers. They do those transfers because the alternative approach is to use legacy technology that's far pricier and slower. Its investment thesis is that over the long term, more and more of those users, which are typically financial institutions like banks and currency exchange houses, will be drawn to its more efficient new technology, enabling it to draw larger and larger transfer volumes, and more fees as a result.
Recessions tend to cause volumes of international trade to decline, as buyers have less money. Sellers may struggle to sell their products at high price points if supply and demand become mismatched. Both of those factors reduce the volume of transactions for XRP and its fee revenue. There's also the possibility that investors will need to sell their XRP to pay for their expenses, driving the coin's price down further.
Therefore, economic recessions are a fierce threat to XRP's value across multiple vectors, at least in the short term. Note that if the coin's value falls during a recession as a result of these factors, it doesn't actually detract from its core investment thesis for it to accrue value over the long term, it just means investors would likely need to wait a lot longer before seeing the price of their coins appreciate in value. And if fundamental economic, financial, or trade relationships are permanently reordered as a result of the disruption, which is often the case, the coin might struggle to regain its prior heights.
On the other hand, Bitcoin only faces one major pressure during a recession: People selling their coins to pay for their spending needs.
Even during hard times, it'll still retain its capabilities as an effective hedge against inflation, and as a store of value. The mechanism by which it gains in value over time -- its scarcity due to regular halvings of its mining reward -- will continue to grind forward regardless of whatever economic phenomena are happening. Similarly, a deep recession could make a company like Ripple, the issuer of XRP, become insolvent, and the chain could therefore collapse.
But Bitcoin isn't run by a company, it's an independent blockchain that exists as a network of many different actors working in their self-interest. That makes it more durable in the face of deeper shocks to the global economy. And that's why, assuming you can keep some capital on hand for when the economy is struggling, it makes more sense to buy Bitcoin than XRP, provided that you're willing to hold it for at least a few years or longer.
Should you invest $1,000 in XRP right now?
Before you buy stock in XRP, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and XRP wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
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Michael Saylor’s Big Bet on Bitcoin Is Inspiring Copycat CEOs
Investors had pretty much written off Jonathan Ferrari’s fledging meal-delivery company.
His startup, Goodfood Market Corp., had lost 98% of of its value from a Covid-era high, and was a mere penny stock in the cut-throat business of food delivery.
So this year, Ferrari hatched a new plan that he is convinced will turn Goodfood’s stock around: Buy Bitcoin.
“We have a nice core business but it’s too small to be relevant to the capital markets,” Ferrari, 36, said. “I think as we start investing more into our Bitcoin treasury strategy we’ll be able to create more liquidity in our stock and attract investors.”
Goodfood is one of the dozens of public companies — including a social-media company, a video game developer and a coal mining firm — that have been following in the footsteps of Michael Saylor’s Strategy by using corporate cash, and in some cases borrowed money, to buy Bitcoin. Even the board of Trump Media & Technology Group Corp. decided last month to allocate some of its cash to cryptocurrency investments.
While there’s nothing illegal about the practice, the purchases do raise questions about whether public companies should be in the business of speculative investing, given that the tokens generally become a part of their treasury holdings, which are usually reserved for cash and ultra-safe equivalents. There is also the matter of what happens to the underlying businesses, which often have nothing to do with Bitcoin, if the value of the token crashes yet again.
“If you buy things with debt and the price of those things go down and your debt comes due, you have a problem,” said Austin Campbell, a cryptocurrency consultant and former Wall Street trader who is an adjunct professor at NYU Stern School of Business.
Yet those sorts of concerns get pushed aside in the fads that periodically sweep the corporate world during moments of tech euphoria. There were the companies that added dot.com to their name in the late 90s, and the more recent trend of executives rushing to talk about artificial intelligence during earnings calls. In this case, though, the Bitcoin buyers are putting corporate funds on the line.
Ferrari started with $1 million of Bitcoin last month and he is planning to spend a “significant” amount of Goodfood’s remaining cash — and any future cash flows — on additional purchases.
The Bitcoin-buying tactic has caught fire as the price of the original cryptocurrency has taken off over the past year, leading Donald Trump to talk about even the US government creating its own strategic Bitcoin reserve.
The new additions to the crypto landscape are generally taking inspiration from Saylor, the chairman of Strategy — or MicroStrategy Inc. as it used to be known.
While the company’s old software business has been limping along, the stock has become a darling of retail and institutional investors due to Saylor’s decision to plow the company’s cash — and more recently the proceeds from stock and bond sales — into Bitcoin. Strategy said on Tuesday it plans to offer another $2 billion of convertible debt in a private offering, extending the self-styled Bitcoin treasury company’s unconventional fundraising strategy.
Strategy’s stock has gone up even faster than the price of Bitcoin over the past year and the company is now worth almost twice as much as its roughly $45 billion in cryptocurrency holdings.
Some of Saylor’s proteges have done even better. Metaplanet, which has styled itself as a Japanese version of Strategy, has been one of the best performing stocks in the world since it sold most of its hotel holdings and plunged all the money into Bitcoin last year, and then borrowed money to buy more. (Its lone hotel in Tokyo is being rebranded as “The Bitcoin Hotel.”)
The most recent sign of Saylor’s success came when the CEO of GameStop Corp, Ryan Cohen, posted a picture of himself with Saylor on social media. The post led GameStop’s stock to shoot up as Cohen’s followers speculated that the retailer would become the latest public company to buy Bitcoin.
Some of the current Strategy imitators have followed Saylor’s risky tactic of borrowing money to buy Bitcoin. Semler Scientific, Inc., a medical testing company, borrowed $85 million last month to fund its own purchases and add to the tens of millions of dollars it bought with cash last year.
The move has worked for Semler so far, as its stock has more than doubled since it began buying.
Yet some analysts worry about how sustainable the strategy will prove to be. First, there are questions about what happens to a company’s ability to pay back the money it borrowed if the price of Bitcoin goes down. And even for smaller companies that aren’t taking on debt, there is the worry that the attention boost from buying Bitcoin will diminish as more companies do the same. For Goodfood, the company’s stock initially rose slightly before slumping after it made its first purchases.
“With the Bitcoin ETF and MicroStrategy already existing, the actual long-term utility of other people doing this is very low,” said Campbell, the adjunct NYU Stern professor.
For now, with the original digital token holding near its all-time high, the tactic that Saylor initiated in 2020 has continued to remain attractive.
While there is no official way of tracking the practice, one public list counts 66 publicly-listed companies — and another 12 private ones — around the world that have bought Bitcoin, many of which had nothing to do with Bitcoin, or investing of any sort, previously.
The manager of a $25 million hedge fund, TMR Capital, is about to embark on a letter-writing campaign to encourage dozens of micro-cap companies to follow the MicroStrategy playbook. Ted Rosenthal, the founder of TMR, said he thinks the tactic can give small stocks a huge boost of attention, and he is offering to pool capital to inject more money into the shares of companies that give it a try.
“Bitcoin is a way to get attention very quickly,” Rosenthal said. “There’s probably no other way to get your stock up 20-times in a year.”
This is not the conventional corporate strategy of yore that focused on building sustainable long-term businesses.
To Eric Semler, the CEO of Semler Scientific, the risks are worth it because the new holdings give the company access to a wider pool of potential investors.
The convertible bonds issued by Semler and Strategy — along with a handful of Bitcoin mining companies — have made them attractive to hedge funds looking to employ a form of arbitrage that allows them to capitalize on the volatility of Bitcoin.
Other large investors that are restricted from purchasing Bitcoin directly — even through ETFs — are using stocks like Semler and Goodfood as an indirect way to get exposure to the asset class. Meanwhile, message boards are filled with day-trading crypto aficionados advertising their desire to invest in and support companies with Bitcoin holdings.
Then there is the sheer persuasive power — and attractive returns — of Strategy’s Saylor, who has become a promoter of the practice, and a mentor to many of the executives jumping on board.
“Our board didn’t have a lot of experience of or understanding of Bitcoin,” said Eric Semler. Saylor, who got on the phone with Semler, won him and the board over.
“He is such a strong believer in the merit of what he is doing,” he said. “And he wanted others to follow him and help Bitcoin.”
[Bloomberg]
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[OPINION] Unlike Kate Henshaw, Some Nigerian Celebrities Mistake Controversy For Achievement - Isaac Asabor
In the contemporary Nigerian entertainment industry, an unsettling trend has emerged: the glorification of controversy as a means of remaining relevant. Some celebrities, either ignorantly or deliberately, believe that being constantly embroiled in controversy equates to success. This misguided ideology is fueled by the unquenchable thirst for public attention, social media engagement, and brand endorsement deals. However, the reality is that controversy, when not carefully managed, often leads to a damaging reputation, career stagnation, and, in some cases, irreparable downfall.
Given the allure of controversy, it is little wonder that the Nigerian entertainment industry is replete with celebrities who thrive on controversy. From musicians to actors, influencers, and reality TV stars, many have mastered the art of staying in the headlines through scandalous actions and statements. The rise of social media platforms such as Instagram, Twitter, and TikTok has further enabled this trend, allowing celebrities to instantly engage millions with provocative content.
Some celebrities see controversy as a surefire way to remain relevant, especially in an industry where public attention is fleeting. They stir public emotions by engaging in online feuds, making outrageous statements, or displaying socially unacceptable behavior. The resultant buzz generates clicks, shares, and comments, creating the illusion of fame and influence. In reality, this notoriety often comes at a great cost.
Unfortunately, there is a price of controversial fame, and which is damagingly costly. While controversy might bring temporary fame, it seldom leads to lasting success. In Nigeria, we have seen celebrities who were once household names fade into obscurity due to their inability to transition from scandal-driven popularity to substance-driven success. A case in point is some musicians who gained fame through provocative lyrics and gimmicks but struggled to maintain relevance when public interest shifted.
Brands and corporate organizations, which play a crucial role in the financial sustenance of celebrities, are cautious about associating with individuals who thrive on controversy. While some may leverage scandalous moments for short-term marketing, they often distance themselves when the public backlash becomes intense. The result is that these celebrities, despite their online fame, struggle to secure long-term deals and endorsements.
At the core of this issue is ignorance. Many of these celebrities do not understand that being relevant in entertainment goes beyond social media outrage. They lack the awareness that true success comes from talent, consistency, and personal brand management. A musician who invests in controversy rather than refining their artistry will soon be overtaken by those who focus on their craft. An actor who engages in endless social media drama rather than improving their skills will be left behind when the industry evolves.
Unfortunately, some of these celebrities do not realize the negative impact of their actions until it is too late. Many fail to build a solid legacy and eventually find themselves sidelined when public sentiment turns against them. Some even resort to desperate measures, such as fake scandals and publicity stunts, just to remain in the limelight.
Looking at the issue from the perspective of the role of social media and the press, it is germane to opine that social media has played a significant role in fostering this culture of controversy. With the increasing demand for content and entertainment, many blogs and media outlets thrive on sensational stories. This has created an ecosystem where celebrities feel pressured to stay relevant by any means necessary.
Moreover, the rise of clickbait journalism has further worsened the situation. Many online platforms prioritize engagement over credibility, publishing stories that sensationalize controversies involving celebrities. This cycle of controversy and media exploitation fuels the perception that remaining in the public eye, regardless of the circumstances, is a sign of success.
Rather than relying on controversy, Nigerian celebrities should focus on building lasting careers rooted in talent, discipline, and strategic brand management. There are numerous examples of Nigerian entertainers who have remained relevant for decades without resorting to controversy. These individuals have consistently delivered quality work, maintained professionalism, and cultivated strong relationships within the industry.
A prime example is Kate Henshaw, an actress who has remained relevant in Nollywood not through controversy but through talent, hard work, and professionalism. Kate Henshaw has built an enviable career by focusing on her craft, making strategic career moves, and maintaining a scandal-free public image. Her ability to reinvent herself over the years and stay at the top of her game without indulging in unnecessary drama is a testament to the fact that talent and integrity are the true determinants of success.
Similarly, Nigerian comedians such as Basketmouth and Ali Baba have stayed relevant without unnecessary drama. Their ability to evolve, create meaningful content, and maintain professionalism has ensured their continued success in an industry where many have come and gone.
It is imperative to educate upcoming entertainers on the dangers of building a career on controversy. Entertainment academies, mentorship programs, and industry stakeholders must emphasize the importance of personal branding, ethics, and professionalism. Young talents should understand that while controversy may offer temporary fame, it is not a sustainable strategy for success.
Furthermore, the media has a responsibility to promote stories that celebrate talent, innovation, and hard work rather than solely focusing on controversies. By shifting the narrative, the industry can encourage celebrities to prioritize substance over scandal.
While controversy may provide short-term attention, it is not an achievement. The ignorance of some Nigerian celebrities in mistaking controversy for success is a dangerous trend that must be addressed. True success in the entertainment industry is built on talent, consistency, and professionalism. Until celebrities begin to prioritize these values over cheap publicity, the industry will continue to witness a cycle of fleeting fame and regretful downfalls.
The time has come for Nigerian celebrities to rise above controversy and embrace meaningful engagement with their audience. In the end, history remembers those who leave a legacy of impact, not those who merely trended for the wrong reasons. Kate Henshaw remains a shining example of a celebrity who has built a lasting and respectable career through dedication, talent, and integrity, proving that real success transcends the fleeting nature of controversy.