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Today’s Menu

• Baidu Slashes AI Costs, Setting Stage for Global Price War

• Bitcoin Holds $84K as Market Eyes Fed Decision and Tariff Uncertainty

Markets

TODAY IN AI

Baidu Slashes AI Costs, Setting Stage for Global Price War

Chinese tech giant Baidu just unveiled two new multimodal AI models—ERNIE 4.5 and ERNIE X1—positioning itself as a leader in ultra-cheap AI intelligence. ERNIE 4.5 delivers improved logical reasoning, hallucination prevention, and coding capabilities, while ERNIE X1 introduces deep-thinking capabilities that rival top competitors.

What’s truly disruptive is the pricing. ERNIE 4.5 reportedly outperforms OpenAI’s GPT-4o in multiple benchmarks while costing just 1% of its price—$0.55 per million input tokens compared to OpenAI’s $55. Meanwhile, ERNIE X1 matches DeepSeek’s R1 in reasoning ability at half the cost.

China is making AI "too cheap to meter," and the consequences could be massive. With models priced at a fraction of Western alternatives, Baidu is accelerating what could become a full-scale AI price war. If OpenAI, Google, and Anthropic don’t adjust, they may find themselves under immense pressure to cut costs, ultimately forcing advanced AI into mass affordability worldwide.

^{Today In Crypto}

Bitcoin Holds $84K as Market Eyes Fed Decision and Tariff Uncertainty

Bitcoin has stabilized around $84,000 after last week’s dip below $77,000, with memecoins, layer-2 tokens, and gaming assets leading the broader market recovery. However, the rally remains fragile as President Trump’s administration appears more tolerant of market instability than investors initially expected.

Two months into his presidency, traders had hoped that economic turbulence caused by tariffs would be met with immediate policy support. Instead, Treasury Secretary Scott Bessent signaled that corrections are "healthy and normal," hinting that the long-awaited “Trump put” may not materialize anytime soon.

Adding to uncertainty, Bessent did not rule out a possible U.S. recession in a Sunday interview—a stark shift from typical government messaging. This suggests Trump may remain committed to his aggressive tariff strategy, keeping risk assets, including crypto, on edge.

Markets will be closely watching Wednesday’s Federal Reserve meeting, where Chair Jerome Powell is expected to maintain a cautious stance, assessing Trump’s policies before making any decisions on rate cuts. Meanwhile, sentiment on Main Street is deteriorating, with a record number of U.S. consumers expecting economic conditions to worsen.

Despite these macroeconomic risks, key developments in the crypto space continue:

• Aave’s decentralized governance has rejected a new token proposal for its Horizon initiative.

• Trump is reportedly in talks with Vladimir Putin regarding the Ukraine war.

• FalconX and StoneX executed the first-ever block trade in CME’s Solana (SOL) futures.

The market remains volatile, and all eyes are now on the Fed’s next move.

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Thanks for reading!

Until next time,

Damon James