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Today’s Menu

• Disney leads Hollywood coalition in landmark Midjourney copyright lawsuit

• Crypto markets face cross-currents from inflation relief and geopolitical tensions

Markets

TODAY IN AI

Disney leads Hollywood coalition in landmark Midjourney copyright lawsuit

Hollywood's entertainment giants have launched their first major coordinated legal offensive against AI companies, with Disney, Universal, Marvel, Lucasfilm, and others filing a comprehensive lawsuit against Midjourney over alleged massive copyright infringement. The action represents a decisive escalation in the conflict between traditional media and AI companies over unauthorized use of intellectual property.

The lawsuit alleges that Midjourney built its image generation models by systematically scraping the studios' iconic characters, enabling users to create unlimited unauthorized reproductions of beloved properties. The complaint includes dozens of side-by-side comparisons demonstrating how users can generate images virtually indistinguishable from characters like Yoda, Shrek, Spider-Man, and Minions.

Disney's legal counsel struck a defiant tone, stating that while the company remains "bullish on the promise of AI," they maintain that "piracy is piracy." This position reflects a fundamental disagreement over whether AI training on copyrighted content constitutes fair use or theft.

The timing is strategically significant. While major media outlets have negotiated lucrative AI licensing deals for their textual content, Hollywood studios are choosing confrontation over collaboration when it comes to visual intellectual property. This suggests studios view their character portfolios as too valuable to license at market rates AI companies are willing to pay.

The case could establish crucial legal precedents affecting not just Midjourney but the entire AI industry's approach to training data. If courts rule that character generation constitutes copyright infringement, AI companies may need to fundamentally restructure their training methodologies or face massive licensing costs.

For AI development, this lawsuit represents a potential inflection point where the industry's "move fast and ask forgiveness later" approach to copyrighted content meets organized resistance from entities with both significant legal resources and strong financial incentives to protect their intellectual property.

TODAY IN CRYPTO

Crypto markets face cross-currents from inflation relief and geopolitical tensions

Bitcoin and broader cryptocurrency markets are navigating complex cross-currents as weaker inflation data boosts rate cut expectations while escalating Middle East tensions drive flight-to-safety behavior. These competing forces are creating near-term volatility while potentially setting up longer-term bullish conditions.

Consumer prices rose less than forecast last month, increasing expectations for Federal Reserve rate cuts beginning in September. With core inflation stable at 2.8%, traders now largely anticipate two rate reductions this year according to CME's FedWatch tool. Lower interest rates typically benefit risk assets including cryptocurrencies by reducing the opportunity cost of holding non-yielding assets.

However, geopolitical tensions are creating immediate headwinds. The U.S. is evacuating personnel from the Middle East amid heightened security risks and reports that Israel is considering military action against Iran. The International Atomic Energy Agency ruled that Iran breached its non-proliferation duties for the first time in two decades, escalating international concerns.

These tensions are driving traditional safe-haven flows, with investors favoring gold and the Swiss franc over the dollar while reducing exposure to risk assets. Bitcoin has declined 1.7% in the past 24 hours, with the broader CoinDesk 20 Index retreating 2.25%.

Despite near-term volatility, structural factors remain supportive. Boris Alergant of Babylon notes that "more institutions are emulating MicroStrategy's BTC treasury strategy, creating a steady base of structural demand." Additionally, the SEC's newfound openness to altcoin ETFs and DeFi protocols is generating optimism about regulatory clarity.

CoinShares' James Butterfill highlighted $900 million in new digital asset fund inflows this week, suggesting investor confidence is rebounding despite short-term uncertainty. As he observed: "This resurgence comes as bitcoin trades near all-time highs and global money supply conditions loosen, suggesting there could be further upside potential."

Strategic outlook: The current environment presents a classic risk management scenario where tame inflation supports long-term crypto prospects while geopolitical uncertainty creates near-term volatility. Investors with strong conviction in crypto's structural adoption story may view geopolitical dips as accumulation opportunities, while those focused on shorter timeframes must navigate the tension between monetary policy tailwinds and safe-haven outflows.

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Thanks for reading!

Until next time,

Damon James