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Today’s Menu

• Musk Creates Highest-Valued Private Company With xAI Merger

• What Actually Caused Saturday's Crypto Crash

Markets

TODAY IN AI

Musk Creates Highest-Valued Private Company With xAI Merger

Elon Musk just announced the merger of his AI startup xAI with SpaceX, forming what's now the highest-valued private company on the planet at a reported one point two five trillion dollars, combining his rockets, Grok, and the X platform all under one entity.

xAI will operate as a division within SpaceX, with Musk pitching a vision of launching AI data centers into orbit to overcome Earth's energy constraints. The merger comes ahead of an anticipated SpaceX IPO later this year, expected to push the company's valuation to one point two five trillion dollars.

Musk estimated that space-based AI compute will be cheaper than traditional data centers within two to three years, powered by near-constant solar energy. He also said space-based data centers will "enable self-growing bases on the Moon, an entire civilization on Mars, and expansion to the Universe."

When you merge your AI company with your rocket company to build orbital data centers, that's not just vertical integration. That's treating Earth's energy constraints as a solved problem by literally leaving the planet.

TODAY IN CRYPTO

What Actually Caused Saturday's Crypto Crash

Between nine and ten a.m. Eastern Time on Saturday morning, around seventy billion dollars in market value vanished from crypto. If you're in the dark on what happened and what you need to look out for this week, here's a breakdown.

The sell-off was the result of more bad news hitting a market already on the edge. Think of it like a Jenga tower that's been wobbling for weeks. Someone finally pulled the wrong block.

BTC had already dropped from recent highs to around eighty-four thousand dollars by January thirtieth. Liquidity was paper-thin, meaning there was lower trading volume, making it easier for large orders to move prices significantly, because it was a Saturday.

Take that, and add: A partial U.S. government shutdown kicking in. Trump nominating Kevin Warsh to replace Powell at the Fed. Warsh doesn't like the idea of turning on the money printer, and money printing floats risk assets. Explosions at Iran's Bandar Abbas port, with Trump warning about potential military action.

As a result, risk-off mode was activated. BTC broke below eighty-one thousand dollars, triggering a wall of liquidations. One point six eight billion dollars plus in positions got wiped, mostly longs, causing forced selling. This forced selling triggered more forced selling, and so on, with the crash essentially feeding itself.

When seventy billion dollars vanishes in one hour on a Saturday with thin liquidity, that's not just volatility. That's a cascade failure waiting for the wrong trigger.

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Thanks for reading!

Until next time,

Damon James