Schrödinger's Regime Change: Ten31 Timestamp 943,627
A superposition of hot takes
We’re at the point in the cycle where everything is basically one trade – oil NGU or nah? – and yet most of the headlines related to that trade are borderline useless for decisionmaking, if not outright propaganda. Both Panicans and Plan Trusters are firmly convinced they see the full chessboard, with the menu of interpretive heuristics effectively reduced to either 1) a uniquely incompetent deep state apparatus totally blindsided that *checks notes* oil prices went up due to a war in the Middle East or 2) a White House occupied by a reincarnation of Sun Tzu. For our part, the predominant tenor of headlines in the mainstream press continues to suggest that view #1 is trading too rich, but we would mostly recommend readers keep their eye on the balls they can see most clearly and with the least obfuscatory smoke, including that Fed Chairman Jerome Powell felt it appropriate to signal that the central bank will likely “look through” the current oil supply shock when making decisions on rates, a view he was definitively not ready to take during last year’s tariff tantrum. Meanwhile, every week brings new and more challenging headlines for themes including the US private credit complex (with or without an extended oil shock); the unipolar rules-based order of the past 40 years that assumed frictionless global arbitrage, capital mobility, and open consumer goods markets; and cheap, widely available commodities and critical material inputs. Whether there is a Plan to be Trusted or not, all of these highly visible and inarguable sea changes will have sustained impacts on how nations build and protect their capital stocks and national savings going forward, and we continue to think this has underappreciated implications for globally liquid, scarce reserve assets.
Selected Portfolio News
Strike launched business loans in California and Vermont:
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Media
Ten31 Managing Partner Marty Bent appeared on the Blockspace podcast and RoxomTV.
Battery Finance CIO Thierry Adant appeared on the Real Estate Standard show to discuss the growing intersection between bitcoin and real estate.
Market Updates
It’s becoming nearly pointless to track and tabulate all the headlines in the latest chapter of the multi-millennial saga of Middle Eastern chaos, but for what it’s worth, the Trump administration directly or indirectly informed the public this week that:
Regime change has already happened in Iran and a deal is coming soon
But if a deal doesn’t come soon, we will totally obliterate the country’s oil infrastructure
But Iran’s President is a sensible fella and has asked for a ceasefire
But the US will only grant that ceasefire if the Strait of Hormuz is opened up
But we might also just leave the Gulf without reopening the Strait
Though we’re also considering just taking the oil, which would be a “GUSHER FOR THE WORLD???”
But either way, no ground troops will be needed
But also the Pentagon is ready for weeks of ground operations in the region
Whatever you make of all that, the speaker of Iran’s parliament took to Twitter again this week to tell everyone to fade any positive market moves driven by Trump’s statements, suggesting the speaker has a promising backup career as a Substack analyst if the whole theocratic dictatorship thing doesn’t work out.
While the President’s intentions in the region remain (perhaps intentionally) obscure, some reports this week at least pointed to a loosening of flows through the Strait of Hormuz, as roughly 4 million barrels of oil exited the waterway on Thursday, the largest outflow since the start of the conflict. At the same time, a French-owned container ship crossed the Strait, marking the first explicitly Western crossing since February.
Meanwhile, Saudi Arabia’s East-West pipeline that feeds shipping routes in the Red Sea ramped up to its maximum capacity of 7 million barrels per day (vs just 1-2 million a few weeks ago), partially offsetting some of the lost Hormuz volume.
However, Yemen’s Houthis (the source of the early 2025 attacks in the Red Sea that led to Signalgate) appeared to enter the conflict for the first time at Iran’s encouragement, potentially posing issues for this alternate supply route. Everyone’s favorite Iranian shitposter popped back up to insinuate that this region is just as vulnerable as Hormuz.
Underneath all the headlines and vacillating bluster from the White House, one theme that seemed increasingly clear was the administration’s narrative framing of the “free rider” security problem that Trump adviser and Fed appointee Stephen Miran has repeatedly pointed out, as the President suggested that Gulf countries should be the ones to take charge of (and pay for) security in the area, while telling Europeans that they should just “go get their own” resources out of the Gulf rather than assuming the US will keep shipping lanes open for them.
Notably, in comments echoing his aggressive Davos speech from earlier this year which heralded an end to the “rules-based order,” Trump also explicitly suggested he’s considering withdrawing the US from NATO due to Europe’s alleged (and, to be fair, kind of observable) refusal to support US activities in the Gulf.
The President made this case even more directly in a speech on Wednesday night, wherein he outlined that the options for nations depending on the Strait are to deal with the problem independently, buy oil and gas from the US, or just wait for the Strait to “open naturally.”
Oil prices saw some relief for part of the week, but these comments sent key benchmarks ripping once again, with both WTI and Brent closing the week above $110 / barrel. Some headlines suggested the very wide Brent / WTI premium we flagged a few weeks ago actually flipped to a discount (i.e. WTI rose above Brent) for the first time in years, though it looks like the large premium is still intact on an apples-to-apples basis.
As it relates to the relative impacts of this ongoing disruption – a core theme we’ve focused on in the past few weeks – the helium market continues to experience severe shortages, which has serious implications for semiconductor production and may give the US (the world’s largest helium producer) incremental leverage in the fight over chip infrastructure.
Elsewhere, Qatar Energy announced it will be ramping up LNG production…in Texas. When fully operational, its new Golden Pass facility – part of a JV with Exxon – will produce 18 million metric tons of LNG annually, surpassing the ~12.8 million in capacity recently knocked offline in the Gulf and adding to the US’s position as world’s largest LNG exporter.
That said, China is also benefiting on the LNG side for now, as local firms are capitalizing on spiking Asia prices by reselling gas in record volumes.
On the rare earths front, a US firm completed a long-delayed purchase of one of the last few major cobalt miners not under Chinese control while inking a $565 million deal for Brazilian rare earths that had previously been earmarked for China (though crucially, it remains unclear how to do the hard part of actually refining these raw materials in US-aligned jurisdictions).
North of the border, the Alberta independence movement reached the threshold of petition signatures needed to force a referendum vote in October. If successful, the vote would put the future of Canada’s main oil-producing province – including a large constituency of pro-Trump Canadians – in question.
Across the Pacific, despite this month’s massive energy market dislocations, China factory activity returned to growth in March, with PMIs inching into positive territory after a decline in February (though input costs also surged at the fastest pace since 2022). Notably, the government has reportedly instructed local oil refiners to maintain fuel production at all costs, even if losses are required.
Despite the increasingly strained special relationship between the US and Europe, EU officials are considering a “Western steel alliance” to ringfence the G7 steel industry from Chinese “overcapacity.”
Stateside, the March US PMI reading came in at 52.7, higher than expected and up M/M, good for the third consecutive month in expansion territory after several years of unbroken contractionary readings.
After a rough February readout, Non-Farm Payrolls data for March were well above consensus at +178,000, with January’s figures also revised higher (notably, the entirety of the gain was driven by private payrolls).
On the flipside of those more positive data points, the private credit complex continued to post concerning headlines, as Blue Owl reported a huge spike in redemption requests at several funds, including 22% of its flagship $36 billion fund and nearly half of its smaller tech-focused fund.
A Wall Street Journal analysis suggested the asset class’s exposure to the embattled software industry is larger than appreciated, while ratings agency Fitch reported a 14-year high in the proportion of private credit interest electing non-cash PIK (Payment in Kind) treatment.
After much recent investor consternation regarding how the Federal Reserve might respond to the oil shock out of the Middle East, Fed Chairman Jerome Powell said this week that the central bank would not look to hike rates just because of the energy price spike (though Powell appears to have wisely excised the word “transitory” from his vocabulary).
Fed Governor and Certified Low Rates Enjoyer Stephen Miran, meanwhile, said he thinks benchmark rates can still go a full point lower from here.
Amid the biggest upheaval in the global order in at least 50 years, the consensus safe haven asset of US Treasuries saw official international holdings shrink to their lowest level since 2012 (though it should be noted that a lot of that gap has been backfilled by semi-private organizations linked to sovereign buyers).
Though basically flat for the past month, the end of March saw bitcoin officially close out its worst quarter since Q1 2018.
But regardless of muted sentiment, Square officially auto-enabled bitcoin payments at its 4 million merchant terminals around the country, and the first bitcoin-backed municipal bond cleared a notable hurdle by achieving a rating from Moody’s.
And for what it’s worth, Goldman Sachs published a report suggesting bitcoin may have already reached its cyclical bottom.
Regulatory Update
President Trump made his most direct statement on bitcoin in close to a year, telling a room of investors and policymakers that “bitcoin is very powerful” and reiterating that the US will be the “crypto and bitcoin superpower of the world.”
In response to an Executive Order from August, the Department of Labor published a proposed set of rules for 401(k) administrators to open up access to bitcoin and other digital assets.
Senators Cynthia Lummis and Bill Cassidy introduced a bill that would create a “voluntary certification program” for US bitcoin miners to transition away from mining equipment produced by “foreign adversaries,” though it’s unclear how realistic this would be in the near-term given the vast majority of ASICs are still produced by the Chinese Bitmain / MicroBT duopoly.
Notably, the bill would also codify President Trump’s Strategic Bitcoin Reserve into law under the administration of the Treasury Department.
Noteworthy
The quantum computing hornet’s nest was kicked once again this week, as two new papers – one by Google Quantum and one by Caltech and startup Oratomic – claimed significant theoretical efficiency gains in running Shor’s algorithm, which could allow a hypothetical future quantum computer to crack private keys more quickly and with lower computational resources.
Many bits have been flipped on this issue, but for anyone new to the story, we recommend checking out the overview we wrote last year, as well as:
Some reviews of the material engineering and physical scaling constraints confronting the development of a functioning, cryptographically relevant quantum computer
A detailed summary of ongoing quantum mitigation measures in development by different elements of the bitcoin development community
A helpful overview from Bitcoin Optech regarding progress on quantum research in 2025
A new proposal – released just this week – from cryptography researcher Jonas Nick for quantum-resistant signatures that could be much more compact than prior proposals
Another new proposal for leveraging isogeny cryptography for even smaller post-quantum signatures
An accessible summary of the situation and potential paths forward – some of which would not require a near-term soft fork – from longtime bitcoin developer Matt Corallo
The Bitcoin Policy Institute published a paper outlining the case for Taiwan to allocate a portion of its $600 billion sovereign wealth fund to bitcoin.
Drift, a Solana “DeFi” platform, was hacked for over $200 million, the latest entry in a long string of DeFi security incidents.
Travel
OPNext, New York, April 16
Bitcoin 2026, Las Vegas, April 27-29