Ten31 Timestamp 808,299

This week was full of noteworthy macro headlines, the most prominent of which was the reacceleration of officially reported US inflation metrics just a few months after many mainstream economists were running victory laps about the Fed’s supposed success in “taming inflation” without breaking anything in the economy (other than a few massive domestic and international banks). The latest numbers put the Fed in an awkward position as it heads into its next FOMC meeting this coming week, as inside-track reporters had been suggesting the central bank was planning another rate hike “pause” this month. International central banks also had their hands full this week, with China’s huge property sector still teetering on the brink and Japanese government bond yields taking another leg up to decade highs. 

Outside the realm of tenured Phillips Curve devotees, the vibrant ecosystem of bitcoin development was again on full display this week at Nashville’s Bitcoin Park, which hosted both Grassroots Bitcoin — an event dedicated to on the ground, grassroots adoption driven by dozens of meetup organizers and small businesses worldwide — and the Human Rights Foundation’s Global Bitcoin Summit, which brought together activists and entrepreneurs from around the world to collaborate on developing bitcoin technologies and solutions for emerging markets, where bitcoin’s censorship and debasement resistance are most desperately needed. As bureaucrats and economists continue to rearrange deck chairs on the Titanic with debates about the ideal pace of savings destruction, this week at the Park was the latest confirmation that the tools and community organization needed to power the next paradigm shift in money are only gaining traction. 

Portfolio Company Spotlight

Fedi is an innovative platform leveraging the Fedimint protocol to provide a custody solution that aims to support mass adoption and trust-minimized, censorship-resistant use of bitcoin by balancing privacy with usability for less technical users. Fedi's intuitive, user-friendly app offers the privacy of Chaumian eCash alongside a "federation" approach that distributes trust across a variety of parties (who will often be friends and family of end users rather than remote, inaccessible corporations) and eliminates single points of failure while providing a simple UX for users of all technical capabilities. The platform is designed to empower local communities, particularly those in emerging markets, to easily use bitcoin without deep technical understanding or reliance on unaccountable third parties. 

Selected Portfolio News

Build Asset Management partnered with Unchained to offer a new private credit fund investing in retail loans backed by bitcoin:

Fold published updates on its latest plans to diversify trading and custody partners, as well as timelines for bitcoin buying and new features:

Media

Ledger published a new Donjon security report on the Coldcard, highlighting the device’s robust security and the benefits of its multiple secure elements. 

Market Updates

August’s CPI reading came in hotter than expected at +0.6% M/M and +3.7% Y/Y, an acceleration from July and the largest monthly print of 2023. Economist EJ Antoni wrote a helpful deep dive unpacking the current inflation backdrop. 

The uptick of inflation, a reversal of the disinflation trend touted by many bureaucrats this year, comes as oil prices are just now reaching a positive Y/Y change and the UAW is initiating a strike, potentially putting renewed upward pressure on car prices. 

This week’s developments on the inflation front will present an interesting setup for the Fed later this month, as recent commentary from favored Fed journalists has pointed to another “pause” at September’s FOMC meeting. 

Indicators were mixed overseas this week, as some macro data out of China showed signs of improvement, but the PBOC announced another cut to banks’ required reserves. 

Country Garden, one of China’s largest and most distressed property developers, narrowly avoided default with creditor payments made this week, but still faces over $15 billion of maturities in the next 12 months, possibly a canary in the coal mine for the increasingly strained Chinese real estate market. 

Elsewhere, Japanese government bond yields took another sharp step up, with the 10-year surpassing 70bps for the first time in a decade. 

As of this week, China and Japan now hold less than 8% of outstanding US Treasury debt held by the public, compared to over 25% in 2007. 

Meanwhile, inflation in Egypt continued to soar this week to levels not seen in over a decade. 

Back in the US, asset manager Franklin Templeton, which directs ~$1.5 trillion in AUM, joined the spot bitcoin ETF race with its own filing.

Regulatory Update

Coin Center published a summary of their response to a new proposed regulation from the Treasury Department that seeks to broaden the (already stretched) standards for collection of KYC/AML information. 

US Democratic Congressman Stephen Lynch introduced a bill to explore a digital dollar pilot program managed by the Treasury Department. 

Noteworthy

Coinbase CEO Brian Armstrong called bitcoin the “most important asset in crypto” and confirmed the company is advancing its planned integration of lightning network capabilities. 

A variety of Binance.US executives — including the unit’s CEO, Head of Legal, and Chief Risk Officer — announced departures from the company this week, just a few months after a previous mass exodus of top executives. 

Paxos, which provides the infrastructure behind PayPal’s new stablecoin offering, inadvertently dramatically overpaid for a bitcoin transaction to the tune of a 20 BTC fee, highlighting how early enterprise bitcoin treasury management solutions are and how much whitespace exists for improvement. 

Travel

• Utah Portfolio Company Retreat, October

• Pacific Bitcoin, October 5-6

• Nostrville @ Bitcoin Park, November 8-10