Ten31 Timestamp 812,476
The deluge of “highest since 2007” headlines continued over the past couple weeks, as sovereign debt yields around the world continued to spike to alarming levels. Most notably, the US 10-year breached 4.8% in an upward impulse that ranked as the fastest move since the current rate hiking cycle began, before finally retracing some of this move in the last few days. The ongoing selloff in the bond complex has prompted a variety of stories in the mainstream press about the precarious position of US public debt and interest payments, a stark reminder that deficits don’t matter until suddenly they do.
While the foundational assumptions of the world’s reserve asset were being thrown further into question, the Ten31 team spent the week at our annual portfolio retreat in Utah with nearly 40 portfolio company representatives diving deep on topics ranging from AI and the lightning network to banking, custody, and mining. This year’s event was even more successful than last year’s inaugural retreat and has already led to many synergistic relationships and new opportunities for intra-portfolio collaboration within and across all major verticals of the bitcoin and freedom tech ecosystems. We see the retreat as just the latest example of the power of open networks, where innovations by one company can easily cross-pollinate to benefit a whole portfolio in a way that simply isn’t possible in most legacy investment platforms.
Portfolio Company Spotlight
Coinkite develops and manufactures consumer tools for interacting with bitcoin, including the Coldcard – a highly secure hardware signing device that sets the standard for private key custody – physical bearer instruments (Opendime and Satscard), an NFC-enabled card for signing transactions (Tapsigner), the upcoming Q hardware wallet and Satslink device, and much more. The company’s product portfolio balances security with usability and includes some of the most widely used products in the bitcoin ecosystem among both consumers and institutions.
Selected Portfolio News
Strike announced Strike Private, a premium offering for high net worth individuals and institutions:
Coinkite announced the release of the latest Coldcard firmware, which enables a variety of exciting new features including multi-seed storage and PSBTv2:
River enabled target price levels for automated trade orders:
River released an extensive new edition of its survey of the lightning network, which points to substantial growth and innovation in the lightning ecosystem over the past year.
Fedi Co-Founder and CEO Obi Nwosu appeared on Guy Swann’s AI Unchained podcast to discuss the relationship between Chaumian e-cash, AI, and the decentralized web.
Bitcoin Magazine profiled the Satslink, Coinkite’s upcoming device focused on flexibility for developers interested in a variety of use cases.
Yields everywhere continued skyrocketing over the past two weeks, with the 10-year Treasury breaking 4.8% for the first time since 2007 before retracing a bit in the last several days. The 10-year is now up ~60bps since just the start of September.
Long-duration US government bonds – ostensibly the world’s bedrock reserve asset – have now experienced worse peak-to-trough losses than than the S&P500 saw during the Great Financial Crisis.
Total US debt, increasingly the focus of many investors and market observers, gapped up $275 billion (about 40% of the once-unthinkable $700 billion total for TARP) in a single day, while the US posted its third-largest annual deficit on record for fiscal 2023.
CPI data for September came in above expectations this week, rising 0.4% M/M and 3.7% Y/Y. The good news is that inflation has actually already been defeated if you exclude all the things you actually need to live.
Meanwhile, the UAW unexpectedly and significantly expanded its strike to a new facility with nearly 9,000 employees, increasing the already large strike’s potential for ongoing inflationary pressure.
Use of the Fed’s BTFP facility – which allows banks with distressed US government bond holdings to borrow against them at par – reached another new record this week (after hovering near all-time highs since the start of the summer).
Totally coincidentally, American Banker magazine ran an op-ed this week arguing for a “TARP 2.0” program to help absorb banks’ $500 billion+ in trapped assets.
Famed investor Paul Tudor Jones – who has previously advocated for bitcoin’s role in portfolio construction – said he “loves bitcoin” as an approach for dealing with the US’s increasingly “untenable fiscal position.”
Markets overseas saw pockets of continued volatility. The Bank of Japan announced another round of unscheduled bond buying as its 10-year government bond yield approached 0.8%. Shortly after, the BOJ appeared to step in to defend the rapidly weakening yen.
After months of delayed payments and attempts at credit restructuring, embattled Chinese property development giant Country Garden announced it expected to default on a variety of offshore debt obligations.
Argentina’s central bank hiked its benchmark interest rate to an eye-watering 133% (from the previous level of 118%) as reported price inflation reached 138%.
The SEC said it would not appeal a court’s recent reversal of its attempt to deny ETF conversion for GBTC, increasing the likelihood for successful conversion of the trust.
Bitcoin developers Robin Linus and SuperTestnet published a proposal for BitVM, a new computing paradigm that aims to allow for Turing-complete smart contracts verified by the bitcoin network.
Fidelity Digital Assets published Bitcoin First Revisited, an updated iteration of their January 2022 deep dive on bitcoin’s differentiation from all other digital assets.
Stablecoin issuer Tether froze 32 addresses allegedly associated with terrorism and militant groups in Israel and Ukraine, highlighting the inherent censorship risk of centrally issued digital currencies.
The President of Madeira announced the creation of a “bitcoin business hub” to support innovation and bitcoin development in the region.