Ten31 Timestamp 824,619
Bitcoin celebrated 15 years since the mining of its genesis block this week – a period during which the permissionless, open source, distributed network has achieved 99.99% uptime – by breaking the $45,000 price level for the first time since April 2022 (a level last seen before the implosion of TerraLuna and the cascade of crypto collapses it triggered). Poetically, the US national debt also broke the $34 trillion mark this week, adding another $1 trillion in under three months and highlighting the accelerating fiscal instability that motivated bitcoin’s creation 15 years ago. This anniversary week was also marked by the filing of near-final documents for the launch of many long-awaited spot bitcoin ETFs, which could open up substantial new capital flows to bitcoin (a dynamic we expect to benefit our whole portfolio).
As the traditional finance world continues its slow but inevitable process of capitulation to the next global reserve asset, the underlying ecosystem continues to push out exciting and innovative new developments, several of which were on display this week in the form of a stable MVP release of the Fedimint open source project (which several Ten31 companies are leveraging to great effect) and a code-complete testing version of Mercury Layer, an implementation of blinded statechains that could offer an interesting scaling mechanism for bitcoin transactions. While we believe potential ETF approvals will drive tailwinds to bitcoin’s price over time, we remain most excited about innovations like these and the overall pace of permissionless development we see in the bitcoin ecosystem, a phenomenon few market participants – even many of those who are bullish on the ETF – have yet understood.
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 uses the Fedimint protocol to offer 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
Unspent capacity in Samourai Whirlpool recorded another all-time high, surpassing 10,000 bitcoin for the first time:
Mutiny and Fedi rolled out new updates incorporating the latest feature-complete version of the Fedimint open source project:
Fold added new category rewards boosts for membership clubs like gyms, golf courses, and more:
Ten31 Managing Partner Matt Odell joined the new Final Settlement podcast to discuss the power of open source ecosystems.
The US national debt eclipsed $34 trillion for the first time this week, an increase of $1 trillion in under 3 months.
While the federal government continues to borrow and spend at GDP-adjusted levels seen only during the Great Depression, World War II, and Great Financial Crisis, the veneer of a strong economy was bolstered this week with non-farm payrolls data that came in well above expectations.
Of course, many of the usual caveats apply here, as full-time workers declined by 1.5 million M/M to their lowest level in a year, while multiple jobholders hit another all-time high. It also bears mentioning that 10 of the last 11 NFP reports have subsequently been revised down.
Minutes from the latest Federal Reserve Open Market Committee confirmed the now-consensus view that rates will come down sometime this year, but committee members were mixed as to the pace of that decline.
Meanwhile, use of the Fed’s BTFP facility – which is ostensibly set to expire in ~2 months – continued to grow rapidly, and the reverse repo facility – the recent decline of which has been a likely source of increased liquidity in US markets – fell below $700 billion for the first time since early 2021.
Following on the heels of JP Morgan being named an authorized participant for BlackRock’s ETF, new reports this week indicated Goldman Sachs is also seeking a role as an AP.
Additionally, a startup founded by Citigroup alumni announced a plan to offer bitcoin depositary receipts to investors, a vehicle that wouldn’t need SEC approval. While we take no view on the probability of success for either Goldman or these new DRs, both developments offer further evidence of institutional capital’s growing demand for bitcoin exposure.
A new tax provision affecting cryptocurrency transactions came into effect to little fanfare this week. The new rules, instituted under the “Infrastructure and Jobs Act” of 2021, require additional disclosures for any transaction exceeding $10,000 in value.
A member of the Missouri House of Representatives introduced a new bill that would codify legal protections for bitcoin self-custody, transactions, mining, and more.
The Fedimint project released a stable, feature-complete MVP that lays the foundation for significant additional development.