Ten31 Timestamp 837,023
The US stock market continued to advance to new all-time highs this week on a relative lack of meaningful macro updates, though the latest PCE data – released on Good Friday when markets were closed – pointed to some additional signs of relatively sticky price inflation. Fed Chairman Jerome Powell responded to the data on Friday by suggesting the central bank is in no hurry to loosen monetary policy, just one week after delighting traders everywhere with comments indicating the Fed is still on track to cut rates three times this year. Powell also noted that the economy doesn’t appear to be suffering from current rate levels, even as the Chicago PMI declined to troughs not seen since spring 2020, the often-cited Sahm Rule has now been triggered in 20 states, and federal deficits continue to run at levels only previously exhibited during recessions. Against that backdrop, bitcoin held in around the $70,000 level throughout the week – just above its all-time high from the 2021 cycle – as ETF inflows flipped back to positive following last week’s spike in GBTC outflows.
Portfolio Company Spotlight
Fedi is building a suite of tools 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, transaction velocity, and 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-backed eCash for daily payments without deep technical understanding or reliance on unaccountable third parties.
Selected Portfolio News
Strike revamped its limits system for better clarity around user balances and withdrawal availability:
Unchained released its new iOS app for all users:
Fedi launched Fedi Bravo, the first version of the project that allows users to interact with actual funds and a variety of Fedi modules:
The FREE Madeira group also launched the first public Fedi-based federation operating on bitcoin mainnet:
Media
Strike Founder and CEO Jack Mallers appeared on Bloomberg TV to discuss expectations for the upcoming block subsidy halving and the latest developments at Strike.
Giga Energy Co-Founders Matt Lohstroh and Brent Whitehead were featured in a CNBC piece on the company’s expansion into Argentina.
Fold Founder and CEO Will Reeves joined the Bitcoin Frontier podcast to discuss the future of bitcoin scaling and his long-term vision for Fold.
AnchorWatch Co-Founder Rob Hamilton and Mutiny Co-Founder Ben Carman appeared on the Bitcoin Review podcast to discuss the latest technical developments across the bitcoin and nostr ecosystems.
Ten31 Principal John Arnold joined Anthony Pompliano’s podcast to discuss his recent essay Bitcoin Is Eating the World.
StatMuse published its latest monthly Muse Letter.
Market Updates
Equity indices made more new all-time highs this shortened trading week, though data released on Friday pointed to more signs of sticky inflation, as core PCE – the Federal Reserve’s preferred inflation gauge – rose 2.8% Y/Y in February, its slowest growth since March 2021.
The gain was in line with expectations, but the metric climbed 3.5% on a three month annualized basis, and monthly consumer spending growth came in well ahead of consensus. At the same time, prior PCE data for December and January were revised higher.
As part of his ongoing master class in clear communication, Fed Chairman Jerome Powell responded to the data by saying the central bank doesn’t need to hurry to cut rates, just one week after assuring investors that the Fed is on track for three cuts and looser monetary policy this year.
While the Fed waffles on its appetite for near-term easing and inflation looks progressively more entrenched, US Treasury issuance has now returned to hockey-stick levels not seen since the onset of 2020’s lockdowns, with bills’ share of issuance approaching levels commonly seen during recessions.
Elsewhere, existing home sales rose in February, good for the first two-month streak in two years, and median prices were up nearly 6%. However, the median price of new homes has continued to decline precipitously, with the peak-to-trough drop now almost in line with the 2009 housing bust.
Meanwhile, the Chicago PMI macro barometer came in at 41.4 for March, down again from last month’s reading of 44. The print was well below consensus and marks the fourth consecutive monthly decline for the metric.
S&P downgraded the credit outlooks for five regional US banks to Negative due to growing concern about those banks’ commercial real estate exposure. The same day, the Bank of England expressed concern about the growing threat global commercial real estate lending poses to banking stability.
After several consecutive days of substantial outflows driven by more GBTC selling, spot bitcoin ETF flows stabilized this week, pulling in nearly $850 million in a holiday-shortened week.
Overseas ETF markets saw positive headlines on the week, as Bloomberg’s ETF team reported Hong Kong regulators appear likely to allow in-kind creations for local spot bitcoin ETFs. Meanwhile, the London Stock Exchange announced it would start a marketplace for bitcoin Exchange Traded Notes (ETNs).
Regulatory Update
SWIFT, the primary international messaging infrastructure for interbank payments, announced it is developing a platform to accommodate the expected proliferation of global Central Bank Digital Currencies over the next 1-2 years.
Prominent US “crypto” exchange Coinbase lost most of its motion to dismiss a case brought against it by the SEC last year. The judge in the proceedings ruled that the regulator has a plausible case that Coinbase is operating as an unregistered intermediary for securities.
Noteworthy
Prolific bitcoin and lightning developer Super Testnet released an early design for “Hedgehog,” a new protocol that purports to allow for asynchronous channel-based payments, potentially ameliorating the offline receive hurdles associated with lightning’s current design.
A new critical vulnerability was discovered in a library used by a wide variety of Linux-based software.
As part of his late-career pivot toward repeating Ron Paul talking points from 2012, BlackRock CEO Larry Fink called out the increasingly unsustainable path of the underfunded public retirement systems in most developed countries.
Travel
Austin BitDevs, April 18
Bitcoin Asia Conference, May 9-10
Bitcoin 2024, July 25-27