Ten31 Timestamp 850,939
While a handful of megacap tech stocks continued to barrel to new all-time highs this week, both broader macro data and bitcoin took a turn for the worse. The latest jobs numbers showed – in addition to the clockwork downward revisions of prior months’ estimates – an unemployment rate of 4.1%, which was a) above expectations, b) higher than the Fed’s previous projection for year-end unemployment, and c) high enough to trigger the Sahm Rule, a popular heuristic for impending recessions. As the cliche goes, history doesn’t repeat, but it often rhymes, and the last few months have increasingly sounded quite a bit like spring 2000. The beauty of bitcoin is that holders don’t have to have a strong opinion on the durability of late-stage equity melt-ups, and even with bitcoin looking much like the Feeble 493 this week, we anchor to a few fundamental indicators that continue to suggest bitcoin’s underlying health is only improving – for example, the percentage of UTXOs that haven’t moved in over a year (>65%) is largely unchanged relative to one year ago despite a 150% run to new all-time highs over that period (with typical downside volatility mixed in along the way). Meanwhile, the number of known nodes on the network continues to move up and to the right, and network hashrate remains more than 50% above year-ago levels even after a recent pullback. These fundamentals and the ongoing progress we see among our portfolio companies suggest bitcoin will be a progressively more popular release valve as capital allocators eventually look to rotate out of a concentrated basket of historically crowded, overextended tech names.
Portfolio Company Spotlight
Satoshi Energy provides market-leading services and analytics for behind-the-meter data center development projects bringing together bitcoin mining operators and power producers. The company offers plug and play power contracts and project monitoring services, as well as cutting edge tools for sites to manage credit exposure and real-time settlement of invoices. With a large pipeline of projects under development and a growing suite of products and services, Satoshi Energy is pioneering the accelerating convergence of power production and bitcoin mining.
Selected Portfolio News
Strike launched a no-fee option for recurring DCA orders:
Media
IBEX CEO Jose Lemus appeared on the Build with Bitcoin podcast to discuss bitcoin’s long-term role in cross-border transactions and real-time settlement.
Fold published an updated summary of its latest options for using the platform to pay bills, including a preview of in-app bill pay options to come.
Cathedra Bitcoin published its 2024 letter to shareholders.
Pseudonymous bitcoin network research specialist Orange Surf from the Mempool.space team joined the Stephan Livera podcast to discuss his recent deep dive report on empty blocks.
Unchained’s Tom Honzik published a piece delving into the technical details underpinning a bitcoin wallet.
Market Updates
The latest nonfarm payrolls data for June came in roughly in line with expectations, though down M/M from May, which was itself revised sharply lower (along with April’s number, continuing a trend that has played out consistently for the past ~18 months).
Once again, job gains were driven primarily by the government and healthcare sectors, and full-time employment remained largely stagnant.
The headline unemployment rate unexpectedly ticked higher to 4.1%, triggering the Sahm Rule, a popular leading indicator for recessions.
Consistent with this update, the latest ISM manufacturing index reading for June was down again M/M, extending the metric’s longest streak of sub-50 readings (i.e. readings indicating contraction) in over 20 years.
Despite the ongoing streak of stagnating macro indicators, Federal Reserve Chairman Jerome Powell made public comments suggesting the central bank still needs to develop “more confidence” on inflation to loosen monetary policy.
Meanwhile, the Secured Overnight Financing Rate (SOFR), a key benchmark for interbank overnight lending, spiked well outside its recent range to its highest level since late last year, potentially pointing to a tighter liquidity backdrop (though likely partially attributable to quarter-end dynamics).
For now, US stock indices ignored any underlying signs of stress and continued their recent melt-up, with the S&P500 reaching yet another all-time high to close out Friday. That said, breadth continues to decline as the “Magnificent Seven” are now responsible for over half of the index’s gains this year.
The Japanese Yen, a key currency to watch given the size of the Bank of Japan’s US Treasury holdings, continued pushing lower this week but stabilized around the 161 level, a ~40 year low.
Regulatory Update
Louisiana’s governor signed into law a bill that explicitly protects individual self-custody and bitcoin mining, among other provisions.
Noteworthy
The German government – which holds ~50,000 bitcoin from historical asset seizures – has sold several thousand bitcoin totaling close to $400 million over the past two weeks, adding to recent sell pressure on bitcoin and compounding market consternation related to the potential near-term impact of Mt Gox creditor distributions.
OpenSats announced its fifth wave of bitcoin grants, including support for several projects related to lightning, fedimint, BDK, and more.
New reporting this week suggested that the identity verification software provider used by Twitter, TikTok, Coinbase, and many more services left sensitive user data exposed to the internet for more than a year. The news marks roughly the thousandth example of the inherent vulnerability of centralized personal information repositories that we’ve highlighted in the Timestamp in the past year.
Travel
Ten31 Tribe Event @ Bitcoin Park, July 24
Bitcoin 2024, July 25-27
BitcoinMENA, Dec 9-10