Ten31 Timestamp 860,335
It was a rough week for markets, as virtually every incremental data point that hit the wire pointed to macro deterioration on production, employment, and overall economic activity. The slow drip of negative news – which included the U-6 unemployment rate reaching its highest ex-COVID level since spring 2018 – dragged the S&P500 to its worst week in almost two years, prompting one Federal Reserve official to suggest openness to more than the 25bps of rate cuts the market is currently projecting for the central bank’s September meeting. As has been the case with the last few broad market selloffs, bitcoin was not immune to overall market pressure and spent the week chopping in the mid-$50,000 range. However, network hashrate continued pushing aggressively to new all-time highs this week even despite all-time low hashprice and months of low transaction fees (a significant pain point for pure-play prop miners but a boon for “picks and shovel” players providing infrastructure for the mining industry globally). The bitcoin network is now only a ~30% increase away from surpassing a zettahash of total hashrate, an indication that market and state actors around the world are only becoming more confident about bitcoin’s long-term staying power despite the noise of near-term macro gyrations.
Portfolio Company Spotlight
Debifi is a non-custodial lending platform providing institutional-grade liquidity for P2P loans collateralized by bitcoin. The company, founded by Hodl Hodl CEO Max Keidun, offers robust, secure multisig vaults that ensure bitcoin collateral cannot be rehypothecated, solving one of the key problems plaguing most “DeFi” projects. Debifi extends the proven security of Hodl Hodl’s lending model to the institutional sphere and made a variety of exciting roadmap announcements at last month’s Baltic Honeybadger Conference.
Selected Portfolio News
Strike launched support for BOLT 12 Offers, which allow for protocol-native reusable QR codes, improved security, and advanced functionality:
Media
Fold Founder and CEO Will Reeves joined Ten31 Managing Partner Marty Bent on the TFTC podcast to discuss Fold’s journey from inception to pursuing a public listing.
Primal Founder and CEO Miljan Braticevic gave a presentation at the Nostriga conference in August delving into the ways Nostr can enhance bitcoin applications.
Debifi and Hodl Hodl Founder Max Keidun appeared on The Investor’s Podcast to dig into bitcoin’s emerging role as superior global collateral.
River published a new report on the proliferation of business adoption of bitcoin over the past several years.
Founders of AnchorWatch and Start9 were featured on panels at the Bitcoin 2024 Conference in Nashville.
Market Updates
It was a busy week for macro headlines, with virtually all updates coming in worse than expected. Most notably, the latest nonfarm payrolls jobs report showed hiring up by 142,000 in August, better than last month but below consensus estimates. Once again, all net gains were driven by growth in part-time work.
The standard U-3 unemployment rate ticked down slightly M/M, but the broader U-6 rate (which includes underemployed and marginally attached workers) moved up to 7.9%, its highest reading since fall 2021 (and highest since spring 2018 excluding the COVID period).
Meanwhile, JOLTS data on job openings for last month were down M/M and well below expectations, pointing to softer labor demand.
The latest ISM Manufacturing PMI metric for August rose slightly M/M to 47.2 but remained in contraction territory for the fifth straight month, while new orders and production declined significantly from July.
Similarly, the Federal Reserve’s latest Beige Book survey generally pointed to flat to declining economic activity in most regions, while job seekers indicated finding employment is becoming more challenging.
Equity indices sold off throughout the week on the stream of negative data, with the S&P500 ending down nearly 5% vs last Friday’s close, the index’s worst week since the collapse of Silicon Valley Bank in spring 2023.
The tough week tagged several of the “Magnificent 7” large cap growth stocks, particularly AI bellwether Nvidia, which dropped ~$400 billion or approximately one Costco on the week.
Following the litany of bearish updates, Fed Governor Christopher Waller indicated on Friday that he would be open to a substantial rate cut at the next FOMC meeting in mid-September.
Despite choppy price action, bitcoin network hashrate has continued to push persistently to new all-time highs, surpassing 740 EH/s this week and pushing hashprice to all-time lows.
Regulatory Update
Following his arrest and indictment in August, Telegram founder Pavel Durov publicly announced the platform will soon enact stricter content moderation across group and private chats.
YouTube suspended the channel of popular conservative content producer Tenet Media following a DOJ indictment alleging the channel was funded by Russian “disinformation” agents. The merits of those claims notwithstanding, this episode is the latest example of the vulnerability posed by centralized, permissioned content distribution systems.
Republican Presidential candidate Donald Trump continued to promote bitcoin as a key feature of his policy platform, noting his administration will “make America the world capital for bitcoin.”
Japan’s tax authority indicated it is weighing an update to its tax code that would result in lower bitcoin and cryptocurrency tax rates.
Noteworthy
The MIT Technology Review made the case this week for “personhood credentials” developed by OpenAI and Microsoft to universally verify human actors online, ostensibly in an attempt to mitigate the proliferation of AI-enhanced fraud and “misinformation” campaigns (a result, coincidentally, of technologies developed by OpenAI and Microsoft).
Travel
Austin BitDevs, Sep 19
Portfolio Company Retreat, early October
Lugano Plan ₿ Forum, Oct 25-26
BitcoinMENA, Dec 9-10