Ten31 Timestamp 868,557

It was a brutal week for virtually all macro indicators heading into next week’s US Presidential election. The latest numbers for GDP, employment, job openings, and US manufacturing all declined sequentially and missed expectations, with the latest jobs report showing especially anemic activity and particular weakness in non-government payrolls. Despite the uniformly worse indicators and investors staring down what is sure to be a volatile upcoming week regardless of the election’s outcome, 10-year US Treasuries – generally thought to be a countercyclical, “safe haven” asset that benefits from macro weakness and volatility – saw yields rise all week, ending with a dramatic pop on Friday that brought the rate within spitting distance of 4.4%, its highest level since June. The benchmark yield has now increased ~75bps since the Federal Reserve initiated its latest rate-cutting cycle back in September, setting up an interesting dynamic heading into Wednesday’s post-election FOMC meeting. 

While bonds extended their monthslong selloff, bitcoin cracked $70,000 again for the first time since May and nearly made a new all-time high before retracing to just under the $70,000 level. Bitcoin has now spent the vast majority of this year above the $1 trillion market cap level, a particularly noteworthy achievement given the network marked just the 16th anniversary of the protocol’s white paper this week. Despite just barely being old enough to drive and bootstrapping from zero, bitcoin continues to prove itself as a globally significant asset and technology, and we expect it to continue to rapidly chip away at gold’s multi-millennia head start as well as the monetary premium of all other asset classes regardless of how next week’s election plays out.

 

Portfolio Company Spotlight

Giga Energy is a bitcoin miner and energy infrastructure provider focusing on stranded energy and waste gas opportunities. The company helps oil and gas producers use bitcoin mining to optimize production and monetize gas resources that would otherwise be wasted, through both proprietary mining deployments and the provision and operation of tailored power generation equipment including generators, data centers, and electrical infrastructure. Giga sits at the forefront of the convergence of the energy production and bitcoin mining industries, a trend we expect to gain significant momentum over the coming decade. 

Selected Portfolio News

Fold launched insured bitcoin deposits, allowing users to send bitcoin directly to their Fold account for various uses:

Media

Strike Founder and CEO Jack Mallers appeared on the Bitcoin Standard podcast to discuss building Strike and the huge opportunity the company is addressing. 

Ten31 Managing Partner Matt Odell joined The Investor’s Podcast to delve into the importance of open source bitcoin funding, the Nostr ecosystem, and more.

The Ten31 team launched Bitcoin Alpha, a new bi-weekly podcast highlighting the many ways bitcoin and related technologies are increasingly interacting with traditional financial markets. 

Market Updates

A busy week of macro news offered almost uniformly disappointing updates, starting with the latest GDP report, which showed growth at +2.8% Y/Y, down sequentially and below Street expectations. 

The latest nonfarm payrolls print was even further below consensus, as the US added just 12,000 jobs in October relative to 223,000 in the prior month and expectations for 100,000. 

While some of the wide miss can likely be attributed to storm activity and a strike at Boeing, the weaker than expected report also included significant downward revisions for numbers from both August and September. Meanwhile, the unemployment rate ticked up slightly. 

Under the hood, private payrolls declined for the month vs expectations for an increase of 70,000, and growth in full-time jobs continued to stagnate. 

In the same vein, the latest JOLTS data (which measures US job openings) read out at 7.44 million in September, well below both expectations and August’s 7.86 million reading (which was itself revised down from 8.4 million). 

Finally, the latest US ISM Manufacturing PMI came in at 46.5 in October vs consensus of 47.6 and September’s 47.2 figure. The metric has now been in contractionary territory (readings of <50) for well over two years.

Notably, amidst this barrage of negative economic news and with investors bracing for a likely volatile few sessions around next week’s US Presidential election, the yield on 10-year US Treasuries – a benchmark rate that historically tends to fall on bad news and volatility – trended higher all week and spiked back to nearly 4.4% for the first time since June on the back of Friday’s poor jobs update. 

US 30-year fixed mortgage rates continued to rise through the week, pushing to 6.73%. The average rate is now up nearly 70bps since the Federal Reserve announced its first Fed Funds cut in September. 

Higher rates have kept pressure on the US housing market, where existing home sales declined once again in September and have now reached a 14-year low.

Key overseas sovereign debt markets saw similar action, as UK gilt yields jumped to the highest levels in over a year thanks to a higher than expected public spending plans, as well as increasing inflation expectations. 

As China’s stock market rally continues to stall out following a massive run on new government stimulus plans last month, the Chinese government is now reportedly weighing $1.4 trillion in additional stimulus spending over the next few years.

Bitcoin broke $70,000 again this week and nearly touched a new all-time high before retrenching to just below that level on Friday. Spot bitcoin ETFs have been on a tear over the past several weeks, and the vehicles took in another $2.2 billion in net flows this week. The cumulative net flows of IBIT alone have now surpassed the lifetime flows of the 20-year-old GLD ETF. 

Regulatory Update

Florida’s Chief Financial Officer instructed the State Board of Administration to consider directing a portion of state retirement assets into bitcoin. He also indicated that the state already holds $800 million in “crypto-related” investments. 

In his latest outreach to bitcoin-aligned voters, Republican Presidential candidate Donald Trump posted a tweet celebrating the 16th anniversary of the publication of bitcoin’s white paper. 

Noteworthy

MicroStrategy, which currently has more than 252,000 bitcoin on its balance sheet, announced plans to acquire $42 billion in additional bitcoin over the next three years, including a $21 billion equity at-the-market filing that represents the largest such offering in history. 

A new filing indicated the endowment fund of Emory University now owns more than $15 million of GBTC, marking the first time a US university has publicly reported bitcoin ETF exposure. 

Fidelity Digital Assets published a new report on bitcoin’s unique role in institutional investment portfolios. 

Lightspark, the Andreessen-backed bitcoin venture of former Facebook crypto head David Marcus, introduced Spark, a new bitcoin layer 2 protocol design that leverages statechains and aims to provide non-custodial, low-cost payments. 

Several bitcoin developers launched Athenut, a new privacy-focused browser similar to Kagi Search that requires no signup or account and allows users to pay for searches with bitcoin via an underlying e-cash wallet. 

Travel

• LABitConf, Nov 1-2

• Nashville BitDevs and Nostrville, Nov 5-6

• SatsConf, Nov 8-9

• Austin BitDevs, Nov 21

• BitcoinMENA, Dec 9-10