Ten31 Timestamp 872,631
In a relatively quiet, holiday-shortened week, there were a few signs of an ongoing drift toward more accommodative monetary and fiscal policy worldwide. The latest FOMC minutes pointed to continued comfort with the path of inflation among Fed governors – even as all the latest inflation prints have shown headline figures well above the central bank’s stated target – and the Fed still appears poised to make another cut to its benchmark rate next month. Overseas, the PBOC announced another $100 billion+ round of new liquidity injections to shore up the health of the local banking system, the country’s latest pro-liquidity move in a quarter filled with them. Meanwhile, bitcoin survived another quick ~10% dip after almost cracking $100,000 last week and is once again knocking on the door of that key psychological level as of this writing. Perhaps more importantly, an appeals court overturned recent OFAC sanctions of the Tornado Cash protocol on the grounds that its smart contracts can’t be characterized as traditional property, contracts, or services; while the protocol itself is not directly relevant to bitcoin, this conclusion could have favorable legal implications for a variety of projects in the bitcoin ecosystem and adds further support to the already ample mosaic of evidence protecting bitcoin’s use and growth within the US.
Portfolio Company Spotlight
Battery Finance is a credit opportunities asset management firm capitalizing on the many ways that bitcoin will impact traditional finance. Battery offers project finance vehicles with unique dual collateralization in the form of both underlying physical assets and bitcoin, as well as several additional strategies. All of the firm’s products aim to blend exposure to bitcoin’s upside with reduced medium-term volatility via project cash flows and the collateralization of traditional assets. Battery is a prime example of the “bitcoinization of finance” theme that Ten31 expects will become increasingly powerful over the coming decade.
As the world’s largest investor focused entirely on bitcoin, Ten31 has deployed nearly $150 million across two funds into more than 30 of the most promising and innovative companies in the ecosystem, and we expect 2025 to be the best year yet for both bitcoin and our portfolio. Ten31 will hold a first close for its third fund at the end of this year, and investors in that close will benefit from attractive incentives and a strong initial portfolio. Visit ten31.vc/funds to learn more and get in touch to discuss participating.
Selected Portfolio News
Following Founder and CEO Andrew Hohns’s appearance on CNBC last week, Battery Finance announced its first dual-collateralized refinancing of a mixed-use property in Philadelphia:
Fold launched a long-awaited feature allowing customers to add multiple users to their accounts:
StatMuse announced the beta rollout of college football data:
Media
AnchorWatch Co-Founders Rob Hamilton and Becca Rubenfeld joined the Ten31 team on the latest episode of Bitcoin Alpha to discuss how AnchorWatch is fusing bitcoin’s native properties with traditional blue-chip insurance to push bitcoin custody forward.
Rob also appeared on the Galaxy Brains podcast to delve into many of the same topics and the potential custody mechanics behind a US strategic bitcoin reserve.
StatMuse published its latest monthly Muse Letter.
Market Updates
The latest reading for Core PCE – the Fed’s preferred inflation gauge – was in line with estimates but higher M/M while accelerating slightly on a Y/Y basis to 2.8%.
The latest FOMC minutes out of the Federal Reserve were fairly in line with consensus and pointed to slow incremental rate cuts from here. Notably, the committee expressed comfort with the progress of inflation even as both PCE and CPI remain well above the central bank’s stated 2% target, the latest signal of the Fed’s increasingly accommodative stance.
President-elect Trump ramped up his pro-tariff rhetoric this week, suggesting he will look to impose blanket 25% tariffs on all goods coming from Mexico and Canada via executive order on his first day in office. This move could have broad implications for end-user pricing across a variety of goods and potentially complicate an already murky inflation picture for the Fed.
As of this writing, though, markets are still pricing in another 25bps rate cut at the Fed’s December meeting (for what that’s worth).
The 10-year US Treasury yield remains comfortably above summer lows but continued to slip from its post-election highs this week, closing out Friday under 4.2%.
Overseas, the PBOC injected over $100 billion in new liquidity (after adding ~$70 billion just last month) to help support the local banking system as government debt issuance rips higher amid the country’s aggressive stimulus programs.
After almost kissing the $100,000 mark, bitcoin suffered a quick (and typical) ~10% drawdown early this week before recovering to the high 90s again to close out the week. Bitcoin network hashrate, meanwhile, has continued to push to new all-time highs, and is now well over 700 EH/s and up nearly 7x from the lows of China’s infamous mining “ban” in summer 2021.
Regulatory Update
A US Appeals Court overturned the Treasury Department’s sanctions on the Ethereum-based Tornado Cash protocol. The court noted: that Treasury’s OFAC arm had overstepped its Congressionally defined authority; that the protocol’s non-custodial smart contracts cannot be classified as services or property; and that there are legitimate reasons that a law-abiding individual might use a protocol like Tornado Cash.
While this protocol is unrelated to bitcoin, all of the points in the court’s decision could have positive implications for privacy-focused projects built on bitcoin and privacy-oriented software in general.
The incoming Trump administration is reportedly seeking to shift more digital assets regulatory authority over to the CFTC and away from the SEC. Meanwhile, the former head of the CTFC – and potential candidate for the new administration’s “crypto czar” role – endorsed the idea of a strategic bitcoin reserve this week.
Senator Cynthia Lummis, sponsor of the BITCOIN Act that would seek to establish a bitcoin reserve through Congress, referenced the importance of protecting self-custody on a media appearance this week.
Texas’s utility regulator implemented new rules requiring bitcoin miners that consume more than 75MW of power to officially register with the local grid operator.
Russian President Vladimir Putin signed a new tax framework that treats bitcoin as property, allowing its use in some foreign trade settlements. The new regulations also exempt bitcoin from the country’s value added tax.
Noteworthy
Leading stablecoin provider Tether is reportedly in talks to take part in Cantor Fitzgerald’s new multi-billion dollar bitcoin-backed lending facility. Cantor is the custodian of much of Tether’s reserve of US Treasuries and is run by Commerce Secretary appointee Howard Lutnick.
On a new Joe Rogan podcast with nearly 2 million views as of this writing, Marc Andreessen – founder of Netscape and traditional venture capital behemoth Andreessen Horowitz – discussed both Nostr and Operation Chokepoint 2.0, two topics far outside mainstream view just a few months ago.
Travel
BitcoinMENA, Dec 9-10
Nashville BitDevs, Dec 10
Austin BitDevs, Dec 19