Ten31 Timestamp 873,655
The $100,000 dam burst this week, as bitcoin finally tacked on another zero Wednesday night after a few weeks of ranging just beneath that level. As bitcoin crossed this key psychological barrier – while also crossing over the $2 trillion market cap threshold, pulling right up next to Google – politicians and regulators around the world seemed to come that much closer to outright capitulation, as Russian President Vladimir Putin openly acknowledged bitcoin cannot be banned, Federal Reserve Chairman Jerome Powell flatly compared bitcoin to digital gold, and the incoming Trump administration added to its long list of pro-bitcoin cabinet and regulatory appointments. Meanwhile, macro data were modestly positive on the week, and the latest Fed commentary continued to point to openness to more near-term rate cuts, pushing equity indices to yet another all-time high and likely supporting further inflows to bitcoin ETFs, which now collectively hold more bitcoin than the quantity often attributed to bitcoin’s pseudonymous creator Satoshi Nakamoto. With so many fundamental tailwinds, we would expect bitcoin to sustain and potentially accelerate its recent momentum going into the new year.
Portfolio Company Spotlight
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Selected Portfolio News
Strike launched a new bill pay feature allowing US users to pay dollar-denominated bills out of their bitcoin balances:
Zaprite rolled out a variety of new features this week, including integrations with Coinos and Lifpay, as well as cash payment invoices:
Media
Ten31 Managing Partner Marty Bent hosted a fireside chat with Battery Finance Founder and CEO Andrew Hohns at New York’s bitcoin bar Pubkey.
Ten31 Managing Partner Matt Odell sat down with Primal Founder and CEO Miljan Braticevic for a deep dive into Primal 2.0 and its many significant feature enhancements.
Market Updates
Bitcoin topped $100,000 on Wednesday (and again on Friday) after several weeks of testing that resistance, ultimately posting a new all-time high of ~$104,000 before retrenching slightly. Bitcoin has not only posted far and away the best performance of any major asset this year, but also nearly the best Sharpe Ratio.¹
Spot bitcoin ETFs had another banner week, taking in an additional $2.7 billion in net flows. The ETFs now collectively hold more bitcoin than the amount popularly attributed to Satoshi Nakamoto, and BlackRock’s IBIT alone reached $50 billion in assets this week, making it the fastest ETF to reach that milestone by a wide margin.
As part of his public remarks this week, Federal Reserve Chairman Jerome Powell compared bitcoin to digital gold, noting he views it more as a competitor to the yellow metal than to the US dollar. This remark appeared to help precipitate bitcoin’s final push through $100,000, though we note that Powell has already made similar comments in the past.
Powell’s remarks also contained a suggestion that the Fed “can afford to be a little more cautious” with the pace of rate cuts given what he sees as a strong economy, though he also indicated the central bank is ready to step in on any sign of labor market weakness.
Meanwhile, Fed Governor Chris Waller suggested the current policy rate is still “significantly restrictive” and that he would support another cut at the December meeting in two weeks.
On the back of all this commentary, Fed Funds futures now imply an 86% chance of another cut at the next meeting, and the S&P500 closed out the week at yet another all-time high, firmly clearing the 6,000 level for the first time.
In response, BlackRock strategists suggested this week that the global economy has permanently exited the boom and bust cycle, which we think we’ve heard somewhere before.
The macro data points that came in this week generally leaned positive, including a November Non-Farm Payrolls report that came in above consensus and showed a step-up vs October’s hurricane-impacted results.
However, the unemployment rate increased slightly to nearly 4.3%, and full time job growth remains stagnant.
The latest JOLTS data showed job openings also edged up for October, indicating a marginally better environment for job seekers. Elsewhere, the University of Michigan’s latest consumer sentiment index ticked up substantially vs the prior period, though inflation expectations for both the near- and medium-term are still anchored around 3%.
Finally, the latest Manufacturing PMI reading was up M/M but remains stuck in recession territory (<50). The latest Services PMI is still in expansion but was down notably M/M and below expectations.
¹The $100,000 mark appeared to be the straw that broke the camel’s back for outspoken bitcoin critic Paul Krugman, who finally decided to throw in the towel on the same day.
Regulatory Update
The incoming Trump Administration continued its streak of appointing pro-bitcoin cabinet members and regulators this week, as Trump tapped former SEC commissioner Paul Atkins to head the SEC. Atkins has previously made positive comments about “crypto” in general, and founded a consultancy with a digital assets practice after leaving his government post.
Trump also selected David Sacks, founder of Craft Ventures, to serve as the first “Crypto and AI” czar. Sacks has been a longtime bitcoin holder, and Craft was an early investor in Fold, one of Ten31’s largest investments.
Elsewhere, Trump again threatened to levy aggressive tariffs on the BRICS countries if they seek to move away from the US dollar for international trade.
The House Financial Services Committee held a hearing on the allegations of systematic de-banking of bitcoin and “crypto” companies under the Biden Administration.
Overseas, Russian President Vladimir Putin acknowledged at a conference that no one can ban bitcoin, echoing a view that many bitcoin holders have been espousing for years.
US customs enforcement has reportedly been halting shipments of Bitmain bitcoin mining units at US ports for the past several weeks. The rationale and potential timing for resolution are thus far unclear.
A Texas judge issued a preliminary injunction against the enforcement of the Corporate Transparency Act, a piece of legislation set to go into effect in January 2025 that would require new personal information disclosures from millions of US business owners. The US government swiftly appealed to have the injunction overturned.
Noteworthy
MicroStrategy CEO Michael Saylor – whose company has amassed over 400,000 bitcoin in its corporate treasury over the past several years – delivered a three-minute presentation to Microsoft’s Board of Directors advocating that Microsoft adopt a bitcoin treasury strategy.
Wharton professor Jeremey Siegel – who called for an emergency rate cut this summer on the back of the massive selloff tied to the Yen carry trade – said on CNBC this week that bitcoin is the biggest threat to the dollar as a reserve currency.
A new report out of the Basel Institute suggested that AML frameworks – intended to curb “money laundering” and misuse of financial rails – have become less effective over time even despite growing compliance.
In a similar vein, the House Judiciary committee released a report surveying the ways that the federal government has weaponized the Bank Secrecy Act – which many pundits have strongly argued is unconstitutional – to surveil Americans.
Travel
BitcoinMENA, Dec 9-10
Nashville BitDevs, Dec 10
Austin BitDevs, Dec 19