Ten31 Timestamp 874,734
Signs of sticky inflation reared their head once again this week, as CPI for November ticked back up to 2.7% for the metric’s second consecutive month of sequential acceleration, while Core CPI remained stuck uncomfortably north of 3% and the Producer Price Index grew at its fastest annual rate in nearly two years. The hotter inflation prints – which came against the backdrop of the US posting far and away its widest deficit on record to kick off the 2025 fiscal year – sent the US 10-year Treasury yield back toward multi-month highs. All the same, investors are still pricing in overwhelming odds for the Federal Reserve to once again cut its benchmark rate at next week’s final FOMC meeting of the year, a likelihood that seemed to mostly buoy the S&P500 as well as bitcoin, which spent the week establishing a firmer foothold above the historic $100,000 level. Bitcoin also continued to occupy significant real estate among mainstream headlines this week, as multiple localities around the world signaled growing interest in a “strategic bitcoin reserve,” several traditional asset managers continued to warm to the orange coin, and MicroStrategy officially landed in the Nasdaq 100.
Portfolio Company Spotlight
Strike is an emerging fintech and payments innovator leveraging bitcoin and the lightning network to allow consumers and merchants around the world to send and receive payments instantly and cheaply in a wide variety of settings. Strike's offerings include a consumer app – now available in nearly 100 countries including the EU – for bitcoin purchases, P2P payments, global remittances, and more. Strike also offers a suite of APIs for merchants and enterprises to easily benefit from lightning’s low cost, near-instant settlement. The company has announced a variety of exciting new features over the past year and continues to have one of the most robust pipelines of upcoming launches in the bitcoin ecosystem.
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
Strike added support for USDT deposits and withdrawals in 9 international markets, a long-requested feature among customers without easy access to US dollars:
Unchained added new features to its Connections offering that make shared vaults more flexible and private:
Fedi added interoperability with the Cashu protocol, an implementation of bitcoin-backed Chaumian ecash that does not rely on a federated mint:
Zaprite added a new integration with Orqestra:
Media
At the Bitcoin MENA conference this week, Ten31 Managing Partner Marty Bent participated in a debate with Tron’s Justin Sun on bitcoin’s differentiation relative to the broader “crypto” universe.
Strike Founder and CEO Jack Mallers appeared on several podcasts this week, including the Tim Pool show, The Investor’s Podcast, Anthony Scaramucci’s podcast, and the Kitco News show.
Fold Founder and CEO Will Reeves joined Ten31 Managing Partner Jonathan Kirkwood on a Twitter Spaces broadcast to discuss Fold’s planned public listing and vision for the future.
Battery Finance Founder and CEO Andrew Hohns delved into Battery’s inception and strategy on the Less Noise, More Signal podcast.
Primal Founder and CEO Miljan Braticevic joined Marty Bent on TFTC to discuss the release of Primal 2.0 and the future of Nostr.
Trey Sellers, VP of Enterprise Sales at Unchained, also joined TFTC to discuss bitcoin reaching $100,000 and Unchained’s growth as bitcoin becomes a key lever for wealth preservation.
AnchorWatch Co-Founder and CEO Rob Hamilton appeared on the recently relaunched What Bitcoin Did podcast to dig into AnchorWatch’s unique offering and potential upgrades to bitcoin.
Strike and River were featured on a local Hawaii news broadcast discussing bitcoin adoption.
Market Updates
The CPI readout for November printed in line with expectations but accelerated sequentially to 2.7%, led by continued pressure in services and vehicles. This is the second consecutive monthly uptick in the annual rate.
Under the hood, Core CPI (which excludes food and energy) remained well above 3%, extending its nearly four-year streak above that level, its longest such run over in over 30 years.
Meanwhile, the latest Producer Price Index (PPI) came in well above consensus and grew at its fastest annual clip since February 2023.
But despite the less encouraging inflation data, investors are still pricing in nearly 100% probability of another Fed Funds Rate cut at next week’s FOMC meeting.
While the world’s most important central bank weighs its rate cut path, the US Treasury reported the largest two-month budget deficit to ever kick off a fiscal year, complicating the Fed’s position even as inflation continues to look sticky.
On the back of these headlines, the US 10-year yield popped back above 4.4%, a ~30bps move on the week following several weeks of post-election cooling.
Global central banks largely maintained their recent easing paths this week, with the European Central Bank cutting rates another 25bps and the Bank of Canada making a 50bps cut (though the latter tried to suggest it would make slower cuts from here).
Bitcoin ranged right around the $100,000 level all week and saw another five days of strong ETF inflows totaling ~$2.2 billion.
On Monday, MicroStrategy announced it had acquired another 21,550 bitcoin, bringing its total bitcoin treasury to over 423,000, or more than 2% of bitcoin’s total supply.
To close out the week, Nasdaq announced on Friday night that it will add MicroStrategy to its Nasdaq 100 index, effective December 23. The move will expose MSTR (and, indirectly, bitcoin) to flows from Nasdaq-tracking ETFs, which collectively hold over $300 billion in AUM.
As MicroStrategy puts itself on a path to hold more bitcoin than any other single entity in the world, Microsoft chose to stay on zero, as shareholders overwhelmingly (and unsurprisingly) voted against a recent proposal for the Board to evaluate a bitcoin treasury strategy.
However, the drumbeat of corporate adoption is likely just getting started, as illustrated this week by a new Amazon shareholder proposal (by the same entity that submitted the Microsoft proposal) calling for the company to assess a bitcoin treasury allocation of at least 5%.
Regulatory Update
Texas State Representative Giovanni Capriglione introduced a bill that would enable the state to build its own strategic bitcoin reserve (though the legislation does not specify any particular target thresholds or direct purchases of bitcoin). The bill would mandate that any bitcoin in the reserve be held for a minimum of five years.
In an interview on CNBC this week, President-elect Trump noted his administration “will be doing something great with crypto.” Elsewhere, a source close to Trump indicated that he will be “very focused on the price of bitcoin” and would like to see the price reach $150,000 early in his Presidency.
Eric Trump, the President-elect’s son, gave a talk at the Bitcoin MENA conference this week promoting his family’s positive view of bitcoin, including a prediction that bitcoin’s price will reach $1 million.
Wyoming Senator Cynthia Lummis posted a tweet suggesting that incoming Treasury Secretary Scott Bessent will be a “crucial ally” in implementing a strategic bitcoin reserve.
Overseas, a Russian legislator proposed investigating the feasibility of creating a strategic bitcoin reserve. Elsewhere, the Czech Republic passed new rules exempting bitcoin held for 3+ years from capital gains tax.
The Bank of England quietly indicated that the names of any pension funds and other institutions tapping its new emergency liquidity facility will be kept secret in an effort to minimize potential stigma associated with the facility.
Noteworthy
Google introduced its new Willow chip, an advancement in quantum computing that has the potential to bring the technology closer to real-world applications, once again stirring up consternation about bitcoin’s long-term resistance to quantum computing.
We will publish a deeper dive on this issue soon, but in the interim we’d recommend this summary piece from NYDIG for those interested in understanding key nuances that should mitigate any near-term concern over bitcoin’s security.
In a speech in the UAE this week, famed investor Ray Dalio expressed his preference for “hard money like gold and bitcoin” relative to debt-based assets. The comments echo a sentiment shared recently by fellow billionaire investors Paul Tudor Jones and Stanley Druckenmiller.
BlackRock continued its recent track record of strongly promoting bitcoin to clients with a new paper indicating a bitcoin allocation of up to 2% is reasonable. We estimate they may tack a zero onto this recommendation by the end of the decade.
The founder of massive brokerage platform Interactive Brokers also suggested a similar allocation this week.
China gave the world a stark reminder about the unique nature of bitcoin’s absolute scarcity, as the country now claims to have discovered the world’s largest gold deposit, worth ~$83 billion at today’s prices. No comment yet from gold devs on how they may adjust the issuance schedule in response.
Digital Currency Group reportedly plans to split the prop mining piece of its Foundry mining arm into a new business to be named Fortitude Mining. Foundry will continue as a mining pool and service business.
Travel
Austin BitDevs, Dec 19