Ten31 Timestamp 878,794
Markets had a turbulent opening week of the year, as the dollar wrecking ball continued wreaking havoc on the global sovereign bond complex and all downstream asset classes. The DXY index is now just a couple points off its local highs from late 2022, helping to push the critical US 10 year Treasury yield back near a post-2008 high of 4.8% and making it progressively harder for already overindebted Western governments to fund on the long end. The damage was exacerbated by a nominally strong jobs headline to end the week, which cemented into market consensus that Fed rate cuts will likely be on pause for an extended period, at best, as the central bank grapples with stubbornly high inflation, strength in pockets of the US economy (though much of that buoyed by government hiring), and an incoming administration with a clearly expressed desire to spend aggressively. Against that backdrop, bitcoin held in fairly well – particularly given it also had to absorb news of yet another impending US government sale – closing the week around $95,000 after spending a brief holiday above $100,000 once again. The orange coin may see further headwinds along with other assets if broad market pressures continue, but with fundamentals better than ever and more governments and institutions around the world looking for ways to preserve wealth, we still expect bitcoin’s next 12-24 months to look much like prior cycles of global volatility.
Portfolio Company Spotlight
AnchorWatch is a first of its kind bitcoin self-custody insurance provider offering true 1:1 coverage through its innovative, proprietary vault technology and backing from Lloyd’s of London, a dramatic step up from the fractional insurance coverage offered by most traditional custodians. The company’s Trident Vault platform leverages bitcoin’s native properties to offer bitcoin holders and fiduciaries an intuitive, enterprise-grade collaborative custody solution that enables highly composable and dynamic custody schemes, all with the backing of regulated, blue-chip insurance products that further mitigate risks of theft, key mismanagement, natural disasters, and more. Trident Vault, which integrates with many popular bitcoin signing devices, was designed with distributed teams and complex workflows in mind, and AnchorWatch’s embedded insurance offerings are set to unlock further bitcoin adoption among high net worth customers, enterprises, and institutions of all sizes.
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 is raising multiple new funds and has already built out a strong initial portfolio for each. Visit ten31.vc/funds to learn more and get in touch to discuss participating.
Selected Portfolio News
AnchorWatch officially kicked off the broad public launch of its unique bitcoin insurance policies backed by Lloyd’s of London for customers with up to $100 million in bitcoin:
Unchained added upgraded passkey support for enhanced account security:
Media
Ten31 Managing Partner Marty Bent hosted bitcoin and fixed income analyst Nik Bhatia on TFTC to discuss some noteworthy dynamics that may drive tailwinds for bitcoin’s price over the next few years.
Unchained custody expert Tom Honzik joined the Robin Seyr podcast to discuss self-custody and where bitcoin could go this decade.
Market Updates
The dollar extended its recent rally this week, as the DXY index breached 109.50 to close out the week. The index is now just a couple points off the multi-decade high it set several years ago at the height of 2022’s market turbulence.
US Treasury yields, tied at the hip to relative dollar strength, also ripped higher, with the critical 10-year yield now closing in on 4.8%, surpassing last year’s highs and approaching 2022’s top. The 30-year yield, meanwhile, briefly crossed 5%.
Upward pressure on rates was supported by the recently released minutes from the latest FOMC meeting, which suggested the Fed is unlikely to cut rates further in the near term on growing concerns about sticky inflation. Fed Governor Michelle Bowman also publicly supported that view this week, suggesting December’s rate cut should be the last for some time.
Regarding that lingering inflation pressure, outgoing Treasury Secretary Janet Yellen acknowledged this week that the rampant federal fiscal deficits that characterized her tenure might have contributed “a little bit.”
The upward impulse for rates was kicked into high gear on Friday as the latest nonfarm payrolls report for November came in well ahead of expectations, including a slight decline in the unemployment rate.
All the usual caveats applied, including an outsized contribution from government hiring and continued stagnation in full-time job growth, and the print represented the slowest Y/Y NFP growth since March 2021. However, the market focused on the headline, which at least directionally suggests firmer growth expectations and lower rate cut odds in the near-term.
On the back of the report, Bank of America called for an outright end to the current cutting cycle and suggested the conversation may soon move to more rate hikes. Investors are now pricing in roughly one cut for the entirety of the year.
Though the NFP jobs headline got most of the attention this week, the Wall Street Journal ran a noteworthy feature on the growing problem of extended unemployment among white-collar workers, as the number of Americans unemployed for more than 27 weeks has risen well above pre-COVID levels.
Elsewhere, UK gilt yields also ripped higher, with the 10-year breaking 4.8%, setting a new post-2008 high and surpassing the levels that sparked a near-meltdown of the country’s pension funds in late 2022. Further out on the curve, the 30-year gilt spiked to levels not seen since the Clinton administration.
As a result of these headwinds, equity markets broadly took it on the chin this week, with the S&P500 index down 3.5% for the week.
Despite the turbulence, bitcoin held in fairly well all things considered, closing the week in the mid-$90,000 range after a brief run up past $100,000, and ETF flows were essentially flat on the week.
Regulatory Update
In the wake of Justin Trudeau’s announcement of his resignation as Canada’s Prime Minister this week, Polymarket currently pegs outspoken bitcoin advocate Pierre Poilievre as the overwhelming favorite to become the next Canadian PM.
The Governor of the Czech National Bank suggested that the bank has considered including bitcoin in its reserves in the interest of diversification.
The saga of bitcoin seized by US federal agencies continued this week, as a US court approved the sale of over 69,000 bitcoin held by the DOJ in connection with the notorious Silk Road marketplace. It’s unclear if or when the bitcoin might actually be sold, particularly if administrative procedures delay the sale until the inauguration of President Trump.
Noteworthy
A research note out from JP Morgan this week indicated that the “debasement trade” benefiting bitcoin and gold is here to stay for some time.
Capital Group, a massive asset manager with nearly $3 trillion in AUM, took a 5% stake in Metaplanet, a Japanese company running the Microstrategy bitcoin treasury playbook. The position is an interesting signpost regarding traditional capital’s appetite for these kinds of public equity market bitcoin proxies.
The same shareholder who submitted bitcoin treasury proposals to Microsoft and Amazon last month recently submitted a similar proposal to Meta. This submission bears monitoring as Meta CEO Mark Zuckerberg – who has notably pivoted toward a more Trump-friendly stance in the last few months and has a history of interest in “crypto” – controls over 60% of the vote at the company.
BlackRock, the leading acolyte of the ESG movement just a few years ago, withdrew from a United Nations climate coalition this week, the latest indication that this agenda – criticized openly by Ten31 Managing Partner Marty Bent well before such criticism was popular – is losing ground in corporate board rooms.
A US appeals court struck down the FCC’s “net neutrality” rules, marking a first major example of the impact of overturning the Chevron deference doctrine earlier this year.
Fidelity Digital Assets published its 2025 outlook for bitcoin.
Travel
Austin BitDevs, Jan 16
Nashville BitDevs, Jan 28
Bitcoin Investor Week (New York), Feb 24-28