Ten31 Timestamp 879,786
After a rough start to the year, markets broadly bounced back this week, with bitcoin firmly in the lead. A slightly softer than expected CPI headline sent benchmark bond yields tumbling and gave a lift to equity indices, even though reported inflation remains well above the Federal Reserve’s stated long-term target and is clearly trending upward once again. Meanwhile, bitcoin pulled off an impressive reversal from teetering on the $90,000 level to closing the week around $105,000, as the last week before President-elect Trump’s inauguration was filled with bullish headlines for the world’s oldest and largest cryptocurrency. In addition to ongoing and accelerating rumors about the new administration’s plans for a Strategic Bitcoin Reserve executive order shortly after inauguration, local representatives in eight US states have now introduced bills to enact their own state bitcoin reserves, with four of those resolutions coming in just the past week. It’s far above our pay grade to make calls on what the incoming President will do during his first few days or whether the market is set up for a sell-the-news event next week, but all fundamental indicators including the inflation backdrop, the federal debt burden, and the regulatory environment continue to point to an exceptionally strong upcoming year for the bitcoin ecosystem.
Portfolio Company Spotlight
Mempool.space is the leading explorer and analytics platform for the bitcoin ecosystem. The platform provides extensive data and tools for real-time analysis of the multi-layer bitcoin network, including granular information on the bitcoin blockchain, the lightning network, and a mining dashboard, all presented in an intuitive and sleek UI. The site allows users to easily estimate forecasted transaction fees, drill into in-depth data on both historical and forecasted blocks, explore the liquidity and connectivity of nodes across the lightning network, and much more. Users can either query data directly through the mempool.space site or choose to self-host an instance of the project on their own hardware to eliminate third-party dependencies. In addition, mempool.space has recently launched a Mining Accelerator product to help users more easily and predictably manage bitcoin’s volatile blockspace fee market, a capability that will become increasingly important as transaction fees push higher.
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
Large public bitcoin miner Marathon “embedded” a portrait of Donald Trump into bitcoin block via visualization conventions developed by Mempool.space, the leading bitcoin blockchain data visualizer:
Media
Ten31 Managing Partners Matt Odell and Marty Bent appeared on the Money Matters podcast with Jack Mallers.
AnchorWatch Co-Founder and COO Becca Rubenfeld published a video overview delving into AnchorWatch’s unique insured bitcoin custody solutions.
Unchained published a new educational video on the technical details behind a bitcoin wallet.
Market Updates
After weeks of rising bond yields and mounting consternation in major markets, the closely-watched CPI print for December came in at +0.4% M/M and +2.9% Y/Y, marking the highest annual rate since June and a notable uptick since the summer.
That said, while the headline print was in line with consensus, Core CPI (which excludes food and energy) was down M/M and up slightly less than expected Y/Y, pushing bond yields down from recent local highs and driving a sharp relief rally in equity indices and risk assets, with the S&P500 posting its best week since Trump’s election.
The Producer Price Index (PPI), meanwhile, was up only 0.2% M/M, less than consensus of +0.4%.
Recent momentum in dollar strength stalled a bit this week on the headlines, as the DXY briefly touched the 110 level for the first time since late 2022 before retrenching a few points. The dollar remains near multi-year highs heading into the first week of the new administration, a likely point of focus for the incoming President.
Outgoing Treasury Secretary Janet Yellen indicated that the Treasury Department will begin “extraordinary measures” on January 21 to prevent the US from technically surpassing the debt ceiling. The measures will include freezing payments into certain federal retirement accounts.
After a few months of relative cooling off, 30-year fixed mortgage rates broke above the 7% level once again, a driver likely to keep pressure on US existing home sales, which remain stuck at decade lows despite some sequential momentum late in the year.
More encouragingly, US housing starts came in well above expectations for December, though the bump was primarily driven by multifamily units and the annual figure clocked in as the worst in five years.
As has been the case for the past couple years in January, a variety of layoff headlines at large corporations hit the wire this week, with Microsoft and Meta, Southwest, and major alcohol manufacturer Brown-Forman all announcing workforce reductions.
Bitcoin had a typically volatile week including a high-low range spanning nearly $17,000 (essentially matching the asset’s entire market cap from late 2017). The orange coin briefly tumbled below the $90,000 level for the first time since November before quickly snapping back to nearly $106,000, almost notching a new all-time high to close out the week.
Regulatory Update
The week was filled with rumblings about the incoming administration’s plans for bitcoin policies, as the Washington Post reported President Trump plans to issue executive orders related to bitcoin on day one, and Bloomberg indicated Trump is set to designate digital assets as a national strategic priority.
Meanwhile, Senator Cynthia Lummis, sponsor of the BITCOIN Act that would direct the US Treasury to accumulate 1 million bitcoin over five years, tweeted that she is “working hard to get the strategic bitcoin reserve and digital asset legislation across the finish line.”
A flurry of new strategic bitcoin reserve bills were introduced in four US states this week, including Oklahoma, Wyoming, Massachusetts, and Texas (note that the Texas bill is a Senate resolution distinct from the one introduced last month in the state’s House).
Bets on the launch of a US national strategic bitcoin reserve have surged on popular betting markets Polymarket and Kalshi, with odds currently sitting above 60% on both platforms.
This concept, considered absurd beyond the point of discussion less than a year ago, made it to the hallowed front page of a certain daily New York paper this week.
The US government said in a new filing that the 94,000 bitcoin it seized in connection with the 2016 hack of crypto exchange Bitfinex should be returned in-kind to Bitfinex, potentially setting up the end of a nearly decade-long saga. On the margin, the bitcoin being returned to Bitfinex should reduce future sell pressure given the exchange’s ongoing accumulation of bitcoin, though the alternative was likely to be a long-term lockup of the bitcoin as part of a federal bitcoin reserve.
The Senate Banking Committee will introduce a new digital assets subcommittee to be chaired by Senator Lummis and pro-bitcoin Congressman Tom Emmer.
Senator Lummis formally demanded that the FDIC preserve records that could be relevant to an investigation of Operation Chokepoint 2.0.
Advocacy group Coin Center released a briefing highlighting that recent rules proposed by the CFPB insufficiently distinguish between custodial and self-custody products. We expect establishing this distinction will remain an ongoing focus point for bitcoin advocacy groups during the upcoming Presidential term.
Georgia Congressman Buddy Carter introduced a bill that would abolish the IRS while eliminating personal and corporate income tax, estate tax, gift taxes, and the payroll tax.
Noteworthy
The Financial Times ran an article about pension funds increasingly “dabbling” in bitcoin and other digital assets.
Bitwise CIO Matt Hougan published a piece highlighting that corporate adoption of bitcoin is an overlooked megatrend for this coming year.
K33 Research revised its outlook to suggest President-elect Trump’s inauguration may no longer be a sell the news event for bitcoin.
Coinbase launched a new bitcoin-backed lending product for loans up to $100,000. While we expect many such products to emerge in the coming few years as bitcoin is increasingly recognized as pristine collateral, we would note this product’s design makes some noteworthy tradeoffs.
The US Supreme Court upheld Congress’s ban of popular social media and streaming platform TikTok. While the app’s ultimate fate under the incoming administration is an open question, the ban has threatened the livelihoods of millions of content creators who relied on the site to reach their followers, highlighting both the inherent vulnerability of permissioned platforms where followers are not portable and the potential for the Nostr protocol to fix these shortcomings.
Travel
Nashville BitDevs, Jan 28
Nashville Energy and Mining Summit, Jan 30-31
Bitcoin Investor Week (New York), Feb 24-28