Ten31 Timestamp 880,772
All eyes were on the Swamp this week as newly inaugurated President Trump kicked off his second term by churning through a wide variety of executive orders. The focus of the President’s early policy agenda was as wide-ranging as the subject matter of a typical Trump speech, but one executive action that should unite all liberty-minded Americans was the President’s fulfillment of his promise to free Ross Ulbricht, an early bitcoin pioneer and target of extraordinarily excessive sentencing. Shortly thereafter, President Trump went on to sign an executive order to create a federal working group focused on digital assets, which will, among other priorities, evaluate a “national digital assets stockpile.” While this was far from the bitcoin price catalyst some investors were eagerly awaiting (and may have been particularly disappointing given the President’s eleventh-hour launch of his own memecoin), the week did include several noteworthy bright spots for bitcoin, including the confirmation of Senator Cynthia Lummis – whose proposed BITCOIN Act would offer much firmer foundation for a strategic reserve – as head of a new Senate subcommittee on digital assets. Meanwhile, the SEC withdrew its controversial SAB-121 accounting guidance that had historically impeded banks and traditional custodians from holding bitcoin – a move that had bipartisan support from Congress last year and which may open up greater institutional participation in bitcoin over the coming years – and several more states introduced bills to explore their own strategic bitcoin reserves.
Elsewhere, after opening the week at multi-year highs, the DXY Index, which tracks the strength of the US Dollar relative to a basket of key global currencies, declined throughout the week as the incoming administration lightened its tone on proposed tariffs and declared that US interest rates will soon move lower (though the mechanism for the latter point remains uncertain), both of which could have near-term implications for all financial assets including bitcoin. Across the ups and downs of the week, bitcoin briefly surged to a new all-time high of over $109,000 before retrenching slightly to close the week just ~3% below that level, with ongoing strong support from ETF flows. While the new administration clearly needs some ongoing education on the differentiation between bitcoin and its many knock-offs, and some myopic traders were likely disappointed that the President didn’t unilaterally YOLO into a massive bitcoin position during his first week, we continue to view the shift in bitcoin’s market backdrop over the last 12 months as remarkable and believe we’re just starting to see the resulting tailwinds take shape.
Portfolio Company Spotlight
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Selected Portfolio News
The SEC declared Fold’s S4 effective, setting up the company for a final shareholder vote on February 12:
Mempool.space launched new visualizers that both emphasize and de-emphasize bitcoin blockchain inscriptions depending on user preference:
Ian Carroll, a popular political commentator with 1 million Twitter followers and nearly 2 million on TikTok, joined Nostr and specifically called out Primal as his client of choice:
Zaprite launched a new integration with BTCPay Server:
Media
Ten31 Managing Partner Matt Odell hosted Twitter and Block Founder Jack Dorsey on Citadel Dispatch for a wide-ranging discussion on the future of bitcoin, Nostr, and more.
The Ten31 team published a new episode of Bitcoin Alpha recapping Trump’s first week in office and the current macro backdrop.
Battery Finance Founder and CEO Andrew Hohns appeared on the Stephan Livera podcast to delve into Battery’s unique bitcoin-collateralized credit strategy.
Coinkite Co-Founder and CEO NVK also joined the Stephan Livera show to discuss the latest in bitcoin self-custody.
Market Updates
After two months of consistent strength, the US dollar took a decided breather, dropping several points after starting the week at multi-year highs.
Benchmark bond yields also continued to cool off in tandem, paving the way for yet another all-time high in the S&P500 to close out the week.
Newly inaugurated President Trump continued rattling the tariff saber at China, suggesting his administration could impose new 10% tariffs as soon as February 1st. However, Trump took a softer tone later in the week, suggesting he would “rather not” impose the new duties.
During a virtual speech at this year’s World Economic Forum (WEF) conference, Trump indicated he will “demand” that US interest rates drop immediately, which also likely contributed to dollar weakness (though as is often the case with the President, it’s unclear whether we should take this one seriously or literally).
Despite some improvement in the November data, 2024 closed out as the worst year for US existing home sales in nearly three decades.
Meanwhile, the latest University of Michigan consumer sentiment index declined for the first time in six months, while long-term inflation expectations ticked up again to 3.2%. Sentiment appears to have remained firm at the upper end, though, as the latest data from American Express showed robust spending from high income households in Q4.
More positively, the latest manufacturing PMI data came in slightly higher M/M, edging back into expansion territory for the first time in more than six months.
Overseas, the Bank of Japan raised its benchmark interest rate by 25bps to a whopping 50bps, the highest level since 2008.
Over a wild few days of headlines and executive order anticipation, bitcoin remained comfortably above the $100,000 level, putting in a new all-time high of $109,000 before sliding to close the week a bit lower.
Bitcoin’s most prominent influencer Larry Fink suggested to the global elites at the WEF meeting that bitcoin offers a unique hedge against debasement and that sovereign wealth funds are increasingly looking at 2-5% allocations, which could push bitcoin’s price as high as $700,000. Still too bearish, but give him time.
Meanwhile, UBS’s CEO suggested at the same meeting that he’s hearing more mainstream investors describing bitcoin as “the new gold.”
Bitcoin ETFs have had a solid last few weeks, pulling in over $4.2 billion with no net outflow days since January 15. The bitcoin ETF complex accounts for 6% of all ETF flows for 2025.
After months of anticipation, BlackRock filed for in-kind creation / redemption for its IBIT ETF. This change would only apply to Authorized Participants and would not yet have direct implications for individual investors, but would further streamline underlying mechanics for the vehicles.
Elsewhere in the bitcoin ETF space, Grayscale filed for a new “Bitcoin Adopters” ETF, which will build a basket of companies that have taken steps to integrate bitcoin into their businesses, similar to the Bitwise bitcoin treasury ETF announced a few weeks ago.
Regulatory Update
During the first official week of his second term, President Trump found time to sign an executive order creating a working group to study digital assets which will evaluate, among other things, a path to a national “digital assets stockpile.” Notably, the order explicitly indicates the working group will look to protect the rights to self-custody and mining (though of course none of this is legally binding or practically meaningful yet).
Many bitcoin-focused investors were understandably disappointed in the overly broad language that seems to open the door for the US to hold a memecoin reserve, a stance that may have been pushed by an aspiring CBDC platform that is still working on tracking down its first 32,000 blocks.
That said, the full text of the order does lay some encouraging groundwork, including the criteria for assets under consideration (open source, distributed ledgers, which quickly rules out most non-bitcoin tokens) and a focus on curtailing Operation Chokepoint 2.0.
Notably, the working group includes a variety of top cabinet members including the Secretaries of the Treasury (who has spoken openly about the need for a reworking of the Bretton Woods system) and Commerce (who has been an outspoken advocate of bitcoin).
Meanwhile, the group does not include any officials from the Fed, FDIC, or OCC, all of whom industry insiders allege had some role in the recent debanking of bitcoin and crypto companies.
As part of his virtual speech to the Davos cabal, Trump suggested that he wants the US to be the “world capital of crypto,” which unfortunately appears to include the proliferation of memecoins and “diversification” into a basket of floundering altcoins.
More optimistically, Senator Cynthia Lummis was confirmed as chair of a new Senate Banking subcommittee on digital assets. Senator Lummis’s first official priority for the committee is the establishment of a strategic bitcoin reserve, in line with the BITCOIN Act she introduced last year.
Around the US, more states including Arizona and Utah rolled out new bills to explore or introduce their own strategic bitcoin reserves, bringing the total number of states with similar legislation to 10.
Separately, a Kansas state senator also introduced a bill that would allocate up to 10% of the state’s public pension funds to bitcoin.
The SEC withdrew its controversial SAB-121 accounting guidance, which has historically placed excessive reserve requirements on banks and custodians interested in offering bitcoin custody. This could open up more traditional asset managers to enter the market, a development we think may make existing bitcoin-native custody providers attractive strategic targets.
To that point, the CEOs of Morgan Stanley and Bank of America both reiterated their interest in involvement in the space this week.
A district court in Texas officially ordered the removal of addresses linked to Tornado Cash from OFAC’s sanctions list following a recent ruling that immutable smart contracts like those made available through Tornado Cash are not sanctionable property.
However, the Department of Justice continued to argue that this update has no effect on their case against the developers.
New rulemaking from the People’s Bank of China is set to make it easier for mainland Chinese investors to access financial products in Hong Kong, potentially paving the way for more Chinese inflows into Hong Kong bitcoin ETFs.
Noteworthy
President Trump granted Ross Ulbricht a full and unconditional pardon, going above and beyond the commutation most were expecting.
After warming to it for several years, Bridgewater founder and long-term debt cycle enjoyer Ray Dalio confirmed this week that he personally owns bitcoin.
As once-hostile institutions and investors set bitcoin price targets most would have found crazy just a year ago, the world’s best-funded and best-known altcoin has now fallen to bitcoin-denominated lows not seen since its initial listing on Coinbase since 2016, an unfortunate lost decade for the Bitcoin Killer / world computer / utility token machine / DAO infrastructure / DeFi ecosystem of the future, and a case study for all of today’s hot new tokens.
A developer at Starkware introduced zero-knowledge proof capabilities for the Cashu protocol, which could open up new flexibility in the eCash implementation while preserving the key features that make Cashu attractive.
ThorChain, the latest “DEX” protocol aiming to provide “decenteralized” cryptoasset swaps and lending with its own native token, appears to be imploding, the latest example of the inherent instability of systems built on endogenous, non-bitcoin collateral.
Travel
Nashville BitDevs, Jan 28
Nashville Energy and Mining Summit, Jan 30-31
Bitcoin Investor Week (New York), Feb 24-28