Ten31 Timestamp 882,898
It was another volatile week for markets, as investors who had apparently taken President Trump neither seriously nor literally balked at the administration’s announcement of aggressive tariffs against Mexico, Canada, and China, sending the S&P500 down several percentage points to open up the week. Stocks partially shook off the impact over the course of the week as US trading partners managed to delay the onset of the new duties with policy concessions, though China chose the opposite tack, dialing up the pressure with an announcement of their own retaliatory tariffs, and the Trump administration stoked fears again on Friday afternoon. The tariff tantrums also continued to heighten stress in the gold market, where supply tightness has ramped dramatically as investors and banks look to move supplies out of the Bank of England and into the US ahead of potentially increased trade frictions. These headlines interestingly coincided with the President’s proposal for a new US sovereign wealth fund, a type of vehicle historically reserved for trade-surplus nations rather than the country that issues the world’s reserve currency and consequently runs the world’s largest trade deficit. Notably, the fund will be supervised by Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent – two outspoken sound money advocates with favorable views of bitcoin – the latter of whom has been clear about the need for a “global economic re-ordering” in which neutral reserve assets like gold and bitcoin might have significant roles to play. There are more pieces moving on the international economic chessboard than ever before, and we won’t pretend to have a crystal ball on the final outcome, but we suspect the events of the past few months may foreshadow a major structural shift in international trade with substantial positive implications for bitcoin.
Portfolio Company Spotlight
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Selected Portfolio News
Fold announced an expanded partnership with Visa that will enable it to continue growing its platform of bitcoin-linked financial services:
Primal released a new update that includes improved feeds, support for Nostr Wallet Connect, and more:
Unchained launched an improved IRA trading experience:
Media
AnchorWatch was featured in a Fortune piece about the rising appetite for bitcoin insurance products covering duress scenarios (so-called “wrench attacks”).
AnchorWatch Co-Founder Becca Rubenfeld joined the Melanion Capital podcast to discuss the company’s innovative approach to custody and insurance.
Mempool.space published a deep dive report on bitcoin’s effective block size over time.
Market Updates
After last week’s aggressive selloff on DeepSeek headlines, stock markets continued to struggle this week as investors absorbed news of US tariffs on Mexico, Canada, and China.
The market did see a strong intraday rally shortly after the tariffs were announced as both Mexico and Canada almost immediately made policy concessions that led to 30-day suspensions of the proposed tariffs.
However, China was predictably less cooperative, announcing its own retaliatory tariffs as well as an antitrust probe into Google.
Dollar strength, which had taken a breather in the last few weeks, spiked once again on the headlines, with the DXY Index pushing back toward recent highs.
President Trump doubled down on this policy path Friday afternoon, suggesting in a meeting with Japan’s Prime Minister that his administration will look to impose reciprocal tariffs on trading partners starting next week.
While Trump has continued to ramp up his aggressive stance on tariffs, he notably reversed course on his interest rate rhetoric this week, suggesting that the Federal Reserve was right to hold rates at current levels (after saying he plans to “demand” lower rates just a few weeks ago).
Treasury Secretary Scott Bessent chimed in to clarify that the Trump administration wants to see a lower rate on 10-year Treasuries, not necessarily cuts to the Fed Funds Rate, an outcome they believe would be facilitated by reducing energy costs to contain inflation.
Bessent also noted he recently had a “constructive meeting” with Fed Chairman Jerome Powell and that he expects Powell to “do the right thing.”
Shifts in Presidential rhetoric aside, Minneapolis Fed Chair Neel “Infinite Cash”-kari suggested he does expect lower interest rates this year if economic data continue to progress along recent trendlines.
The latest Treasury Department Quarterly Refunding Statement – the first of Secretary Bessent’s tenure – was released on Wednesday and points to a continuing skew of US debt issuance on the short end of the curve, a dynamic that seems to have been highly pro-liquidity over the past two years.
January nonfarm payrolls data released on Friday showed employment up only 143,000 jobs M/M, below consensus and down significantly from December. Notably, payroll figures for every single month of 2024 were revised lower, with an average monthly downward revision of 626,000.
Meanwhile, the number of multiple jobholders continued to rise, while average hours worked fell to lows not seen since March 2020.
At the same time, the latest University of Michigan 1-year inflation expectations survey jumped to 4.3%, up a full point from last month on tariff concerns. Longer-term expectations are still firmly above 3%, and consumer sentiment across survey groups declined to its lowest levels since July.
Weekly borrow rates on gold spiked to as high as 12% annualized (vs 2-3% normally) as the recent London gold shortage worsened on the back of ongoing tariff and trade concerns. The Bank of England has assured the public there’s nothing to see here as transfer delays have now reached 1-2 months while gold continues to hit new all-time highs.
As usual, the week’s volatility was evident in bitcoin’s price action as well, including a massive ~$10,000 intraday reversal from under $93,000 to over $102,000 on Monday. Bitcoin closed out the week around $96,000, right in the middle of its recent consolidation range.
Notably, bitcoin mempools (the bitcoin network’s backlog of outstanding unconfirmed transactions, roughly speaking) cleared for the first time in several years last weekend, a bat signal for bitcoin’s many concern trolls who are simultaneously convinced that bitcoin can’t work because fees are both too low and too high.
Regulatory Update
Newly installed crypto czar, PayPal Mafia founding member, and podcaster extraordinaire David Sacks led a press conference on Tuesday addressing President Trump’s newly created digital assets committee. Among other announcements, Sacks indicated evaluating a strategic bitcoin reserve will be among the committee’s top initial priorities.
President Trump signed an executive order that would create a US sovereign wealth fund, which would be a first for the US and a particularly noteworthy move for a country that currently runs massive structural trade deficits.
The fund will be overseen by Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, two relatively outspoken sound money and bitcoin advocates – though Secretary Lutnick had some interesting views on how the fund could be deployed outside of traditional hard assets.
After several years of speculation and insider reports, Congress finally held a series of hearings on “Operation Chokepoint 2.0” this week in which various cryptocurrency industry executives openly testified about their experiences with de-banking.
As part of the hearings, the FDIC released a variety of documents pointing to longstanding bias against the industry – including “pause letters” sent to various banks – and said it would reevaluate its digital asset supervision.
The Czech Republic – whose lead central banker just last week announced his interest in adding bitcoin to the bank’s reserves – officially made bitcoin holdings tax-free after three years.
Kentucky, Iowa, and Maryland all introduced new bills to integrate bitcoin into state reserves, bringing the number of states evaluating such legislation to 19. That said, two of these bitcoin bills in North Dakota and Wyoming were killed in committee this week.
Horseshoe theory got a noteworthy new data point this week, as the Department of Justice – sounding much like vintage Ron Paul – argued that the government can freely seize citizens’ money because fiat currency is not really property.
Noteworthy
A new study in the relatively mainstream Journal of Risk and Financial Management included a model suggesting bitcoin’s price could reach $1 million by 2027 and $5 million by 2031.
Another new study estimated that Coinbase users lose $300 million per year from social engineering schemes that the exchange has struggled to mitigate.
The artist formerly known as Michael Saylor announced a rebranding of bitcoin juggernaut from MicroStrategy to simply “Strategy” in conjunction with the company’s 4Q24 earnings call.
BlackRock will reportedly seek to list a new bitcoin ETP in Europe in the near term. Elsewhere, TMTG – the media company associated with President Trump and Truth Social – plans to issue new bitcoin ETF products as part of its push into financial services, the latest sign that Trump’s camp is (for better or worse) financially aligned with bitcoin.
Travel
Nashville BitDevs, Feb 18-19
Austin BitDevs, Feb 20
Bitcoin Investor Week (New York), Feb 24-28
Austin Bitcoin Takeover, Mar 14