Ten31 Timestamp 883,894
The Fed Pivot narrative was definitively put on pause this week, as the latest CPI reading came in significantly hotter than expected and showed headline inflation clearly trending sharply back up from its mid-2024 local bottom. Federal Reserve Chairman Jerome Powell indicated shortly afterward in Congressional testimony that the central bank “doesn’t need to be in a hurry” to cut benchmark interest rates further, even as President Trump once again reversed course and insisted that rates need to be lowered. The President also continued to ramp up his tariff plans this week, calling for new duties on steel and aluminum and moving forward with the idea of instituting broad reciprocal tariffs. Meanwhile, the federal budget deficit for the first four months of the 2025 fiscal year came in at a whopping $838 billion, up 58% over the same period last year and on pace to hit $2.5 trillion this year. Yet despite higher inflation, less favorable commentary on rate cuts, growing tariff bluster, and accelerating growth in the federal deficit, dollar strength actually declined notably on the week, with the DXY down all the week to levels not seen since last year; at the same time, the US 10-year Treasury yield actually closed the week lower than where it opened (a quick spike on the inflation headline notwithstanding). It’s even more notable that all this happened while gold – historically a leading indicator for pro-liquidity moves happening in the background – continued setting new all-time highs all week, and while the latest wave of 13F filings showed huge bitcoin ETF position increases for several major funds, as well as the first publicly reported bitcoin exposure for a Gulf State sovereign wealth fund. The stars continue to look like they’re aligning for major structural, pro-bitcoin shifts over the next 12-24 months.
Portfolio Company Spotlight
Fold is a leading financial services platform providing the most comprehensive bitcoin-denominated consumer rewards programs and a suite of services bridging bitcoin and traditional financial rails. Fold offers debit cards that accrue cash-back rewards in bitcoin that can be withdrawn to customer-controlled wallets, on top of unified checking and bitcoin custody accounts allowing users to seamlessly combine their USD and bitcoin activities to better preserve and grow their wealth. Fold has an exciting product pipeline – including a credit card set to be launched in the near term – and will shortly complete its public listing with over 1,000 bitcoin on its balance sheet, giving the company one of the largest corporate bitcoin treasuries in the world.
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. Visit ten31.vc/funds to learn more and get in touch to discuss participating.
Selected Portfolio News
Fold announced the upcoming launch of its credit card, a unique product offering users 2% bitcoin-back rewards for everyday credit purchases:
Fold also announced the closing of its business combination with FTAC Emerald. Fold will begin trading publicly under the FLD ticker on Nasdaq starting February 19th:
Strike announced that its popular Send Globally capability is now live in Brazil:
Media
Fold Founder and CEO Will Reeves joined The Bitcoin Podcast to discuss the new Fold credit card and the company’s journey toward going public.
The Fold credit card was also covered in popular fintech publication PYMNTS.
Primal Founder and CEO Miljan Braticevic published a new blog post on the benefits that integrated bitcoin capabilities can bring to every app and how Nostr facilitates this.
Market Updates
The CPI reading for January came in well above expectations, up 0.9% M/M and 3% Y/Y, the first annual 3-handle print the metric has seen since June 2024. Core CPI (ex-food and energy) was up 3.3% Y/Y, and the latest PPI reading also came in slightly higher than expected.
Shortly thereafter, Federal Reserve Chairman Jerome Powell pumped the brakes on hopes for additional rate cuts in the near-term, suggesting the Fed “does not need to be in a hurry” to bring rates any lower.
Meanwhile, retail sales data for January declined much more than expected, posting a -0.9% M/M move vs estimates for -0.2%.
Stocks took an initial tumble on the inflation headlines, but the S&P 500 recovered to end the week higher. Meanwhile, the US 10-year Treasury yield spiked as high as 4.65%, but entirely retraced that move to finish slightly lower on the week, two interesting signposts for investor expectations despite the incrementally worse inflation update.
Contrary to Powell’s rates posture, President Trump yet again reversed his public stance on the direction of interest rates, reiterating that rates should come down to better align with his tariff policies.
At the same time, the administration continued to double down on that policy agenda this week, as Trump proposed new tariffs on steel and aluminum while ordering federal agencies to evaluate the introduction of reciprocal tariffs on US trading partners.
The President also made some eyebrow-raising comments about US Treasuries, suggesting that recently uncovered fraud in that market might mean “we have less debt than we thought.”
Aides quickly jumped in to clarify that Trump was specifically talking about Treasury payment flows, not the actual balance of outstanding debt, but this theme may be worth watching during the “global economic reordering” led by the new Treasury Secretary.
To that point, the federal deficit for the first four months of the 2025 fiscal year clocked in at $838 billion, up 58% from the same period last year. This pace, if maintained, would annualize to a $2.5 trillion total deficit for FY25, or a 37% Y/Y increase.
Interestingly, the DXY Index – a measure of dollar strength vs a basket of foreign currencies – declined throughout the week and is now well off recent highs despite news of incrementally worse inflation, heightened tariffs concerns, slower rate cuts, and ripping federal deficits.
At the same time, gold continued to make new all-time highs for most of the week, breaking $2900 per ounce for the first time as the transition of gold into US-based COMEX vaults continued to rip higher.
Those headlines formed the backdrop for a round of very notable 13F filings for year-end 2024, the most significant of which was Abu Dhabi’s sovereign wealth fund disclosing it now owns $437 million in BlackRock’s IBIT bitcoin ETF.
A permissioned, delegated custody wrapper overseen by an American company on an American exchange is among the least sovereign ways a sovereign wealth fund could achieve bitcoin exposure, but the disclosure is still very meaningful as IBIT appears to be one of the fund’s largest reported positions, and it publicly confirms sizeable Gulf State participation in bitcoin for the first time.
Elsewhere, Wisconsin’s state pension fund and Goldman Sachs also boosted their allocations to bitcoin ETFs by nearly 100% in the fourth quarter, while Barclays opened up an IBIT position for the first time.
On the fund side, Tudor Investment Corp (led by macro veteran Paul Tudor Jones) and asset management giant Brevan Howard both disclosed that IBIT is now among their largest reported positions.
Finally, new reports indicated that Citigroup and State Street, two “systemically important financial institutions,” are planning to expand their bitcoin custody services in the next year.
Regulatory Update
It was a busy week for state-level bitcoin legislation as well, as Utah’s strategic bitcoin reserve bill passed a vote in the state’s House of Representatives and will now move to the Senate.
Various new bills with pro-bitcoin components were also introduced in several other states, including Florida, North Carolina, and Georgia. Thus far, 32 states have now introduced legislation that would either establish a state bitcoin reserve or enable investment of public funds into bitcoin.
It’s worth noting, however, that several recently proposed bills have now been rejected, including those floated in North Dakota, Pennsylvania, and Wyoming.
President Trump nominated Jonathan Gould, former CLO at bitcoin miner Bitfury, to lead the Office of the Comptroller of the Currency, a key regulatory position for the US banking system.
Trump also tapped Brian Quintenz, former CFTC Commissioner and head of policy at Andreessen Horowitz’s “crypto” unit, to return as head of the CFTC.
The Customs and Border Protection agency broadened its crackdown on imports of bitcoin mining ASICs from Chinese manufacturers, an escalation of its adversarial stance first reported late last year.
New reporting this week indicated the United Kingdom has secretly attempted to force Apple to build a backdoor into all iCloud accounts for purposes of enhanced government surveillance.
Noteworthy
An article in the generalist fintech publication PYMNTS highlighted bitcoin’s growing role in protecting and enhancing corporate treasuries.
A study out of Duke University called out bitcoin mining’s significant potential benefit to US grid systems via demand response and curtailment programs. The report estimates these initiatives could effectively support an incremental 76 GW of generation with minimal change or disruption to existing grids.
ACINQ, the lightning network stalwart responsible for the Eclair lightning implementation, introduced a new lightning channel scheme that can avoid sudden “force closes” of outstanding channels when bitcoin transaction fees spike, which was revealed as a major pain point for the network during last year’s various periods of fee volatility.
Proton broadly rolled out its bitcoin wallet to all users, opening easier bitcoin access to the company’s 100 million+ accounts.
Travel
Nashville BitDevs, Feb 18-19
Austin BitDevs, Feb 20
Bitcoin Investor Week (New York), Feb 24-28
Austin Bitcoin Takeover, Mar 14