Ten31 Timestamp 886,907
The onslaught of rough macro data and rougher tariff headlines picked up steam this week, and markets around the world felt more than the “little disturbance” President Trump predicted in his State of the Union address on Tuesday night. On the back of declining GDP estimates, softer employment data, and multiyear highs in job cuts, the Nasdaq officially entered a correction, and the S&P 500 has now fully retraced all of its gains since Trump’s election in early November. The new administration has not been shy about proposing (then rescinding, then proposing again) sweeping new tariffs, and this week saw that trend continue with the added twist of a suspension of aid to Ukraine that indirectly sent international bond markets into a tailspin. If Trump is indeed looking for a global economic reordering as his Treasury Secretary has claimed, he certainly appears to be on the path to getting his wish.
To that point, the Trump administration also made this one of the most significant weeks in bitcoin’s history in a way that seems to have been drowned out by near-term speculative fervor and macro headwinds. As promised on the campaign trail, Trump signed an executive order officially instituting a national strategic bitcoin reserve, which will be initially seeded with bitcoin already held by the US from criminal proceedings. Moreover, the order: 1) compares bitcoin to digital gold; 2) explicitly differentiates and separates it from altcoins; and 3) directs (not just permits) Treasury and Commerce to find budget-neutral ways to accumulate more. Those who expected Trump to go 100x levered long at Friday’s digital assets summit seem to be disappointed, but in our view, the signal sent by these last few months (whether or not you agree with the logic of a strategic bitcoin reserve) is being largely missed by the market. While this order could certainly drive some perverse incentives (e.g. more aggressive civil asset forfeiture as a means of “budget-neutral” bitcoin acquisition) and those bear close monitoring, anyone fading this week is missing the forest for the trees and failing to appreciate how rapidly and radically the Overton Window on bitcoin has shifted: just a year ago, ETFs had barely gotten off the ground and the idea of major governments holding bitcoin as a strategic asset would have been dismissed as Bitcoin Twitter hopium. This week has further bolstered our already high conviction in the bitcoin ecosystem, and we look forward to deploying more capital into the best opportunities in the space as bitcoin’s global relevance gets solidified.
Portfolio Company Spotlight
Strike is an emerging fintech and payments innovator leveraging bitcoin and the lightning network to allow consumers and merchants around the world to accumulate bitcoin while sending and receiving payments instantly and cheaply in a wide variety of settings. Strike's offerings include a consumer app – now available in nearly 100 countries including the EU – for bitcoin purchases, P2P payments, global remittances, and more. Strike also offers a suite of APIs for merchants and enterprises to easily benefit from lightning’s low cost, near-instant settlement. The company has announced a variety of exciting new features over the past year and continues to have one of the most robust pipelines of upcoming launches in the bitcoin ecosystem.
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 added another 475 bitcoin to its corporate treasury, bringing its total bitcoin held to 1,485:
Media
Ten31 Advisor and Zaprite Head of Business Development Parker Lewis published a new piece on the logic behind saving and spending exclusively in bitcoin.
Parker also joined Managing Partner Marty Bent on the TFTC podcast to discuss the thesis in detail.
AnchorWatch Co-Founder and CEO Rob Hamilton made a guest appearance on this week’s Rabbit Hole Recap with Marty and Ten31 Partner Matt Odell.
Market Updates
President Trump complicated the weekend for anyone not used to 24/7 markets, taking to social media on Sunday to post about his support for a “crypto reserve” where bitcoin seemed to be an afterthought to various altcoins of ill repute.
Both bitcoin and the altcoin complex ripped higher into Monday before almost entirely retracing the move (before yet another pump to similar levels later in the week).
While bitcoin continued making volatility great again, the softening macro data that ignited last week’s growth scare largely continued rolling in this week, as the latest ISM Manufacturing Index reading came in lower M/M and below expectations, with new orders very weak and prices paid much higher.
On the bright side, the Services ISM reading was generally better, but the Atlanta Fed’s GDP estimates for Q1 fell even further after last week’s precipitous decline.
While softer GDP estimates have partially been driven by a collapse in net exports due to the threat of imminently ramping tariffs, consumer spending estimates have also recently flatlined and residential investment has flipped negative.
Elsewhere, the latest monthly nonfarm payrolls report came in below expectations (though slightly better M/M) with a higher than expected unemployment rate, and ADP jobs data was well short of consensus.
Finally, the US saw the largest number of monthly job cuts since July 2020, and the most for a February since 2009. While much of that spike was driven by DOGE-related cuts, the figure would still have been the highest since fall 2020 even with no federal layoffs.
As the macro data continued to look soft, the Trump administration kept ramping up its aggressive tariff plans, reiterating that previously delayed duties on Canada, Mexico, and China would go into effect starting this week, prompting China to respond with the threat of greater retaliatory measures.
Later in the week, Trump once again dialed back the threats against North American trading partners, suggesting that a large percentage of goods from Mexico and Canada meeting certain requirements will not be subject to new tariffs.
Amid the chaotic policy background, Trump signaled in his State of the Union address on Tuesday evening that he expects “a little disturbance” to markets from his tariff regime, and Treasury Secretary Scott Bessent later acknowledged that the economy may be “starting to roll a bit.”
Bessent also continued to reiterate that the Treasury Department remains adamantly focused on bringing rates down and emphasized the need to “rebalance” the economy more toward the private sector, regardless of the near-term impact on Wall Street or the stock market.
Commerce Secretary Howard Lutnick took that tack as well, publicly highlighting that near-term stock moves will not be a constraint on Trump’s policies.
The market took all those softer data points and policy comments to heart, as major stock indices continued to sell off throughout the week, with the Nasdaq entering correction territory and the S&P 500 fully retracing its post-election gains.
Meanwhile, the DXY dollar strength index continued its recent precipitous decline this week, dropping back to pre-election levels.
Following the tumultuous week, Federal Reserve Chairman Jerome Powell indicated that the world’s key central bank is “awaiting greater clarity” on the Trump administration’s trade and fiscal policies before making any further decisions on the direction of interest rates.
Markets overseas were also roiled all week by both uncertainty about US trade policy and a sudden shift toward a posture of rearmament in Europe, where Germany vowed to spend “whatever it takes” to bolster European defense capacity in the wake of the US’s suspension of military aid to Ukraine.
Government bond yields around the continent surged, with German rates ripping off their biggest one-day move in over 30 years as the market adjusts to further expansion of fiscal deficits among the biggest European issuers.
The European Central Bank cut its benchmark rate as expected, though analysts were mixed on whether ECB Chair Christine Lagarde’s comments pointed to an extended pause in further cuts from here.
Japanese government bond yields also soared on the week, with the 10-year breaking above the 1.5% level for the first time since 2008.
Finally, China announced a plan to run its largest budget deficit in 15 years as it looks to continue supporting various sluggish sectors and struggling local governments – potentially a source of incremental global liquidity in the months to come.
Regulatory Update
After months of speculation and some confusing social media posts, President Trump signed an executive order officially directing the establishment of a Strategic Bitcoin Reserve, as well as a “digital assets stockpile.”
The order stipulates that the government will maintain its existing holdings of bitcoin seized as part of criminal proceedings, acknowledges bitcoin as comparable to gold, and draws a distinction between the bitcoin reserve and the separate “digital asset stockpile” for seized altcoins.
Notably, the order also directs the Treasury and Commerce Departments to determine “budget-neutral” ways to accumulate more bitcoin, a provision that has already inspired a wide array of suggestions for funding mechanisms at no net cost to taxpayers.
Also of note, the order does not indicate that the government should continue to hold the altcoin assets currently in the digital asset stockpile, potentially pointing to one obvious initial source of budget-neutral bitcoin accumulation.
When asked about plans for incremental bitcoin purchases, Treasury Secretary Scott Bessent suggested the “first step is to stop selling” and a plan for further accumulation will be determined going forward.
On Friday afternoon, the President hosted a roundtable discussion with Scott Bessent, Howard Lutnick, a few Congressional leaders, and executives from the cryptocurrency industry including Strategy Chairman Michael Saylor.
Saylor presented a framework to the group recommending the US purchase 5-25% of all bitcoin.
Around the same time, the Office of the Comptroller of the Currency also released new guidance specifically affirming that national banks may custody bitcoin, engage in certain stablecoin activities, and participate in distributed node networks.
Elsewhere in the US, the Texas Senate passed its own version of a strategic bitcoin reserve bill, which will now move to the state House of Representatives. In Florida, gubernatorial candidate Byron Donalds endorsed adding bitcoin to state reserves.
It was also a surprisingly solid week for backtracking on onerous regulations, as the Treasury Department said it will not enforce the Corporate Transparency Act, and the Senate voted to overturn a Biden-era IRS rule that would have imposed infeasible data gathering requirements on self-custodial wallets and decentralized exchanges.
Overseas, some European leaders reportedly ramped up calls to seize another €200 billion of frozen Russian assets in the name of funneling more support to Ukraine, once again highlighting the vulnerability and insecurity of permissioned assets as long-term stores of value, particularly at the sovereign level.
In Japan, the country’s ruling party proposed bringing cryptocurrency capital gains taxes down to match stocks, which would reduce the top rate from 55% all the way to 20%.
Belarus’s President indicated an openness to building out more bitcoin mining operations to harness the country’s excess power capacity.
Noteworthy
North Korean hackers responsible for February’s ByBit hack have now moved almost the entirety of their Ethereum windfall to bitcoin.
In the latest headline that should make us all feel very secure about the state of legacy banking rails, Citi erroneously credited a customer account with $81 trillion, or roughly 4x the entire M2 money supply.
The IMF released additional details about its recent $1.4 billion loan to El Salvador, including an apparent prohibition on further bitcoin buying by the country’s government, which has built a treasury of over 6,000 bitcoin. However, President Nayib Bukele suggested his administration will continue accumulating.
Travel
Bitcoin for America hosted by Bitcoin Policy Institute, Mar 11
Austin Bitcoin Takeover, Mar 14
Bitcoin 2025, May 27-29