Ten31 Timestamp 892,099
It’s been a long year since last week’s unveiling of President Trump’s proposed tariff framework for the rest of the world. In what was probably the most eventful five days for markets since March 2020, virtually every key financial benchmark saw wild swings, including a 50+ basis point upward move in the US 10-year yield, a 10%+ intraday swing in the S&P 500, daily new all-time highs for gold, and the DXY dollar strength index hitting a three-year low. That combination of factors is highly unusual, and the last time we saw it was – you guessed it – March 2020, illustrating how violently global investor confidence has been undermined by the administration’s attempts at reordering global trade flows. This gambit may well represent a high-level, 4D-chess play to box out China and push the world to a new “Mar-a-Lago Accord,” or it may just be the logical conclusion for a President who really, really hates trade deficits in principle – but either way, the bond market appears to be firmly in the driver’s seat of what’s actually achievable near term, as is inevitably the case for a nation with public debt / GDP well north of 100% and federal interest expense above defense spending. The long end of the curve seems determined to push back toward multi-year highs if Trump maintains course, which we think can point to only one path forward for monetary and fiscal policy in a hyper-financialized global economy where Treasuries are the de facto base collateral and debt is only ever rolled rather than repaid (technically there’s a second path available, but history suggests it ends in pitchforks and torches). Gold is clearly already ringing the alarm on the march toward an increasingly fractured global economy in need of scarce, non-sovereign reserve assets, and we think bitcoin will soon pick up the baton, particularly if governments and central banks respond to these dislocations as they always have.
Portfolio Company Spotlight
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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.xyz/invest to learn more and get in touch to discuss participating.
Selected Portfolio News
Mempool.space shipped v3.2.0 of its open source instance, which adds a wide variety of enhancements and new features:
Media
Ten31 Managing Partner Matt Odell gave a presentation on investing in and supporting the bitcoin ecosystem at the MIT Bitcoin Expo.
AnchorWatch Co-Founder and COO Becca Rubenfeld joined the Coin Stories podcast to discuss AnchorWatch’s unique approach to bitcoin insurance.
Market Updates
President Trump followed up last week’s Rose Garden Massacre with continued escalation of his tariff plans all week, kicking things off with threats of an additional 50% tariff on China in response to their retaliation over the weekend.
China, predictably, responded by raising their retaliatory tariffs even further to 84%, while Chinese President Xi Jinping vowed that the country is ready to “fight to the end” on trade.
Treasury Secretary Scott Bessent framed China’s resistance as a “losing hand” and even suggested that a de-listing of Chinese stocks from US exchanges could be on the table.
After several more rounds of it-for-tat, the Trump administration landed on a 145% tariff on Chinese goods to close out the week. Unconfirmed reports suggest the President is preparing to increase the level to one gazillion percent if China does not back down, though sources say advisors are privately trying to steer this to only one bajillion percent.
The White House increasingly tried to frame the tariff push as an aggressive negotiating posture throughout the week, as Trump suggested “countries all over the world are talking to us” about making trade deals and that over 70 such deals are already in negotiations.
Notably, Japan’s Prime Minister quickly indicated that the country is willing to negotiate with Trump, and Japan confirmed it is planning trade talks in the US this coming week.
EU Commission President Ursula von der Leyen also suggested the economic bloc is open to negotiations, though several member states publicly took steps pointing in the opposite direction.
On the surface, it’s not entirely clear what the administration might be looking for in many of these negotiations, as Trump trade advisor Peter Navarro suggested even 0% tariffs with trading partners would not be enough, as it’s really the “non-tariff cheating” that counts.
Admittedly, though, this opacity is likely part of the plan (for better or worse) and may be part of a broader gambit to bifurcate global capital flows and isolate China’s sphere of influence.
In the middle of the week, President Trump announced a 90-day “pause” on tariffs above 10% for all countries other than China, potentially hinting further at the White House’s goal of boxing out the US’s main geopolitical rival.
On the back of the week’s wild policy escalations and retrenchments, the US economic uncertainty index blew out to new all-time highs.
The few days following President Trump’s Rose Garden Massacre and its accompanying policy uncertainty were an unmitigated disaster for asset prices, as the S&P opened the week with its worst three-day performance since 1987.
However, all major equity indices saw a massive reversal on Wednesday thanks to Trump’s tariff pause, with the S&P and Nasdaq both adding back more than 10% intraday. Somewhat shockingly, stocks actually closed higher on the week, though they remain well below levels last seen before Trump’s tariff unveiling.
More importantly, contrary to typical behavior amid equity bloodbaths, US Treasury yields spiked all week, with the 10-year yield rising to nearly 4.6% (up more than 50bps W/W) before slightly retrenching on Friday. The 30-year, meanwhile, briefly cracked 5% and hovered around that level at the week’s close.
At the same time, the MOVE Index – which tracks volatility in US Treasuries – popped to levels only seen historically during periods of major instability (though it remains a bit below the spring 2020 benchmark).
High yield spreads saw their biggest spike since spring 2020, SOFR swap spreads fell precipitously to all-time lows, pointing to growing stress in the US Treasury market. This is a particularly interesting development given recent discussions around a new bailout facility for the large Treasury basis trades that have built up at major hedge funds.
Treasury Secretary Bessent suggested he sees nothing systemically problematic about this bond market activity, though trade advisor Kevin Hassett acknowledged that the rip in yields “added a little more urgency” to the President’s decision to pause broad tariffs mid-week.
In a relatively rare divergence, the dollar sold off hard even as US yields pumped, with the DXY Index falling below 100 to put in its lowest level in more than three years.
Minneapolis Fed Chair Neel “Infinite Cash”-kari suggested the combination of rising bond yields and a declining dollar point to global investors moving away from USD-linked assets. Whether that proves correct or not, it comports with the apparent goal of Council of Economic Advisors Chair Stephen Miran, who gave a speech this week explicitly targeting the USD’s reserve currency status as a key issue that trade policy needs to address.
Deutsche Bank and other Wall Street shops began to speculate that ongoing bond market pressure would ultimately force the Federal Reserve to intervene, and JP Morgan CEO Jamie Dimon predicted a “bond market kerfuffle” that will ultimately require Fed action.
Right on schedule, we got dovish commentary from both Kashkari and Boston Fed President Susan Collins suggesting the central bank is ready to mop up any dysfunction. Not to be outdone, ECB President Christine Lagarde assured the world she’s ready to step in to maintain stability.
The US fiscal picture didn’t do the bond market any favors this week, as the latest YTD budget deficit through the first six months of the fiscal year came in at $1.3 trillion, the largest six-month deficit on record outside the first half of 2021.
Defense Secretary Pete Hegseth assured voters that his department will do its part to push this number higher with a suggestion that the DoD will soon have its first ever trillion-dollar budget allocation.
The market carnage was far from limited to the US, as the Japanese Nikkei Index immediately triggered a circuit breaker to start the week, though like US indices, it recovered much of the drop by Friday’s close.
China’s CSI300 fell 7% and Hong Kong’s Hang Seng Index declined 13% on Monday alone, and neither index fully recovered that gap.
Chinese officials openly discussed pulling forward more stimulus spending to counter potential impacts from tariff disruptions, and the PBOC suggested it will indirectly support the country’s stock market via sovereign wealth funds.
The UK’s bond market took even more pain than the US’s, as 30-year gilt yields ran up to levels not seen since the late 1990s. In response, the Bank of England postponed an auction for long-dated gilts.
Back in the US, some key macro updates likely got lost in the shuffle of the week’s volatility. Most notably, the latest CPI reading came in well below expectations, and “Supercore” CPI fell at its fastest pace since the depths of COVID.
Producer prices were also very soft at -0.4% M/M vs +0.2% expectations, the largest decline for the metric since October 2023. Importantly, these prints – which on the margin should be favorable to bond yields – did nothing to slow down the selloff in the Treasury complex this week.
On the flipside, the latest University of Michigan survey pointed to an ongoing elevation in inflation expectations, with consumers now forecasting nearly 7% one-year inflation (up from 5% at last reading) alongside a further deterioration in overall confidence.
BlackRock CEO Larry Fink echoed this declining confidence with a suggestion that the US is probably already in a recession. Several bellwether US companies including Delta and Wal-Mart gave further credence to that view by withdrawing their previous 2025 guidance on earnings calls this week.
Amid all the chaos, several large institutions still found time to highlight bitcoin’s uniquely attractive features as an alternative, non-sovereign investment. Standard Chartered suggested bitcoin can become a hedge against tariff risks, while S&P Global touted bitcoin as a potential safe haven allocation.
Regulatory Update
President Trump asked the Supreme Court to clear the way for him to fire top agency officials, which could have notable implications for his ability to remove Fed Chairman Jerome Powell to support the administration’s preferred monetary policy agenda.
In line with commentary several weeks ago from Treasury Secretary Bessent, Fed Governor Michelle Bowman said the central bank is prioritizing reforms that would make it practical for banks to hold more US Treasuries in their reserves, a potential vector for more Treasury issuance absorption.
The Department of Justice announced it will wind down its cryptocurrency enforcement division, which may have positive long-term implications for several open cases in bitcoin and elsewhere.
President Trump signed a bill nullifying the IRS’s proposed “broker rule,” a vestige of the 2021 infrastructure bill that sought to create cumbersome and unenforceable rules for users of bitcoin and other digital assets.
Paul Atkins, who previously served as SEC Chairman under the George W. Bush administration and has spoken positively about bitcoin, was confirmed to lead the SEC again during Trump’s second term.
State legislators in Alabama introduced a second bill to institute a state bitcoin reserve of up to 10% of public funds.
Taking the opposite tack, two US Senate Democrats elected to introduce a new bill to collect data on energy use and carbon emissions from US bitcoin miners. Clearly our elected officials need to study the work of esteemed environmental scholar Pierre Rochard.
Noteworthy
As the global economy and benchmark asset prices gyrated wildly, bitcoin’s network hashrate has climbed steadily higher, officially surpassing one zettahash this week. For those keeping score at home, that means bitcoin’s global fleet of miners is now processing one sextillion (1,000,000,000,000,000,000,000) hashes per second.
Block (fka Square) launched a new set of tools for companies building corporate bitcoin treasuries.
Travel
Austin Bitdevs, Apr 17
Bitcoin 2025, May 27-29
Bitcoin Policy Summit, June 25-26