Ten31 Timestamp 893,100
Markets took a bit of a breather in this holiday-shortened week, with US equity indices down slightly and the benchmark 10-year Treasury yield mostly holding steady after one of the most volatile stretches in recent memory. Unfortunately, this calmer surface in asset prices was not matched by underlying data out of the real economy, where President Trump’s historically aggressive tariff regime appears to be ramping up its impact in various sectors. Despite the vastly increased policy uncertainty and signs of a potential “sudden stop” in US economic activity, Federal Reserve Chairman Jerome Powell reiterated in public comments this week that the Fed remains most focused on inflation and isn’t in a rush to make any major changes to monetary policy, remarks which immediately spurred Trump – a longtime critic of the Fed Chair – to once again publicly air his grievances, even claiming that “if [he] wants Powell gone, he’ll be gone.” While we don’t expect the Fed Chairman to actually be ousted before his term expires next year (and we’re not clutching our pearls too hard about the President’s rhetoric – wake us up when Trump physically assaults Powell like LBJ), we think it’s instructive to consider the implications for an escalating feud between Trump and the Fed. In a world where Trump makes history by becoming the first President to actually find a way to remove a sitting Fed Chairman, what might that mean for the subsequent path of monetary policy and, perhaps more importantly, global capital allocators’ perception of traditional safe haven assets like US Treasuries? Might a neutral, non-sovereign, globally accessible store of value become more attractive in such a scenario, particularly if legacy stores of value like equities are also increasingly impaired by the fracturing of global supply chains? Perhaps it makes sense to get some just in case.
Portfolio Company Spotlight
Coinkite develops and manufactures best in class consumer tools for interacting with bitcoin, including the Coldcard Q and Mk4 – two highly secure hardware signing devices that set the standard for private key custody – physical bearer instruments (Opendime and Satscard), an NFC-enabled card for signing transactions (Tapsigner), and much more. The company’s product portfolio balances security with usability and includes some of the most widely used products in the bitcoin ecosystem among both consumers and institutions.
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
Coinkite launched new firmware for its flagship Coldcard product, including a wide variety of new features:
Unchained launched a revamped UX:
Media
AnchorWatch Co-Founder and CEO Rob Hamilton appeared on Citadel Dispatch with Ten31 Managing Partner Matt Odell as well as a Bitcoin Magazine podcast to discuss the latest in miniscript and the company’s approach to bitcoin custody.
Battery Finance Founder and CEO Andrew Hohns appeared on multiple podcasts to discuss his proposal for US Treasury “BitBonds.” Andrew also participated in a panel on institutional bitcoin adoption.
Market Updates
After weeks of inflammatory rhetoric and tariff escalations, President Trump gave the market a sigh of relief over the weekend by announcing smartphones, semiconductors, and various other electronics would be exempted from new tariffs (though the White House later attempted to frame this as a reclassification rather than a concession).
The relief was short-lived, however, as the administration quickly raised China’s tariffs once again to a whopping 245%.
In response, China suspended rare earth mineral exports to the US (though this may be an attempt to frontrun internal supply constraints) and halted new deliveries of Boeing orders (though it’s unclear if that will be particularly meaningful to the manufacturer).
Following weeks of the Twitter cognoscenti speculating as much, the Wall Street Journal ran a piece this week citing White House sources who claim the Trump administration is using this tariff regime primarily as a negotiating tool to isolate China as it seeks to entirely rework global trade and capital flows – though this remains a tenuous, high-risk bet.
On that front, Trump declared “big progress” in trade negotiations with Japan this week, and Japanese pension funds notably removed Chinese stocks from their performance benchmarks.
Meanwhile, China reportedly instituted domestic restrictions on equity selling by large investors in an effort to stem potential cascading liquidations as trade frictions intensify.
That said, despite all the bombast and uncertainty, Trump ended the week by suggesting that “we’re going to make a deal” with China, and Beijing’s representatives have also indicated the country is “open for talks” provided Trump shows more respect (we wouldn’t hold our breath on that point).
Treasury Secretary Scott Bessent suggested this week that no one thinks current tariff levels are sustainable in the long run, but that the Treasury has a broad toolkit to maintain bond market functioning if tariff-linked disruptions continue, even as a European financial watchdog group publicly questioned the safe-haven status of US federal bonds.
To that point, the Deputy Treasury Secretary mentioned the department is actively considering how to restructure SLR requirements to allow banks to hold more Treasuries. We wonder if Bessent’s toolkit might also include “encouraging” debtholders to swap current issues for 50-100 year maturity Treasuries.
Back in the real world, the escalating trade war started to show its first material impacts across the US. Most notably, ocean freight bookings showed precipitous declines in the most recent available data for the first week of April.
Meanwhile, the New York Fed’s latest manufacturing new orders survey came in at an all-time low, while 6-month forward expectations among survey participants reached the lowest levels since spring 2020.
Similarly, the latest Philadelphia Federal Reserve manufacturing index declined dramatically M/M, substantially missing consensus forecasts in a historically negative signal for the near-term path of asset prices.
US housing starts also declined by double-digits on the month for the largest decrease in a year, though the metric is at least still hovering in the range established over the past year.
Collectively, this backdrop appears to be rippling through the broader business community, as a recent poll of several hundred CEOs suggested over 60% expect a recession in the next 6 months. White House economic adviser Kevin Hassett attempted to reassure markets that such a contraction is “100% not happening.”
Federal Reserve Governor Chris Waller suggested that the risks of recession could soon outweigh the risks of recurrent inflation, thereby justifying nearer-term easing of monetary policy.
However, Fed Chairman Jerome Powell indicated in public comments this week that, while the new tariff regime could pose a risk of stagflation, the central bank remains cautious on any policy changes and feels comfortable waiting for more data.
President Trump, a longtime critic of Powell and an outspoken proponent of lower interest rates, publicly impugned the Fed Chairman, saying that his termination “can’t come fast enough” and that Powell will be ousted if Trump wants him gone.
At this stage, we doubt Trump will actually succeed in firing Powell given the procedural and judicial delays would likely stretch close to the end of Powell’s term a year from now anyway, though we wouldn’t rule out the appointment of a shadow Fed Chairman as floated by Treasury Secretary Scott Bessent last year.
While Powell has held firm on benchmark interest rates for now, the European Central Bank eased its policy rate again this week, citing a much worse growth outlook on the back of decaying trade relationships.
Despite all the volatility and heightened policy uncertainty, US retail investors have continued to pile into leveraged long ETFs, with inflows setting a new record this past week.
Regulatory Update
Bo Hines, the Trump Administration’s Executive Director for Digital Assets, reiterated in an interview this week that the US government has interest in aggressively accumulating bitcoin.
Noteworthy
OpenSats published a report on recent advancements in bitcoin’s lightning network.
Digital asset advocacy group CoinCenter published a piece calling for the cases against Samourai Wallet and other cryptocurrency software developers to be dropped. The group indicated it will file an amicus brief along with the Bitcoin Policy Institute next month.
More than half of the attendees at this year’s Coachella music festival reportedly financed their tickets through “Buy Now, Pay Later” programs, the latest in a string of recent headlines pointing to the growth of short-dated debt for consumption goods.
Early bitcoiner Ross Ulbricht, who was recently pardoned from a lifelong prison sentence for his connection to the Silk Road marketplace, joined Nostr this week.
Travel
Bitcoin 2025, May 27-29
Bitcoin Policy Summit, June 25-26