Ten31 Timestamp 900,175
Is that the Undertaker’s music?! The kayfabe between two of the world’s most powerful men kicked into another gear this week, as Elon Musk learned the hard way that the event horizon on government fiscal rectitude was crossed well before X.com was even a twinkle in his eye. As Congress inches toward passage of the President’s Big Beautiful Bill, the world’s richest man went scorched earth on the Trump administration he helped usher into the White House just six months ago, calling the proposed budget an “abomination” and ultimately leveling some accusations about certain flight logs that we won’t republish in this PG-rated newsletter. None other than JP Morgan’s Jamie Dimon echoed Musk’s concerns this week, suggesting he foresees a “crack in the bond market” in the near future if the US doesn’t reign in its fiscal profligacy soon. President Trump responded to all the criticism exactly as expected, calling for a total elimination of the debt ceiling (in conjunction with strange bedfellow Elizabeth Warren) and antagonizing Fed Chairman Jerome Powell for lower rates to better accommodate the government’s ballooning deficits. Trump closed out the week by suggesting he’ll soon announce his pick to replace Powell – whose term doesn’t end until a year from now – potentially making way for the “shadow Fed Chair” proposed by Treasury Secretary Scott Bessent last year who can softly steer markets in a direction more helpful to the President’s agenda. Looking past this week’s WWE-style antics, we think we’ve seen this movie before, and it ends with (at least) another zero at the end of bitcoin’s price.
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Selected Portfolio News
Strike published an update to its lending terms, making its policy of avoiding collateral rehypothecation clearer:
Media
Fold Founder and CEO Will Reeves participated in a keynote panel on the bitcoin treasury strategy at the Bitcoin 2025 Conference.
Strike Founder and CEO Jack Mallers appeared on the Bitcoin Standard podcast to discuss the latest on Strike’s product offering and pipeline.
Market Updates
The week kicked off with some mixed data points, as ADP private sector hiring for May came in below expectations, increasing by the smallest amount since March 2023. The US Services PMI also came in south of consensus, falling into contraction territory for the first time in a year.
On the back of these weaker updates – and in what seems to be a bi-weekly ritual – President Trump publicly hectored Federal Reserve Chairman Jerome “Too Late” Powell to lower the Fed’s benchmark interest rate in support of the US economy.
However, the Atlanta Fed’s GDP Now metric appears to be on fire, pointing to 4.6% growth for US GDP in Q2. While a chunk of that growth comes from the plunge in the trade deficit early this quarter, the latest Non-Farm Payrolls data for last month also came in much stronger than expected on Friday.
On the back of these stronger updates – and in what seems to be a headline-agnostic ritual – Trump again publicly hectored Powell to cut rates, this time calling for the Fed Chair to cut by a full point to give the economy some “rocket fuel.”
As the Fed continues to hold rates in place, the European Central Bank cut its benchmark rate once again, the ECB’s eighth cut since its easing cycle began. The European policy rate now sits at 2% vs the Fed Funds Rate of ~4.33%.
Trump closed out the week by telling reporters that his pick to replace Powell next year will be announced “very soon,” potentially paving the way for the “shadow Fed Chair” pitched by Treasury Secretary Scott Bessent late last year. The move may open the path for Trump’s appointee to use “forward guidance” to nudge rates in a more favorable direction before next year.
These kinds of “creative” approaches to the growing US interest burden are becoming increasingly important with the federal deficit already at 6.5% of GDP even before the passage of President Trump’s Big Beautiful Bill (BBB), which the CBO now estimates will add another few trillion to cumulative deficits vs baseline projections over the next decade.
As part of his push for passage of the BBB, President Trump joined hands with *checks notes* Elizabeth Warren to call for an elimination of the debt ceiling, a heartwarming illustration of bipartisan unity showing that all politicians can ultimately agree that they need to be able to spend more of your grandchildren’s money.
This fiscal backdrop led JP Morgan CEO Jamie Dimon to predict a near-term “crack in the bond market” at a conference this week, as the Financial Times ran a feature on growing stress in sovereign debt markets worldwide.
Continued progress on the new budget also led Trump fundraiser and fanboy Elon Musk to lash out publicly against Congress’s fiscal profligacy, calling the BBB a “a disgusting abomination.” The thwarted DOGEfather escalated his attacks all week, ultimately calling for Trump’s impeachment, a very sudden and public ragequit that rattled markets on Thursday.
That said, investors seemed to look past the political volatility (or perhaps look forward to the inevitable monetization of the ballooning debt), as the S&P500 closed the week above the 6,000 level for the first time since February.
As debate around the US fiscal situation heated up this week, several notable trade headlines hit the wire as well, including President Trump’s first (publicly acknowledged) direct call with Chinese President Xi Jinping since Liberation Day. Trump suggested the call was productive and noted more talks will be held between Bessent and his Chinese counterparts next week.
Less encouragingly for the US, several reports this week pointed to leverage shifting in China’s favor, as Bessent lamented China holding back essential industrial products from the US (we’re not sure what else would be expected during a trade war) and the Wall Street Journal reported some automakers are considering moving their production to China to maintain access to rare earth materials.
While the politicians quarreled, bitcoin quietly continued to permeate traditional finance this week, with a few particularly notable headlines including reports that JP Morgan will soon offer margin loans against bitcoin ETFs, and will consider clients’ bitcoin and digital asset holdings when assessing credit quality.
Overseas, Russia’s largest bank launched a structured bond with returns tied partially to bitcoin’s performance. While not exactly a BitBond, the move is a very notable signpost for what may be a major emerging trend in credit markets over the next few years.
Regulatory Update
South Korea elected a new President who has historically been friendly to bitcoin and other digital assets.
Bo Hines, a key bitcoin advisor to the White House, and Patrick Witt, Director of the DOD’s Office of Strategic Capital, met with El Salvador’s President Nayib Bukele this week.
The UK’s financial regulatory authority announced it will lift its ban on exchange traded notes tied to bitcoin and other cryptocurrencies.
Much less encouragingly, the US Secret Service published a memo on “crypto mixers,” conflating any coinjoin activity with money laundering. Meanwhile, the judge overseeing the Tornado Cash case dismissed the defense’s argument about the protocol’s non-custodial nature.
In response to these ongoing developments, eight bitcoin and digital asset advocacy organizations issued a joint statement on the need for passage of the recently introduced Blockchain Regulatory Certainty Act in Congress, which would clearly establish that developers of non-custodial software are not money transmitters (in line with previously issued FinCEN guidance).
Noteworthy
Michael Saylor’s Strategy raised ~$1 billion in its initial offering of STRD, a new instrument within its preferred equity portfolio, which will be junior to STRF and senior to STRK.
Twenty One, the bitcoin treasury company co-founded by Jack Mallers, Tether, Cantor, and SoftBank, released the first proof of reserves attestations for its bitcoin holdings.
As Strategy, Twenty One, and many other companies double down on bitcoin as a strategic balance sheet asset, shareholders of Meta overwhelmingly rejected a proposal to consider a bitcoin treasury strategy this week.
Travel
Nashville BitDevs, June 10
Austin BitDevs, June 19
Bitcoin Policy Summit, Washington DC, June 25-26