Ten31 early leak of weekly Timestamp
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In a volatile week filled with headlines across the macro and regulatory landscape, a notable dichotomy continued to take shape: the simultaneously growing acceptance of and resistance to bitcoin among legacy investors and institutions. The first theme was on display in the divergent price action of bitcoin and US Treasury bonds – while Treasuries took another beating on the week with the 10-year yield spiking ~40bps W/W to nearly 5%, bitcoin held its recent range and took a ~10% leg up on Friday. At the same time, the many financial institutions with spot bitcoin ETF filings noted continued progress toward approval, and BlackRock CEO Larry Fink even went so far as to call bitcoin a “flight to quality” trade. While Ten31’s thesis on the power of bitcoin infrastructure investing is uncorrelated to near-term bitcoin price swings and the progress of ETF filings, we view this week’s divergence between traditional markets and bitcoin as a noteworthy signpost for the way legacy asset managers will ultimately come to view bitcoin and bitcoin technology as the unbroken 40-year bond bull market sputters to a halt.
On the flipside, this week also saw signs of institutional resistance to bitcoin, as the US Treasury Department’s FinCEN arm released new, excessively broad guidance on the treatment of cryptocurrency “mixing” services. Under FinCEN’s proposed guidance – which will now enter a 90-day public comment period – virtually any use of bitcoin could conceivably be categorized as “mixing” and made subject to additional oversight and burdensome, invasive reporting requirements by regulated financial service providers. In the battle between economic incentives and the inertia of sclerotic institutions, we expect the former to ultimately win out (as suggested by the capitulation of long-term bitcoin skeptics like Larry Fink), but this latest proposal from FinCEN serves as a reminder that bitcoin’s path to global monetization still faces hurdles that demand attention and response.
