The Pomp Podcast - #1336 Dan Tapiero | Bitcoin Is The Greatest Macro Bet of All-Time

Starting point is 00:00:00 What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Today's conversation is with Dan Tapiero. Dan is the CEO and CIO at One Roundtable Partners and 10T Holdings. Dan has been around in the macro world for a very long time. And this

Starting point is 00:00:42 conversation, which was recorded at Bitcoin Investor Day, is highly illuminating about what some of the greatest minds in finance are thinking about Bitcoin, cryptocurrencies, and the macro backdrop. We get into everything around Bitcoin, around digital assets, tokenization, what the big, big group of billionaires that you see on TV are constantly talking about in private, and where Dan is actually allocating capital himself. I always enjoy talking to Dan. He's got a very unique insight on the world. And I personally have learned a ton from him over time. And I think that this conversation will be highly illuminating to all of you as well. Here is my conversation with Dan Tapiero.

Starting point is 00:01:20 Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Today's episode is brought to you by Supra. If you're building anything in Web3 or crypto, you likely need oracles and verifiable randomness too. Supra's offering the fastest oracles and DVRF free for 12 months at supra.com slash pomp for a limited time. Supra delivers the freshest oracle price feeds across 50 plus

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Starting point is 00:02:52 you can mint your home address and upgrade it to a real world asset. This not only protects your home's title from fraud, but when you are ready to move, you can sell it through an NFT auction as well as through the traditional way. There's optionality here. Propy Keys is part of the Propy ecosystem. Their mission is to make home ownership more efficient, affordable and user-friendly. Propy Keys is a fun entry point to placing title on the blockchain. Now anyone can start their on-chain journey by minting home addresses via Propy Keys and staking them for profit until they are ready to sell their home. Visit PropyKeys.com to learn more. Again, that's ProppyKeys.com to learn more. Our next speaker is Dan Tapiero. Dan is a very well-known investor.

Starting point is 00:03:38 He has been in Bitcoin for quite a long time now. And when I first met Dan, somebody had originally introduced me to him as Dan has a bunch of billionaire friends. They all run in this billionaire circle, and they're getting excited about Bitcoin. That was probably 2020, I think. And I remember clear as day, I said, okay, that sounds great. But I've seen Dan tweeting about inflation, monetary policy, and the strength of the dollar. And I think I begged you to get on a phone call. And I said, explain this to me like I'm five. And you did. You did a fantastic job. So maybe walk us through, how do you think about Bitcoin with the macro backdrop and how much of what you were evaluating in 2020 and getting excited about still remains true today, even

Starting point is 00:04:30 though the macro backdrop has changed? We're at high interest rates and Bitcoin's at an all-time high. Well, first of all, I want to say happy to be here. I love this turnout. I don't understand why there aren't more events in new york city i mean uh it's crazy to think there are 30 million people in and around new york and i don't know what are there five or six events etc so it was a great idea i think to start this um you know billionaire friends now i i worked for a bunch of billionaire guys right i think that's what it is um some are friends but no i i i think that was the the uh initial introduction and then i do remember that call by the way when you asked me like this macro stuff i think raul powell had said some things and you said to me well

Starting point is 00:05:21 what is what does that mean exactly and it was about the dollar too which can be very confusing um yeah i mean i also have a small brain so i need to explain it you know but it's not something uh i say you know the the dollar the dollar euro um it's um it's not always straightforward what fundamentals are driving it so i i think with with bitcoin it's actually more simple it's less vague um but the macro case uh today uh frankly i think is probably better than when it was when we spoke in i think it was 2019 20. um you know just a lot of different ways we can take this but to think that the short rate in the u.s is five percent okay and bitcoin is now at an all-time high is not something that i think any of the macro people really uh anticipated most of the

Starting point is 00:06:19 people in the macro world were thinking okay well bitcoin only goes up because rates are negative right and this all was post-08 um you know bitcoin was invented and the idea was that uh real interest rates would be negative for a very long period of time and so that was true and it made sense that an asset um of limited supply would go up in that environment and of course you were losing you know two to three percent annually um you know that was the the negative rate, the negative interest rate for quite a while. So over a 10 year period, you were going to lose 30, 40, 50% of your savings in real terms. So many of the macro people thinking about Bitcoin within that context, at least it could make sense, right?

Starting point is 00:07:10 It's a, you know, you're hedging against the debasement of fiat, right? But now that the real rate is not zero and that, in fact, the short rate is 5%, I think it's really signaling to that macro group that maybe something else is going on. So what's remarkable is that it's 15 years since the invention of Bitcoin. And some of these guys who are phenomenal investors only thinking now that maybe something else is going on it's not just a hedge against the debasement of fiat right of course and bitcoin is many many different things um so when you say is it better uh or what is it compared to 2020 um i think uh i just never and i don't think anyone would have anticipated that we'd be this strong, given where the rate is.

Starting point is 00:08:17 So how are some macro funds or macro traders thinking about Bitcoin in the sense of, OK, there is something else going on? Is that unlocking them to start investing? The ones who were invested, are they putting more exposure on? What is kind of, once they get to a conclusion mentally and from a psychological standpoint, what are they actually doing? Well, I mean, maybe you recall or not, but I've left that world behind, thankfully. Not a lot of return, broadly speaking, in that world. And the old macro world is actually quite boring. Look, I think the people at those big funds who you know, the well-known guys,

Starting point is 00:08:59 they've done so well investing in the old framework. Um, you know, you saw, of course, a few years ago, Paul Tudor Jones's comments and every once in a while he'll come out and say, you know, he owns a little bit of it, but I don't think any of them, uh, have really done sort of the super deep dive that would, um, allow them to only focus on this. And you know, the guys from my background, Mike Novo, who you had this morning, Dan Moorhead, I mean, I've known those guys 20 and 30 years. You know, they're a little younger than those older guys.

Starting point is 00:09:34 And they made the transition completely because this really is the, and I say this a lot, this is the greatest macro bet of all time on Bitcoin, on the digitization of all assets, on the, you know, the fact that I think all value is eventually going to sit somewhere on some blockchain and live in this digital asset ecosystem. So, you know, I really don't think that the commitment to the space is there, certainly amongst the sort of older macro guys. But then also, you know, even the prominent long-short equity guys, you know, there's $3 trillion in that hedge fund business.

Starting point is 00:10:20 um and i i mean they're a handful of people i think the etf as it becomes more liquid so it's not really liquid for a proper fund for trading purposes i think it'll become super liquid just like the gold etf which was introduced in 2000 in the beginning wasn't liquid um and then the actual the options on the gld became the place uh super liquid um super liquid i think that'll eventually happen within the next sort of maybe two, three, four years. And then when it becomes liquid, all of those guys will be trading actively. But to me, that's really less interesting. I think the way to really build wealth, if that's what you care about, is just to hodl, as you and I've talked a lot about. I know it's crazy to think you can just sit there and be long and not do

Starting point is 00:11:16 anything, right? But I'm experiencing it. You've experienced it. Hopefully, everyone in the audience here has experienced it. It's kind of crazy, right? How is that possible, right? That you don't have to go out and sweat and work 18 hours a day, and all of a sudden, your wealth is building. And it's because you've taken a risk that other people, literally 99% of the people out there are not willing to take because they're not willing to do the work. So I love this concept of proof of work algorithm, right? You did the work, you're sitting there. Some people just get lucky and have their gut feel and they buy something and they come back, you know, in five years and it's done well for them. But the reality is, is that you're getting compensated. This is from a

Starting point is 00:12:03 financial markets, you know, portfolio management perspective. You're getting compensated for taking that risk. And so I think you continue to get compensated. I mean, Kathy's prediction or estimate of where it goes is nice, but she didn't give you a time period. And that's a little bit of a problem because macro macro takes its time to play out sometimes. And it doesn't, you know, I always say that, and this is many years being involved with gold, gold never does what you want it to do when you want it to do it. So it's a very, very frustrating thing, unless you're just long. That was in the old world. And I think it's the same thing here that at least in this cycle, I would say, you know, 200 to 300,000, I think is reasonable. In the next 12, 24 months,

Starting point is 00:13:00 it might happen more quickly. But as she rightly said, the ETF is very important. We could talk about that more if you want in a sec. But I think longer term, sure, you can put any number you want on it. 20 years could go anywhere. But I think there's too much also that can happen between now and 20 years from now. So I would put a little more of a... I'm not a short-term guy at all, but i think that that's sort of the first target let's talk about bitcoin and gold uh you are that talk on that that one time yeah you well you are one of the people that i think has done a ton of work on gold has a very strong understanding of that market uh has been right for the most part when it comes to gold um but unlike uh my uncle peter schiff he's not really my uncle but he's

Starting point is 00:13:53 basically my uncle um who has stayed kind of stuck in that world you've been able to say no it's not an either or it can be an and type situation with bitcoin so how do you look at gold and bitcoin similarities differences and how do you think institutions if you go to central banks all the way down to you know financial organizations are going to look at these assets in there these double questions you have to stop with i'm terrible you got to ask one and i'll do that and i'll move on um i don't know why you'd ever met mentioned peter schiff ever um within any context he's certainly not in an investing or proper one a context but um i don't know uh he's uh sort of not a relevant player okay so look i mean clearly bitcoin will continue to outperform gold

Starting point is 00:14:45 um you know i have a physical gold business sales and storage business called gbi i launched it in 08 we're today the third largest balter of gold in the world outside the banking system traded gold since the 90s, done a lot of work and I've thought a lot about it. And look, gold is a great hedge within the old world. So there's the fiat world. And so there's all the value and all the assets that exist in the fiat world, bonds, stocks, commodities, currencies. And if you're worried about that system and you're of that system, then gold is a great hedge for that. You know, it hedges against the debasement of fiat. And, you know, there are a lot of great characteristics. But, of course, Bitcoin has all of that and then a lot more. And so I suspect,

Starting point is 00:15:45 I mean, it'll be easy for Bitcoin to outperform gold. You know, I have this sort of different view about this whole thing, which is that I think that the entire fiat world, so they call it five to seven hundred trillion dollars of assets that exist. If you just add everything up, the real estate, you know, the art, the money, the money supply, add it all up. all of that is slowly, and not in that case, but slowly devaluing against everything in this new world. It's not just Bitcoin. If you look at the last 10 years, every single asset in the old world is down 99% against Bitcoin. Everyone, S&P, NASDAQ, of course, Bitcoin was starting from a low number. But, you know, it's the same thing for Ethereum in the last eight years. Every single asset, no matter what bonds. And so and it's even true with some of these crappier cryptocurrencies

Starting point is 00:16:50 that you'd never invest a dollar in or a Bitcoin in. And I think even they have gone up exponentially against all the assets in the old world. So for me, you know, it was easy to make a break because I saw my purchasing power getting destroyed. I'm sitting there in all the old world investments and, you know, okay, you have a 10% move or up 20 or 30%, but the everything in this digital asset economy is crushing it. So why is that important? I think because there's this idea that the fiat world is over leveraged. There's too much debt. And I don't ever think that we're going to have a government default or a debt jubilee. None of that happens because it would be too cataclysmic but what happens and what does happen is that that whole

Starting point is 00:17:52 world which is which is over leveraged and there are too many bonds devalue slowly against the new world where in a sense there is a finite supply and it is there's no leverage zero leverage no one will lend to anybody in the digital world. I own 24 companies in the space. No one is lending them any money. So I think if you think about things in those big, broad terms, it does make sense to exit as much as you can of the old. I mean, you have to have real estate. You live in a house or whatever it is. But that's how I think about it. I think there's never been a stronger case. So as you are converting value from the old world into the new world, there's a lot of different investment opportunities. You can own companies, you can own existing liquid tokens,

Starting point is 00:18:50 you can own soon to be liquid tokens that are not equity, but they're kind of more like early stage investing. There's growth, there's all these different components. How do you think about where you put capital and how many different areas do you want to be invested in? Yeah. I mean, it's an extremely complex world. And if you're just entering and you just say to me, I just want to own Bitcoin, I think that's just fine. And, you know, I just want to own ETF too. Even that is fine, even though I would prefer I wouldn't do the ETF. But I'm just saying that's for new people who are just coming into the space. That's great. um but you know as an investor you can't do absolutely everything in one thing i guess unless you're michael saylor i mean michael you know 100 just in bitcoin and this thing but so i my my view generally is that you should have a bit of a portfolio you have bitcoin uh and ethereum i think those are the two core assets of the space um bitcoin more core but anyway i i know

Starting point is 00:19:51 a lot of people disagree with that. But I think that network effect has been achieved. And everything else is probably a venture project in my mind. Maybe Solana is transitioning. I don't know. But then, so you decide what percentage you want your portfolio to break down, Bitcoin ETH. And then you have a little bit of a venture fund because there's crazy Wild West stuff going on in the space. And you might want to have some exposure to that. And then a little bit in a growth fund and that's what i do and as far as i know we're still the only growth equity fund in the world that's exclusively focused on crypto blockchain web3 digital assets whatever you want to call it um so that's how my portfolio is structured yeah why are you guys the only one

Starting point is 00:20:39 does i don't know it makes no sense to me um i would have thought by now i mean i had the idea for this in 2019. And I would have thought there would be 10 or 20 guys. In fact, what's happened is a few of them came in and crossover funds in 20, 21 and 22, you know, very famous guys, Toma Bravo and Silver Lake, Tiger, KOTU, all of these, Tomasic, all these big players. And unfortunately, you know, there are landmines all over the space and they stepped on a few and FTX. Thankfully, we passed on them three times. But FTX hurt them. And he hurt the reputation of the space for more traditional players and growth equity players. So they moved out. They've been moving out. And if you're in venture, I don't know who is going to fund

Starting point is 00:21:33 the rounds two years from now, you do the seed or an A round, I don't know where the money is going to come from. Our estimate is this $30 to $50 billion of growth that is equity that is going to be needed in the next two to four years for the next stage of the winners from the venture area right so i don't know why uh i i basically you know i someone asked me that every day and i i have no i have no idea why you know what is the thought process um in venture with what i'll call growth illiquid equity versus growth investing in these like liquid protocols that if they were not in crypto they would be more like early stage startups oh i mean there's like it just shows you how early we are i mean there's zero interest or ability in the early stage

Starting point is 00:22:32 protocols i mean that just it's so hard to understand for traditional people um i think it's more simple you know understand that coinbase is a great business coinbase is essentially the only public company, large crypto public company in the world. The question really is, you know, not only were the growth equity guys, but why aren't there more companies? You have some of the miners, of course, and you have, you know, Mike's firm Galaxy, it's smaller. I suspect that over the next sort of three, two, three, five years, I'm not exactly sure, but in that times that we're going to have many public companies um that are you know from the space i i see sort of emerge emerging um of the equity in the token world i don't see equity going away tomorrow

Starting point is 00:23:27 there's a established sort of system of value um and also the laws are very clear and there's lots of legal precedent, especially with bankruptcy laws. In the crypto space, there's no precedent and all sorts of stuff goes on that shouldn't go on. So I don't see equity going away. I just think they sort of urge somewhere in the future. But very long term, I think you could make the case that there may not be equity, you know, 20 years or something, 15, 20 years, that everything may just be tokenized. So the Bitcoin network to some degree is this, right? In the sense that there was no equity. It was just a token. You buy it. You don't necessarily own the network by owning it, but you have a piece of the network. How do you look at that asset when

Starting point is 00:24:24 some people say, look, it's a store of value. That's all we need it to be. It's kind of quote digital gold and that's good enough versus maybe the other end of the spectrum which is you know it becomes a global reserve currency and is used as a medium of exchange in a unit of account like where in that spectrum is kind of your north star that bitcoin ends up that is really hard um you know i i always just think about what do i do with my bitcoin which is it's just in a vault right hardware wallet finished like i don't not gonna stake it i'm not gonna use it i'm not gonna spend it so that may not be the way the future unfolds um i mean the the use case um but you know i i think it's an incredible asset um

Starting point is 00:25:16 i actually i'm not really sure like is it used for absolutely everything and by everybody and that's it you know i don't know human beings uh you know like to have some variation uh and like like to choose even if the choices are wrong um you know i always say uh like if you may think mcdonald's has the best burger but then you know you have burger king and wendy's and you have burgers. People make all different kinds of burgers. And we all agree that there's only one thing that is it. I don't know. Just looking at the human behavioral pattern, it just seems to me would be hard. So I don't know. I mean, I think, look, theoretically, could it be everything? Yeah. I mean, it could be. But I think that's a hard bet to make, right? Like it's a hard,

Starting point is 00:26:11 And you can be happy with the asset and not get all the way to all money, to all people, all the time. What about sovereign wealth funds, nation states, these large, large pools of capital? One of the things that's interesting to me is there's some countries in the world that are very, very large. if they were to go buy Bitcoin and take self custody of it, they would be expressing financial exposure, but they also would be introducing this geopolitical conversation. And I think the US and others would be like, what are you doing? But now with the ETFs, they may be able to express the financial exposure to price without having to introduce the geopolitical conversation because they actually don't own Bitcoin, they own shares in the ETF. So is that like kind of a green light

Starting point is 00:27:01 for them to start to allocate yeah i mean we are light years away from that i think i mean i know there's some talk about these are cutter or oman or one of these middle eastern countries um and if they bought something it was probably de minimis so i i mean everyone in the audience should be happy about this because it's very early and i think at some point they will all own bitcoin um and that's i don't want to say an infinite amount of money but i mean it is nearly infinite right because many of them can print whatever they feel like um you know some have repercussions on their local currency the us doesn't really um so i i i i don't think they're anywhere i i don't know what makes you do you have you heard some big central banks buying i mean i

Starting point is 00:27:55 And the people I speak to, I only know one central banker who I think is advanced in this area. And I don't even think that central bank will be able to buy for years. I think central banks are looking at it. They're researching all that. So it's kind of early on that side. But I do think that there's a number of countries that are much further along than people realize. Big ones? Very big ones.

Starting point is 00:28:25 Yeah. Now, a lot of them may just say, hey, the safe thing to do is like, let's build infrastructures, let's do mining. Again, you know, I actually think we don't give other national leaders enough credit for them understanding the geopolitical complexity. And so if you are a country that sometimes is nice with the US, sometimes not, this is like kind of throwing like a Molotov cocktail into a room, like you probably don't want to do that. mean you know funnily enough in the last i think six to nine months the central bank buying of gold which i'm sure nobody in the room really what looks at but has exploded dramatically and i it's all part of the u.s having i think taken uh russia's reserves uh you know they made a certain political decision geopolitical decision they they just took the reserve so other people and you know the arab countries their currency is still completely pegged to the dollar so they have have no diversification at all within their assets. So there's a paper from a gentleman at the Harvard School of Economics, I believe. And basically what he tried to look at was Bitcoin as

Starting point is 00:29:32 a sanctions hedge. So being introduced into central banking, not for price or kind of economic reasons, but purely as a sanctions hedge. And his conclusion was it would make sense. Did anyone read that paper or was it just you? I read it. i mean it was just you yeah i haven't even heard of this paper but but here's the the part that's interesting to me about it right is um central banks and other large pools of capital we all sit up here and talk about them as this if they're just economic actors but when you're acting on behalf of a pension fund uh a nation state etc you actually may make decisions not for economic reasons, but for nationalist reasons. Yeah. I mean, that's the infinite bid scenario.

Starting point is 00:30:15 I actually think if I were a central banker, I would definitely be buying. And I don't think it's that far. I think they can understand it. I think it's very hard to get a buy-in. And I see this when we have a few institutional investors. I've got the Texas Teachers pension funds invested $30 million with us and the Michigan pension fund MERS. And you've got to understand every time you have a, after a pension, not only do you go through a year of diligence, but you have to get through a committee and the committee has seven people or 19 people. And as a central bank, the same thing, you can imagine everyone's sitting around the table. all you need is one or two people to veto it or a few people um so i think it's very hard

Starting point is 00:31:10 to get the buy-in even though by now i mean there's enough literature out there i mean the harvard paper you mentioned but there's a ton of literature out there that suggests it's a it's a good idea even just as as a hedge um uh but it's very hard it still is hard yeah the um the last question that i have is around custody itself um i think that obviously big institutions they need qualified custodians and all of that but how do you see bitcoin playing out more at the kind of you know middle market or retail level does bitcoin everybody will just at least in the u.s we'll just buy the etf you have your uh you you know call up your broker You put your order in. I think that's the, we haven't talked about it, but the power of this

Starting point is 00:32:01 thing is that you've onboarded literally, you know, a hundred trillion dollars of value sitting in global equity accounts in one day. So, I mean, I don't know, that's like a Coinbase adding a hundred million, you know, monthly active users, or I don't know, maybe multiple hundred million. i i don't know so i i think um for the you know certainly americans but you know the higher echelon like wealth group who own equity or have other financial assets um it just this is a huge uh a huge deal and i i mean i think self-custody is important but But people don't necessarily get there day one. And the ETF, I think, is great because it really is an easy first step, right?

Starting point is 00:32:59 And then they make a little investment, and then they start doing a little work, and then they buy a ledger, and then they're like, oh, well, what are all these other things going on in this space? Why are all these people focused on this? Why is there $3.5 trillion of value sitting here? And that's when people start to get the light bulb moment. But it's not easy. So I wouldn't be too hard on the people who are not getting it.

Starting point is 00:33:27 As you know, you have to be dedicated. And you doing events like this, I think, is fantastic because it gets the word out. Everything I learned, I learned from Dan. I appreciate it, my friend. That was sick.

The Pomp Podcast - #1336 Dan Tapiero | Bitcoin Is The Greatest Macro Bet of All-Time

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