The Pomp Podcast - #1369 Solo Episode | Altcoins Are Coming To Wall Street

Episode Date: June 8, 2024

Anthony Pompliano records a solo episode about altcoins coming to Wall Street. Anthony explains how it is going to happen, why it is happening, what you should be paying attention to, and what assets could become valuable, and what assets may not become valuable. ======================= Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. Protect your loved ones with sound money built to manage life’s uncertainty and a broken financial system. Their BTC-denominated Whole Life Insurance policies allow HODLers to pass more BTC on to their loved ones and a tax-advantaged way to access BTC for liquidity during their lifetime. Visit their website at https://meanwhile.bm/ to join the waitlist for a policy and to learn more. ======================= BetOnline.ag is a proud sponsor of the the Pomp Podcast. Use crypto to bet on sports, play poker and enjoy casino games at BetOnline. Visit https://promotions.betonline.ag/pomp and use promo code POMP100 to receive a 100% matching bonus on any crypto deposit. BetOnline boasts no crypto transaction fees, and processing is anonymous, instantaneous and secure. ======================= Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/ ======================= View 10k+ open startup jobs: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

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 episode is a solo episode. It's all about altcoins coming to Wall Street. There's many people who disagree with that idea, but I explain exactly how it's going to happen,

why it's happening, and why you, whether you are a Bitcoin maximalist or someone who loves altcoins, should not care what actually happens in terms of which assets come to market, but rather you should find solace in the fact that free market capitalism is going to do its job. And ultimately, I explain why certain assets will end up being valuable and many others will not. I hope you enjoy these solo episodes, but today is a special one because I know it's a topic that lots of people love to debate and I wanted to weigh in with my thoughts. So here you have why I believe altcoins are coming to Wall Street and what our opinions ultimately don't matter. 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 Meanwhile. Meanwhile is the world's first licensed and regulated life insurance company built for the Bitcoin economy.

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give institutional investors exposure to crypto assets outside of Bitcoin and Ether. That's right. Franklin Tempest wants to go all the way down the coin market capitalist and give people exposure to all those other assets. Now, why would they do this? Bitcoiners would say that's not Bitcoin. That's a distraction. Let me explain what's happening. See, one of the counterintuitive things is that Wall Street loves risk. That's right. They are not as risk averse as you think. Plenty of people think they're dumb, but actually Wall Street is just addicted to risk. Why? Risk has volatility. And volatility means that maybe there could be returns there for the big institutional investors. And so that's exactly what we're seeing, is that Wall Street has woken

up to the fact that crypto is risky, but also crypto has lots of volatility and there's a lot of potential return. And so that's where they want to go and allocate capital. Now, if the big institutions want to allocate capital to something, someone somewhere is going to create a fund, a vehicle, or some sort of mechanism for them to get exposure to it. And so, of course, Franklin Templeton and probably many others are considering giving altcoin exposure to Wall Street. Now, here's what's really interesting about this. You can look at options to understand just how much Wall Street loves risk. A zero-day option is basically a bet on what you think is going to happen to the market today. You're betting on where the market's going to be

by the close of the market in the same day. Zero-day options make up more than 50% of all options trading. That's basically gambling. Wall Street has created the greatest casino in history. And now there are these brand new assets, crypto assets, altcoins, things outside of Bitcoin that have tons of volatility.

And that means that Wall Street is gonna come show up with size. I like to think of this as a natural progression of the market. Of course, people are going to buy Bitcoin, but Bitcoin is a great store of value. You buy Bitcoin and you hold it. One Bitcoin equals one Bitcoin. Yes, Bitcoin's dollar exchange price goes up.

And so it feels like you're making more money in dollar fiat terms, but you still just have one Bitcoin. And so if you go and you take a look at these altcoins, it's the same exact thing, just on steroids. They go up lots in fiat terms, but a lot of them are going to end up being worthless. So in the sense that Bitcoin investors are long-term thinkers, they're buying something they're not going to sell and they want to hold it for the long-term. Altcoin investors are not doing that.

Altcoin investors are saying, give me the dopamine. Give me the short-termism. I want to buy something, watch it go up a lot very quickly, and then sell it. Well, guess what happens there? Some people make money, but many don't. But that doesn't matter to Wall Street because they don't care about the long-term viability of these assets. They simply want to be able to buy things, make money quickly, and get out of them.

That goes against everything that Bitcoin stands for. But it's not going to stop the fact that altcoins are coming to Wall Street. The more that we watch these assets gain popularity in crypto, the more that we should expect Wall Street to want to allocate to them. See, there's this term in crypto called a crypto degen. It's an endearing term. It's meant to talk about these people who have these really radical investing strategies. Frankly, they're doing things that violate

all of the traditional investing principles. But one secret of Wall Street is there's just as many, if not more, degens on Wall Street than there are on the crypto market. How many times do you have to see Wall Street investors create super exotic financial products, take on massive amounts of leverage, or do things that end up in ruin

for you to realize that Wall Street is all about risk-taking. They simply want to risk money to drive a return. Now, the funny thing about risk is the more risk you take, the more return you should get paid for having taken that risk. And so in crypto, there is immense risk.

But the further you get on the coin market capitalist, the more risk you're taking. And therefore you're going to need to drive a higher and higher return to compensate you for that risk. And that's exactly what Wall Street's looking for. Wall Street loves things that go up 10%. They love things even more that go up 100%. But if you show up and say,

there's an asset that may go up 10,000% or it may go to zero, you have a line out the door of Wall Street investors who say, let me understand what this is. Let me try to value it. Let me try to predict the future. And I'm willing to risk a little bit of dollars in order to make a big return. And so naturally, some of these financial institutions are going to figure out ways to give them exposure. Franklin Templeton is trying to do it in a private fund. Many others will probably launch private funds as well. Eventually, though, they'll be public funds. You'll be able to buy these altcoins in the public market. Now, a bunch of Bitcoiners are going to yell and scream. They're going to say, wait a minute, this is all garbage. Why would we ever let people buy this? Look at

the stock market. I can show you a ton of stocks that are down 90, 95, 99%. That doesn't mean that we should shut down the stock market. It just means that specific company was overvalued and the market is punishing it. See, that's the beauty of a free market is that the market is the referee. It rewards the companies or assets that end up being more valuable in the future, and it punishes those that are not. And so ultimately, I actually think that having these crypto assets exposed to a bigger market will help us identify which ones are valuable and which ones are not. If you're a hardcore Bitcoin maximalist and you believe Bitcoin is the thing that is going

to survive, then everything else will die and you've got nothing to worry about. If you're somebody who believes that smart contract platforms are going to end up being successful, then as those assets get exposed to more people in the market, they should continue to appreciate in value. And if you're somebody who thinks that meme coins are the future, although I may disagree with you, then having those exposed to more people in a market should lead to more value creation. But who cares what my opinion is? And frankly, who cares what your opinion is? The market is the referee. The market participants will allocate capital. And over time, the market usually gets it right. It may take a while, but really the market ends up doing a great

job of taking money from bad companies and bad assets and reallocating it to good companies and good assets. And so we are at the start of figuring out which assets actually are valuable and which ones are not. That's the beauty of these public markets. And so although the SEC has been very slow to approve a ton of products. I do believe that this approval of an Ether ETF is going to open the floodgates. Altcoins will come to Wall Street. What is the difference between Ether and name your next 5, 6, 7, 8, 9, or 10 coins? It's unclear. And so I do think that we are going to see single name ETFs for a bunch of assets. I think that a ton of financial institutions are going to get very clever about how to give people various types of exposure to these assets. And I

even think that you're going to see people start to take crypto assets and traditional assets and put them in the same exact type of fund. And so when that starts to happen, you're going to get a blending of these two industries. No longer will there be a crypto market and a traditional market. It's all going to be the financial market. People will allocate capital. Some people will win. Some people will lose. Some people will take too much risk and some people won't take enough risk. But But that is ultimately what capitalism is about. Your opinion doesn't matter. The market is the referee.

And over a long enough timeframe, the market will get it right.