The Pomp Podcast - #1501 Cathie Wood | Institutions Are All-In On Bitcoin

Episode Date: March 10, 2025

Cathie Wood is the Founder & CEO of Ark Invest. This conversation was recorded at Bitcoin Investor Week in New York.  In this conversation we talk about what the environment was like buying bitcoin in 2015, why bitcoin is so innovative, institutional interest in bitcoin, global macro world, market uncertainty, DOGE, bitcoin strategic reserve, and the future outlook on the market and bitcoin.========================Are you ready to level up your Bitcoin mining game? Mining Disrupt, the world’s largest Bitcoin mining conference and expo, is happening March 25th to 27th, 2025, in Fort Lauderdale. Network with industry leaders, discover cutting-edge hardware, and gain insights from world-class speakers. Plus, enjoy exclusive events like the Cigar Lounge and Pre-Party Social for meaningful connections. Get your tickets here: https://miningdisrupt.com/========================The future is being built today and the future of currency isn’t dollars, euros, pounds, or yen, it’s crypto. And Gemini thinks that’s a great thing. Because a future where money is decentralized, inclusive, and globally accessible, that’s a future that we are anxious to be a part of. Go where dollars won’t. With Gemini. ========================Xapo Bank, the world’s first fully licensed Bitcoin-enabled bank, offers military-grade security with an unmatched blend of physical and digital security, as well as pioneering regulatory oversight, so your funds are always protected. Beyond secure storage, they enable you to grow and use your Bitcoin. Earn daily interest in Bitcoin, spend with zero FX fees using a global card, and make instant payments via the Lightning Network for unrivalled access and convenience. Visit https://www.xapobank.com/pomp to join.=======================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. 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. you definitely got to come to mining disrupt the largest mining focused conference pretty dang awesome it's a great opportunity for the people let's go out and make some money with it get engaged defend the industry Today's episode is brought to you by Gemini. The future is being built today,

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That's X-A-P-O-B-A-N-K.com slash pomp. Thank you, Anthony. Hello, everyone. 2014 i think it was yes you put bitcoin into your uh portfolio well 2014 was our first blog 2015 was our first white paper and um we put uh we gave our clients exposure to bitcoin gbtc at the time the only thing we could use uh in 2015 uh between 200 and 250 dollars all right oh by the way we faced so much resistance that's what i was going to ask you about explain what the reaction was no from everyone including we had to ask permission uh we had to ask the new york stock

exchange permission to put it in i don't know all the rules and regs but they said okay yes but only one percent of the portfolio but they didn't tell us that we had to sell it if it went higher so we has never sold it until the end of 2017, where other regulations and the pushback from traditional financial service really hit. We were scaling our business, meaning our ETF business, which is all around all kinds of disruptive innovation. And so, boom, but we were not getting on platforms like Merrill, Morgan Stanley, and others because our flagship had Bitcoin in it. And so we then decided,

okay, we're going to keep it in next generation internet, but flagship right at the top, $20,000. Better, better lucky than smart. You every year put out a big ideas list and it's all the things that you guys think are going to be important for the next year, but also you highlight a lot of innovative technologies. And I think why you are so loved is because you're constantly thinking about where the world is going and which technologies are

going to play a big part there. Bitcoin has been one of those technologies for a long time, but it is not operating in a vacuum. We now are seeing things like artificial intelligence and humanoid robots, even self-driving cars. And it feels like when I read the big ideas and listen to you talk. These things are all coming together. And so talk a little bit as to how you see Bitcoin's role and maybe the broader innovative technology bucket and how these things will all kind of work in unison as we kind of build the future. Yes. One other pushback we got just to say when we first put it in, we were kind of new to the business. And the most famous ETF publication of the time made fun of us saying, yeah, great marketing gimmick. And my answer to

that was great. They have no idea what this is. They have no idea. Anyway, yes. So we just put out earlier this month, something called Big Ideas 2025. And we've become fascinated with the convergences among all of the technologies around which we have centered our research. So we've centered our research around the five major innovation platforms evolving today. So as you said, Anthony, robotics, energy storage, artificial intelligence, blockchain technology, and multi-omic sequencing in the life science space. AI, if you look at the convergence chart in that deck and compare it to the one we put in last year, what you see are the convergences are intensifying with AI, really the heartbeat of convergence, pushing everything along and

accelerating the pace of change, and also accelerating the deflationary undercurrents. And I know this is very controversial, but accelerating the deflationary undercurrents that we believe are going to intensify deflation, not bad deflation, good deflation. When you cut prices, you enable more access, right? So if you look at the convergence chart, you know, we've focused, of course, on blockchain technologies and agentic AI.

And I'm sure people have talked about this today, no? No. Oh, okay. Teach us, Cathy. All right. Does anyone, have you heard of a gentic AI? Yes. Yes.

So I wish when I started Arc, I wish I had an agent who I could just say, I want to start this company. Tell me what I need to do legally, operationally, marketing wise. And you just, you know, you can do that today. And of course, DAOs, I mean, back in 2016, we heard distributed autonomous organizations. You know, people say, that's crazy. And we were saying, no, there's something's going to happen that's going to enable this new world. And so the world we're moving into, let's say I start up my business and, you know, my agents that I put on each of these tasks, you know, has to has to facilitate payment, you know, from one to the other. and however we structure the organization,

it can't be done with fiat now, the way we're set up. It probably only can be done with blockchain technology and crypto assets of various types. And I know we have a lot of Bitcoin maxis here and we're as maxi as they come in terms of where we think the ultimate value will reside in the entire ecosystem. But in terms of facilitating both personal agents, I hate shopping. I hate shopping. I just want someone to dress me and tell me what I look good in or somebody else tell me what I look good in and just have it happen. We're moving

into that kind of world. And as we enable our agents to do more and more, giving them more information and freedom to do so, we're going to need peer-to-peer transactions, API to API payments in order to follow through on some of these autonomous organizations. When I hear you talk, what I think about is Bitcoin is becoming this hurdle rate. It's becoming this kind of benchmark where you're talking is the ultimate place where value will reside. How do you think about Bitcoin from a portfolio standpoint, if it continues to compound at 60% year after year after year after year, is every Wall Street investor just eventually have to throw their hands up and say, I can't beat this thing? i i gotta buy it like how does that play into uh an investment community that you know billions of dollars is spent on salaries and offices and research and all this stuff and bitcoin just continues to outperform them so again and in uh big eddie is 2025 i guess i'm promoting that quite

a bit but there is a page where we're talking to traditional uh financial services and i don't know know if you're referencing this, but we list the assets and their compound annual rate of return over the last five years, all of them, all of the major assets. And we put in there the Sharpe and Sortino ratio. So if you're not, if you don't do quantitative analysis, modern portfolio theory, all of that, you're probably not going to care about that, but they do. And I think it is beginning to turn heads. Because if you look at the, I think it is, it's not even the four-year moving average, which would capture the cycle, but the three-year moving average. Bitcoin has gone up every year if you're using a three-year moving average. And I think it's just becoming undeniable

that it is a force that, especially now, that institutions have to consider it as a new asset class, because we've also put out there, actually put it out in 2016, Bitcoin ringing the bell for a new asset class. We showed the correlations of returns, the correlation still, even though traditional investors are getting involved the correlation correlations with other assets still very low it's absolutely essential that institutional asset allocators take a look at this asset if they don't they're not doing their fiduciary responsibility so we're trying to we're trying to help ease them provide a bridge okay we're talking your language uh bitcoin is not only a technology uh it's not only one of the biggest ideas ever uh you know

the global monetary uh system rules-based digital private all of that but it is a new asset class and when you present investors with those three and and and they're not knowledgeable enough um it's a little bit threatening or they feel a bit vulnerable so we are trying to bridge in with okay we're going to talk your language uh you need to look at this new asset class it's not operating in a vacuum there is a global macro world there is trade wars we saw today uh did you see and trump i don't know if anyone has seen yet uh but uh president trump and vice president, Vance, essentially, you know, called Zelensky into the principal's office in front of the media, told him, knock it off. Took him to the woodshed. That's a good Reagan expression.

Took him to the woodshed in front of all the world to see. And so as that's happening, let's just say that there's maybe two major themes. There is the global macro world, which is global liquidity and interest rate and policy decisions and all that, overlaid with uncertainty, maybe is the best way to do it, right? And I think that there's a lot of people blaming the recent price action on Bitcoin and all that on some of that uncertainty. But how do you see Bitcoin's future if we have a world where Doge is cutting government spending, if we have a world where these trade wars are playing out? How does your analysis of Bitcoin change? And if we have a world which we believe we've entered where five major innovation platforms involving 15 technologies are converging

and disrupting the entire traditional world order. Well, in that world, now I'm very confident in our research and in our projections, but if I'm someone who doesn't do what I do all day long And I'm studying all the ways to hedge against, you know, all the uncertainties out there, ground shifting underneath us technologically, geopolitically. What is the one thing I am certain about? I am certain about 21 million units. I am certain about that. and there have been you know for those of you i don't know um if we have an economics oriented audience here but uh art laugher actually helped us write that first uh white paper on on bitcoin

and um and he said after he agreed to collaborate us and with us and he said But, you know, this is what I have been waiting for since the U.S. closed the gold window in 1971. He's been waiting. He's 85 now, I think. This has rejuvenated him and he's proselytizing to the rest of the world. El Salvador, Suriname, he was in Argentina. And he's beginning to help them understand how important this source of certainty will be to them. And, you know, one of the biggest things that has surprised us when we were brainstorming about Bitcoin in the early days of ARK, our working assumption was that the early government adopters of Bitcoin would be in the emerging markets because they live in such a chaotic world. That is, you know, they are battered every now and then by the dollars appreciation and which, you know, they've got a lot of dollar denominated debt.

They run their country, their their countries on their own currency and they're losing out constantly. So I've been very surprised that the U.S. really I mean, yes, El Salvador was, you know, was there. But the U.S. is is leading the charge here. And I think it's going to serve us very well over time. I want to talk about the economy moving forward over the next year, two years, three years, because I think that's going to have a very big impact on Bitcoin. Let's start with Doge. They say they're slashing costs every day. They're tweeting some ridiculous use of taxpayer money. What is your confidence level in their ability to be successful? But also, how do you think that affects financial markets? So much of asset prices going up has been that

the government is incredibly bad at their job and they waste a lot of money. So we devalue the dollar and asset prices go up, but if Doge is successful, does that actually hurt asset prices? Oh, no, no, no, no, no. I actually think this is, you know, I started in the business, well, I was in college in the late 70s, but really here in New York in the early 80s. And it was the Reagan revolution. And he was going, he was changing, I mean, the 70s were just a horrible decade and uh so there was a similar kind of an election and a willingness to change um and you know i've i've i think we're well known for our tesla work research and and our tesla position so in you know i i don't speak to elon that much but when we talked about

this topic, I said, government spending is taxation. Government spending, that's how you sell this. Surface everything that you find out there because, you know, we haven't done that. We haven't cleaned house in so long. And I think, you know, Elon is relentless and he's got a boss who's also relentless. So I do think it's going to be successful. I think it's going to drive huge increases in productivity as well. So Reagan revolution,

I think this revolution will dwarf the Reagan revolution, but I grew up in the heyday of active asset management. Now everybody kind of is passive or benchmark sensitive, those were the glory years. And I think we're going back to the glory years. I think deregulation, I think on monetary policy, I do believe that one of the reasons Trump has become such a fan is,

it's good competition for the dollar. And he wants that. He wants monetary policy to be influenced by it. I don't think he wants the dollar to go away, and I don't think it will. But I think we're going to have Bitcoin and the dollar as the two sort of reserve currencies out there. You recently were talking publicly about tax policy and the velocity of money. And that sounds, for some people, they may say, oh, tax policy, that sounds so boring. but it has a tremendous impact because of the velocity of money on their portfolio.

So talk a little bit about your ideas of how these two things are related. Yeah, I've started, you know, I sometimes get to thinking about something. And if I'm not hearing about it in the press, and I'll just start posting on X. And so yes, this has been my latest. Um, so the velocity of money is the rate at which money turns over. Now in a, in an environment of fear, which is what we have right now in an environment of fear, what do people do? Well, you've got, I'm going to say 30% of the labor force, which is in either government or quasi government including health care education is over 30 or more of the labor force is saying am i going to have a job how is this going to filter down to the state local sector

that's where the bulk of the jobs are so so there's fear and that's so that will slow the velocity of money down so it hit me when walmart came out and said 2025 is going to be a big slowdown. Last year, they had 5% same-store sales. Now they're saying it's going to be 3% to 4%. So that's a 30% deceleration in the growth rate. So that's a change in a change. So for them to be so sure now, they're seeing something they do not like. So part of it is fear, but there's another reason people will delay purchases or business activity. If they think their tax rates are going down, and again, lesson from the early Reagan years, if they think their tax rates are going down, they're going to wait and hold off on a lot of activity until they understand what that means. And if you listen to Kevin Hassert recently, he's been talking about the quid pro quo between tariffs and taxes.

What that means to me, given that Art has been an advisor to every president with the exception of two in the last, I'm going to say, 30, 40, 50 years, is that we're moving towards a flatter tax system and lower rates for everyone. That's Reagan revolution. Reagan delayed the impact. The full 25 percentage point reduction took three years. The economy fell into two recessions. Why? Well, there were a lot of other reasons, but we learned very quickly in 1983, oh my gosh, we went into a boom. They were all waiting for that last step. So you've got fear of unemployment. You've got, wait, how much of a better deal am I going to get out there? And the same thing with pricing. If people think prices are coming down and interest rates are coming down, as President Trump is telling us, and long rates have started coming down.

Nobody believed that was gonna happen. They're gonna hold off for the lower rates and lower prices. So those are three delays. Now, what does this mean? Today, we got Atlanta's GDP now estimate is negative for the first quarter, negative GDP. Now, we have been saying, and many people didn't agree with this point of view,

but I think it's playing out now. We've been in a rolling recession since the Fed started raising rates in 22. It jacked them up at a record-breaking pace. We've never had anything like that. You go back to Volcker, everybody remembers 20% interest rates. Yeah, went from 10% to 20%. That's a twofold increase. We went up 24-fold in little more than a year's time.

That was a major shock to the system. And I think we have been one sector after another moving. The one that did not capitulate was the consumer. And it did not capitulate because of the high end consumer. Well, guess what? In the last University of Michigan consumer sentiment survey, the high income earners confidence cracked. So I think we're going to see a completely different tune in the next few months. What you're basically arguing for is as tariff revenue goes up, Trump will bring down the tax rate, which he did do in 2018.

He started to implement tariffs. He dropped us from thirty nine point six to thirty seven percent in the federal income tax. But are you making an argument that he should drop the tax rate earlier or that he should drag it out over time? Personally, in order to avoid the Reagan double-dip recession, I would make tax cuts retroactive now, and so would Art Laffer. It doesn't matter what I think. Explain retroactive tax cuts. Everyone out here just sat up. They got excited. So I don't know how that, you know, he is such a dealmaker.

It's going to be amazing to see if he gets pulses off. But I think if he really he only has two years before he effectively becomes a lame duck and he knows that, which is another reason I'm posting this, because, you know, let's get this thing going as quickly as possible. If we said, we're taking your tax rates down, choose a percentage, you know, three percentage points, retroactive, if they did this very soon, to, you know, February 1st or March 1st, let's say, and they finish the negotiation, that would take the uncertainty away. that would take that very important uncertainty away. And honestly, I think we will have a booming economy with much lower than expected inflation, because the productivity gains, you know, after we've been through this rolling recession, and now here's the last leg of it, we were housing, autos, capital spending, small businesses, creamed, lower income creamed, finally high income cracking um you know we're ready for a massive productivity increase which you know i

learned again in the early 80s so much um productivity increases and a rising dollar are two of the biggest antidotes to inflation and i think we're going to be shocked at how low inflation goes the last thing i want to talk about is the strategic bitcoin reserve there are people in this room that are salivating over the idea that they got to front run the United States of America and every other country to buy Bitcoin. And they think that when the United States, when not if, finally capitulates and buys Bitcoin, the price of Bitcoin will look like a vertical line straight up. Forget the price impact for a second. But what do you think the odds of a strategic Bitcoin reserve are, let's say this year? This year, again, it's a high priority.

I think this issue became a one-issue voter issue, right? And the president is going to make good on his promise because this really helped bring in the young people. And so I do, and Senator Lummis has done, I heard she was here, but she's done an amazing job. She has an incredible staff. so i do think it will i do think it will happen now i know there are controversies out there you know there are truly some you know you know the confiscation of some bitcoin that was truly illicit and criminal and all of that there are questions about others and then there's the other question is wait a minute are you really then going to get all the way up to a million bitcoin

how do you do that how do you fund it well you know our gold is at cost on our balance sheet land is at cost i learned from senator lummis that a third of the uh a third of the land in the united states and 50 in wyoming is on our country's balance sheets at cost think about that think about that we could sell a little bit off and we could definitely and and and same with gold same with gold do you think that countries will drop gold to buy bitcoin or do you think they both win together i'm sorry do you think that countries will sell some of their gold to buy bitcoin or do you think that this is an additive thing i don't know the answer to that But as they're scraping around looking for alternatives, it becomes a diversifier, I think, because even relative to gold, Bitcoin is a diversifier.

The correlations are a little higher than to other assets, but still not quite there. There was something. Oh, the other thing I learned today was that there are 50 bills going through 22 states right now around Bitcoin reserves. So that's very interesting. Texas, Arizona, and Utah, I think, have seen progress within the last week, which is very exciting because Texas and California, each of those states, is bigger than Canada. And of course, Canada is huge, huge in terms of a gold resource base. Ladies and gentlemen, Kathy Wood. Thank you.