The Pomp Podcast - #686 Bitcoin Could Go To $5 Million w/ Plan B

Starting point is 00:00:00 what's up everyone this is anthony pompliano most of you know me as pomp you're listening to the pomp podcast simply the best podcast out there now let's kick this thing off plan b is one of the most notorious bitcoin investors in the world he has amassed a loyal and engaged following on twitter plan b also invented the stock-to-flow model that is widely cited throughout the bitcoin community in this conversation we discuss bitcoin the stock-to-flow model price targets gold macroeconomics and external tailwinds this exact conversation was deleted from youtube and they deleted our entire youtube channel yesterday because they deemed it to be too quote dangerous while i would be laughing it did get censored on youtube so make sure you tune in and share this

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Starting point is 00:04:22 All right. First, I want to start with a stock-to-flow model. You're the creator of this, And most people point to it as kind of the single guiding light to them in terms of the relationship of Bitcoin's price to these halving cycles. So talk us through a little bit about what the stock-to-flow model is and then what it's showing us so far. Yeah, so the stock-to-flow ratio is a ratio from the commodities market, actually, that tells you something about an asset's scarcity. It divides the stock, the reserves of a certain asset by the flow, the newly issued Bitcoins or gold, newly mined gold. And if you divide the stock by the flow, you get the stock to flow ratio. So that ratio was known for ages in the commodities market. What I did was connect that with the market value of, well, Bitcoin in the beginning, but later also the other assets like silver and diamonds and gold.

Starting point is 00:05:21 and real estate and what you find that there is a perfect linear relationship in the logarithmic space so that was quite shocking and and with that you can uh you can actually predict the price of bitcoin very roughly i should say but you can do it and uh because we know the stock to flow ratio of of bitcoin it's pre-programmed and that's yeah that's a very nice thing And it's, of course, very bullish at the moment. It predicts somewhere around $100,000 Bitcoin for the current halving cycle, which is 2020, 2024. So we're actually heading towards that. Yeah, it's that. So when you think of the stock-to-flow ratio, one of the things that I'm fascinated by is it comes from the commodities market, but it's actually potentially more accurate when it comes to Bitcoin because we know with certainty and can prove the supply, both the outstanding supply and the daily incoming supply. Describe a little bit about why that certainty and that verifability is so important to the accuracy of a model like this. Yeah. So, for example, with gold, we don't know how much gold is mined every year.

Starting point is 00:06:33 We can make a forecast, but we don't know it precisely. And a lot of factors impact that supply, that mine supply of gold. And one of the factors impacting that is price, right? If the price of gold is high, then the miners will increase their production. And if the price of gold is low, they will decrease the production and the mining of gold. with bitcoin um yeah well the whole production the whole flow is pre-programmed every 10 minutes on average right every 10 minutes there's a block and in that block is a block subsidy with the new bitcoins for the miner that found the hash of that block so we know sort of that

Starting point is 00:07:17 every 10 minutes and and for the whole year uh how much bitcoins will be mined of course we don't know exactly because there is some variability in the 10-minute interval. Sometimes it lasts an hour. Sometimes you have like three blocks in 10 minutes. But on average, we know, and especially long-term, we know what the stock-to-flow ratio will be and thus what the price will be roughly. So when you think about these halving cycles, obviously there's a supply shock. But how do you think about kind of the cyclical nature of this, right? Is there a point where you expect the model or ratio to be invalidated, either through external forces, or people start to kind of price it in and front run it? Like, how do you think about the fact that we do know the

Starting point is 00:08:08 supply? And that helps for the accuracy of stock to flow. But at some point, does that become a negative? Yeah, there's several aspects to that. Of course, from efficient market hypothesis, is you would expect that this knowledge and the model would be priced in so i actually and most people with me expected the halving uh the may 2020 halving would be priced in already so we did we would not see the actual price rise that we're seeing now that is uh very much in line with the stock to flow model because all the information is out there the stock information the flow the stock flow ratio and the model so it shouldn't follow the model as closely as it does today On the other hand, there's a lot of people not believing the model, and the model, of course, hasn't proven itself. So maybe that sort of puts the efficient market hypothesis argument aside.

Starting point is 00:09:02 But on the other hand, I think that the stock-to-flow model will break in the future because one of the nice things about the stock-to-flow model, and especially the stock-to-flow cross-asset model, stock-to-flow X model, which also incorporates data from the gold market, diamond market, real estate market, and silver market, so other stores of value, if you will. If we look at that stock-to-flow X model, we can interpolate the data because gold has a higher stock-to-flow ratio than Bitcoin and real estate has a higher stock-to-flow ratio. Gold is 60, around 60, and real estate is around 100, where Bitcoin is 50, 55 right now. So we know we can, within the data set we have available with gold and real estate in there, with market values of $10 trillion for the gold market and $100 trillion for the real estate market, we can interpolate within the data set. And, of course, that ends because if Bitcoin will have its next halving in 2024, the Bitcoin stock-to-flow ratio will jump to 100, which is approximately the same as real estate. um but after next halving where we jump to 200 stock flow ratio for bitcoin we're out of the model data uh bounds if you will and then we have to extrapolate which which is what basically all the other models are doing they're extrapolating into the future um which is very dangerous and

Starting point is 00:10:51 one of the big assets big advantages of the stock to flow model the stock for x model in particular is that this interpolation can be done. So to be in short, I think the stock-to-flow model will end to be valid somewhere after next halving when the stock-to-flow is above 100 because we cannot interpolate anymore. And of course, that means probably that the dollar, the denominator in that model, will end to play a big role or something. Of course, it doesn't say that Bitcoin will die or something. It's just a model. It will not be very accurate after that.

Starting point is 00:11:34 For sure. And one of the things that I appreciate about you is not only can you look at something like the stock to flow model and talk about kind of the cyclical natures of the halvings, but also you've got a very good understanding of market structures and various things that happen on the exchanges. You had a tweet recently talking about these sell walls as kind of pure scare tactics. And we've pulled up the tweet here. Describe a little bit more about what goes on in these order books with these sell walls and how folks are using them as a scare tactic. Yeah, what most people maybe don't know is my background is in institutional investment. And I've been in institutional investor roles my entire life. So, I started at a dealing room in FX trading, then went to banking balance sheets and insurance balance sheets.

Starting point is 00:12:19 And lately, my latest job was managing a pension balance sheet with the team. And that balance sheet was 100 billion US dollars approximately. So, yeah, I spent my life chasing those charts that you have in front there and chasing those sell walls and buy walls. and i yeah what what i noticed was that most people are sort of scared by those big walls those big big uh cell walls in this case in in that chart um and and and of course the most of the time not all the time but most of the time these cell walls are just there to scare people in uh not buying or or even selling and um because because they signal um well don't come here where at the price level where the sell wall is because we will uh we will sell and we will keep the price

Starting point is 00:13:15 under this level but in fact what you see in real life nine and ten times you see that as as the price approaches the sell wall, the sell wall gets canceled and moved further away. So in this case, the sell wall will be moved at a higher price. So it's just scare tactics. And I thought it was a good thing to put that in the tweet for other people to know. For sure. No, I think that people really appreciate that one. When you start to think about whether it's the sell walls on the order books, whether it's the stock to flow ratio, how do you think about what I'll call more quantifiable metrics and analysis with things like regulation or things that seem to be more external to the asset itself? Do you worry about that stuff? Do you think about it?

Starting point is 00:14:05 Do you incorporate it in any way into your analysis? Yeah, I certainly think about it and follow it like a hawk, because the big moves in Bitcoin were all sort of triggered by regulatory changes, regulatory clarity. So I track all the important use and I put it in a database as well. However, I don't use it as an explicit input variable in my models,

Starting point is 00:14:35 both the stock-to-flow model, which only has one input, which is stock-to-flow ratio, but also the on-chain models or the floor models, more technical analysis-based models, they don't use that kind of information. But in fact, those kinds of news events, it could be regulatory news, but it could also be other macroeconomic news, like El Salvador adopting Bitcoin or China banning Bitcoin, et cetera.

Starting point is 00:15:07 This kind of news is very difficult to predict once it happens and what the impact will be. Is it priced in? Do people expect it or not? So I regard those as trigger events that create an outlier in the model. And that means that there is a spike above the model value

Starting point is 00:15:30 or below the value of the model. But those spikes, those trigger events are very rare and are very like black swan events. So they cause some variation in models, some model error, but they don't disturb the general trend in the models. That's how I look at it. And how do you think about your investing philosophy? Do you try to trade around the asset based on all of the data you look at?

Starting point is 00:16:00 Are you just dollar cost averaging, buy and hold? Talk to us a little bit about the philosophy that you use, given that you do have at least an understanding of what some of the data says. Does that change what you do at all? Yeah, but I'm more an investor than a trader and certainly not a day trader. So I was lucky to buy Bitcoin in 2015 and 2016 when the price was 400, 500 kind of. So those are my Bitcoin investments. And I've told in other interviews as well that I sold half of that stash in, well, shortly after the peak in December 2017, based on stock to flow kind of models. So, and I reinvested that half that I sold just before I published the article about stock to flow, because I knew we were at a very low level compared to the stock to flow model at that time. So in that way, I sort of trade or sort of try to time the peaks and the bottoms, but that's on a monthly or even yearly basis, and I certainly do not trade on an hourly basis.

Starting point is 00:17:28 That being said, I am very intrigued, as you know, by on-chain analysis. I do a lot of on-chain analysis, and I have a great team of quants around me that can do all sorts of programming, the blockchain data, and getting signals from there. And that's very, very interesting. And sometimes you can actually find patterns that are tradable on a daily or weekly or monthly basis or on a shorter interval than I'm used to invest. And we are making use of those patterns with algorithmic trading software. So we write our own trading software that automatically scans for those anomalies and make use of that. And that was one of my skills also in my institutional career. Yeah, the algorithmic trading part is very, very interesting in the Bitcoin space. Tell us more about the institutional interest, whatever you can share, whether it's organizations that you work at or have worked at or just kind of conversations with former colleagues, peers, people you know in the industry.

Starting point is 00:18:44 What's the general sense from the institutions in terms of Bitcoin, what they're allocating, how they're thinking about those allocations? Yeah, so I'm Amsterdam based. I talk a lot with European investors, some U.S. investors, but it's mainly a European perspective that I have. Well, certainly the companies that I worked were not very interested in Bitcoin yet, mainly because of regulation and misinformation, if you will. Because most of them thought it was for criminals, it was for, and governments would ban it and all that. And of course, for an institutional party like a bank or an insurance company, they have capital regimes with their central bank. So they will have to put capital aside for every investment they make. If the investment is more risky, like Bitcoin, they have to park more capital for that investment. And for Bitcoin, it's almost one-to-one.

Starting point is 00:19:50 So if they would do a billion dollars in Bitcoin, they would have to park one billion dollars in equity as well. And that is, of course, not doable. It's more doable for for hedge funds. So what I see is it's not the big institutions, pension funds, insurance companies and banks that are investing on their own balance sheet or are interested in Bitcoin. But it is the hedge funds, the family offices, very much so. And commodity investors, especially the gold and commodity investors are, of course, very much into the same philosophy that Bitcoiners have with sound money. um and yeah so family offices commodity investors and um hatchvans those those are the the ones i see active and the other ones are will be late as usual and when you wake up in the morning like what do you check first what's the data sources that you find most valuable um or in terms of just understanding what's happening in the market whether it's the short

Starting point is 00:20:52 term or long-term period um well to be honest the price is one of the first things uh the bitcoin price one of the first things i check because that's the most yeah accurate and and timely information if it's the same as as when i went to bat then nothing happened if it's uh if if it has a big delta then something happened and then i go on twitter which i find is my the most direct and and um an accurate information source there is because yeah one thing i learned is to not read mainstream media or watch mainstream television or even things, media sources like CNN and Bloomberg or the Wall Street Journal that are considered

Starting point is 00:21:39 the creme de la creme in institutional investing. I've learned that with these new investments like Bitcoin, you better ditch those standard sources and go to Twitter and the experts in the field, because that's the most direct way of getting information. Yeah. And when you think about portfolio construction for yourself or for the institutions, maybe both,

Starting point is 00:22:07 is this still something that is like a very small allocation or is it something that is being used to like denominate the whole portfolio? How do you just think about the portfolio construction and any sort of concentration targets? that's a tricky question because um i think for institutions of course that's very important to uh to keep the risk profile sort of constant and within their mandate so they'll uh they'll have to sell bitcoin as soon as it rises to keep to keep the the concentration uh low and within mandate uh boundaries but with uh hedge funds or family offices or uh or for my own investments i

Starting point is 00:22:49 don't have those those mandates or boundaries so i can what what i see in practice that what starts as a small investment a couple percent investment in in bitcoin soon uh grows to a uh a double digit um position in in uh in bitcoin and well after a few years four or five years it it sort of dominates your portfolio. That sure is true with my own investments as well. For sure. And then before I let my brothers ask a couple of questions, what do you think is the likely price for Bitcoin by the end of the year? And do you think that the bull market ends at the end of the year, or does it carry us into the beginning of 2022? Yeah, that's the most asked question. I would be very, very surprised if Bitcoin price would be

Starting point is 00:23:43 below a hundred thousand dollars at the end of the year that would well sort of invalidate my view my models and uh that would that would certainly surprise me i i do think uh we will see a price that is uh at least 135 000 dollars by christmas because uh that's what my floor model says and Basically, I'm using three kind of models that all say the same thing. So Stock-to-Flow, which has 100,000 on average for the entire cycle. And we're, mind you, we're one and a half years into that cycle and with below 100,000 prices. So we'll have to spend the next two and a half years markedly above 100,000 to make

Starting point is 00:24:31 that average. And the second model I use is the on-chain stuff. that on-chain stuff is really good at identifying bottoms and peaks. So we're now talking peaks, of course. So I know quite, well, certain, not guaranteed, but I will have high confidence in that the on-chain indicators will signal a top. And if we look at the on-chain signals right now,

Starting point is 00:25:02 i would say that top is at least a couple of months say six months uh from here so so that would be nfq one maybe maybe later um and then the third kind of models that i use of course that floor model 135 uh a thousand that's that's not based on stock to flow it's it's it's based on other it's it's a proprietary thing but it's based on based on other stuff technical and on chain um so yeah uh and by the way that's very good at like the like the name says on at at um indicating bottoms so i guess we will be above 100 000 above 135 000 at the end of the year and then we'll continue to grow maybe towards the stock for flow x model targets 288 or even above i would not be surprised even to see in q1 or q2 next year prices of uh 300 400 500 000

Starting point is 00:26:05 dollars but i do think um and i noticed you were talking before in this show that i'm a full bull that i'm full bull i am right now but i'm quite sure that there will be a time when i switch from bull to bear, like I did at the end of 2017. And to be honest, I'm a bit of struggling with that. So I don't want to disclose it because I want to at least disclose it responsibly and not be responsible for triggering the bear market. So if people have ideas for that, I think they're very welcome. And so when you think about that $288,000 price, I think a lot of people have heard you say that before. But when you say that it could go higher, $300,000, $400,000, $500,000, is that just pure kind of FOMO and a blow off top that drives that? Or is there something else that

Starting point is 00:27:03 you're looking at that shows that, hey, maybe we do go past that $288,000 that the stock-to-flow model has there? No, no, that will indeed be a FOMO. And that will be very clearly marked in the on-chain analysis, which is looking for certain kinds of transactions that I, which I called them before, but those are FOMO transactions. So, so if, if, if I, if the, if the algos see the FOMO kind of transactions coming in, then the end is near. And yeah, so, so I would envision like, for example, going to 500K somewhere Q2 or something, and then crash back, well, maybe 80% again to 100K, have a bit of a bear market, and then continue another cycle, starting with the halving in 2024.

Starting point is 00:28:02 Going from 55,000, 57,000 today to 500K in Q2, back down to 100K, and then continuing into the next halving. While it sounds crazy to a lot of people, it would be pretty consistent with what we've seen in the past in terms of volatility, both up and down. So it's interesting to hear you say that. Joe, what questions do you have? Yeah, Plan B, thanks for doing this. I know I'm a big fan of yours and your models and your analysis, so I know a lot of others are also. My question would be around kind of the correction that you just spoke of, right, which is we're at $57,000, $58,000 now almost.

Starting point is 00:28:38 you're saying that it's going to average at least 100,000 over this cycle, which is 2020 to 2024. So we obviously have to go much higher, whether it's 300,000, 400,000, 500,000, we'll see. But traditionally, there's also been an 80% correction. So is that something that you think will in fact happen again? And kind of how are you thinking about that in the long term? Yeah, I do think that's exactly what will happen again. I can be wrong by it, right? Let me be very clear. I can be wrong. But I do think that four-year cycle that is sort of triggered by the halving is a very real thing it has to do with the scarcity of bitcoin that's with the shortage that we're seeing right now um you know bitcoins are traded on exchanges

Starting point is 00:29:22 and and the exchanges have some some inventory of bitcoin and then uh and you can buy it you can sell it but it's basically not on chain transactions it's it's bitcoins that are on the exchange and you buy them from other sellers or you sell them to other buyers but if you look on chain so the bitcoins that are in cold storage that that large investors have you can very clearly see these these waves of shortage and and we're in in one right now uh that that will at least last another couple of months before it's uh it's really well out of sellers if you will but yeah from from there um and and whatever news will trigger it i don't know i i do think there will be a crash um and it could be as large as the crashes we've seen in the past we have had

Starting point is 00:30:15 three crashes of 80 percent and i see no reason why we couldn't have another one uh which of course is always short-lived and an excellent opportunity to buy more bitcoin but it could could be quite scary for for newcomers which is uh well precisely what of course those those cycles do they shake out people that are leveraged that are uh investing with too much money that are not certain of their investment strategy that are well those those but you need those those really committed hotlers if you will and uh they'll rise again john what do you think yeah Plan B, nice to virtually meet you. Congrats on all the success so far. I know you reached one million Twitter followers in just about three years. That's pretty impressive. I want to talk

Starting point is 00:31:06 about your stock to flow model real quick. So you have it projected at hitting about a million dollars a coin by 2025. Do you believe this? Do you still believe it? And then if so, how do we get there? Yes. So I really do think that we have at least one more cycle to go in the stock to flow prediction uh so yeah that would bring bitcoin um in in the one one million to five million dollar range uh and i do i really do believe that that we're getting there and so that would be the path that we're seeing right now we're we're going from from uh 57 or right now to 63 98 in november 135 for example or something above that right um in december and then uh then fomo starts to kick in we go to 200 300 400 whatever and then crash and from there we wait till the next halving and

Starting point is 00:31:59 the next halving will be another another important fundamental and even maybe structural event for for bitcoin because minor i think that's that's what people misunderstand that that uh that it's all about the um the supply and and uh the doubling of the the stock to flow ratio which which which is an important part but the other part is that miners will have to survive that event because their their income their their source of income and their um revenue stream will will half and they'll have to switch to uh to new equipment find better ways uh to fund themselves and be much more efficient in their business. And if the miners and the whole business survives another halving,

Starting point is 00:32:46 that's a major accomplishment. And that will trigger the next rise from, say, 100,000 after the next crash to, well, 10x, 20x, 30x, that amount, which is in the millions indeed. It's pretty crazy, Pliny, when you start to look at this. when most people would hear, let's say 2025, a million to five million, that feels like it's a very wide aperture in terms of outcomes. Help people understand why it's so hard to pinpoint, you know, a million to two million, let alone one to five million, right? I don't think people quite get kind of this idea of even into Q1, Q2 of next year, if your kind of thesis plays out,

Starting point is 00:33:32 you said, hey, 288 is in the model, but 300, 400, 500, that's a pretty big variation as well. So help people understand like what drives uh that variability there yeah i think that's an important question and it's it's uh it's funny to see that how naturally and logical that that path of bitcoin is to me and how how amazing it can be for for newcomers and and and traditional investors indeed uh and it's it's the trick is to to look at it exponentially uh so in logarithmic scale if you will um because the it's not about the price level it's about the growth level the percentage growth that is that is constant or or high at least and maybe to to uh explain that it it um if you if you look at my my followers um which is one million now which was which was unthinkable

Starting point is 00:34:26 even a year ago let alone two years ago so three years ago i started with um i crossed a thousand followers boundary um and a a year later i crossed the 10 000 and then a year later so the second year i crossed the 100 000 and now in the third year i crossed a million and and and if you if you look at that that path it's it's 10x every year or 20 every month and so it's amazing growth and and people start to see it when you're when you're big but in fact it's it's it's a constant growth of 20% per month. And yeah, that was 200,000 new followers last month, but it will probably be 220,000 new followers next month. And so the 20% is constant. And the same is with the Bitcoin price. Bitcoin goes, yeah, let's say 10X every two years. So 100X every four year

Starting point is 00:35:28 period and uh that is amazing uh if you if yeah to hear that but if you actually experience that or look at the data but that's different that's but if you experience and as i did of course buying at four or five hundred and then going to four or five thousand and now we're at forty fifty thousand that's a hundred x and that and there are people that have thousand x their investment or 10,000 X. And that constant growth, I guess, is very specific to Bitcoin and triggered by the halving period, the scarcity that's intrinsic in Bitcoin. And that makes it such a perfect store of value. And more and more people will recognize this unique property. What's the thing that when you look forward, you're most excited to? Is there a price milestone?

Starting point is 00:36:20 is there a number of entities on chain is there some sort of uh kind of external milestone what's the thing that you're like man when this happens that's going to be pretty cool i'm really looking forward to it well uh on the short term i would be very uh would be very nice if we hit that 63 000 mark end of this month because i guess that that's what really uh did it last time nailing the $47,000 and $43,000 last two months. So $63,000 would be nice. Of course, the $100,000. The $100,000 is sort of the make

Starting point is 00:36:54 or break for the stock-to-flow model. So I really hope we hit that. And I'm quite certain or not uncertain, I should say, that we're going to hit that. And after that, I think the most amazing thing for

Starting point is 00:37:10 most people and also for myself will be that on-chain model turning red the FOMO transactions that will be detectable and me uh as the full bull um turning uh turning bear and um as I said I'm struggling with that how to how to communicate it maybe that's the best time to go dark but um yeah I think there will be a time where we switch from bull to bear and that of course is is a a great actually a great thing uh of a model that it's it's not always uh bull bull bull but that and and you're not always a moon boy but that you that you can predict the downsides as well so yeah i'm not looking forward to it on the one hand but

Starting point is 00:37:59 I feel it's going to happen someday later next year. But yeah, I'm very much sort of looking forward to that moment. Do you have any thoughts on a Bitcoin ETF and how that could either support, accelerate or be detrimental to a stock-to-flow model? Yes, a stock-to-flow ETF will make Bitcoin available for the masses, for pop mom and investors. And yeah, it will be a huge thing for the market. But although we, of course, think, well, you can buy Bitcoin right now. Why should you pay the fees that are associated with these funds? But it makes it easy for the crowds.

Starting point is 00:38:40 The hurt will be coming then, and that will be a big, big thing. So, yeah, I think it's coming maybe this month, maybe next month, but it will be there. Of course, Gary Gansler from the SEC has already sort of nudged that it is possible to start a Bitcoin futures ETF right now, which I think has already been receiving applications for that at the moment. So, yeah, I would be very surprised if that would not be introduced this year. and what i also found very interesting was that one of the applications and one of the interviews with with one of the um uh future etfs bitcoin etfs was that they mentioned stock to flow model as one of the models that they are tracking uh for future value and uh yeah well i think that's once you've seen that once you've when you understand the exponential growth and the

Starting point is 00:39:42 four-year cycles. I think it's an asset you cannot deny. How about the macro environment, things like interest rates or quantitative easing, both in the United States and abroad? How do you think about that affecting this? Is it something where Bitcoin just remains non-correlated and it's worth paying attention to, but it doesn't ultimately have an effect on price? Or do you think that we've seen more correlation and therefore, if there's some sort of tapering or kind of slowdown in some of those activities, that it could be negative for Bitcoin? Yeah, I think it's very important. I think it's one of the reasons that Satoshi, of course, made Bitcoin. It was against debasement, against money printing, which was very much present in 2008 when he wrote the white paper in the software, because that was at the peak of the financial crisis, the global financial crisis at the time.

Starting point is 00:40:33 And the white paper was, the Bitcoin white paper was published 45 days after the Lehman default. So, yeah, it's very, very important. It's also one of the reasons that I started looking from an institutional investor point of view towards alternative investments. Because I saw, especially in Europe, of course, we have negative interest rates. And that, yeah, that turns your world upside down. that you yeah school or university doesn't teach you that so how do you survive a negative interest rate uh environment and what does that tell you negative interest rates so well everybody's looking for yield and and rates that are not negative i started looking at alternatives and

Starting point is 00:41:19 came to uh came to bitcoin through that so i'm very grateful to the central bankers for introducing quantitative easing and negative interest rates because otherwise i would never have found bitcoin um so yeah i think what we also saw is that all the price uh movement a lot of price movement uh in other markets like like the stock market like s&p 500 were um related or correlated with with uh quantitative easing and possible tapering and and uh yeah uh the money printing if you will so if if money is printed that money has to go somewhere and first it will be to bonds government bonds but the receivers of those bonds usually banks or governments will spend that money again and and so it will end up in the hands of the well the second layer

Starting point is 00:42:13 that receives that that money and uh and some of those those companies and and people will buy equities real estate and bitcoin and that's why we see all these markets go up because there's just too much money and in a way it's just yeah too much money chasing few goods so all the prices of those assets go up asset inflation is is very real these days as all the invest uh uh real estate investors will will notice as well and equity investors as well so um will the markets decouple well it seems like it today uh or this week because bitcoin goes up and all the other markets are not following uh even the altcoin markets are not uh not following bitcoin this time so i guess in the end um bitcoin is the ultimate store of value um consistent with my

Starting point is 00:43:11 stock-to-flow model. It is not as scarce as gold or about as scarce as gold today, but not as scarce as real estate today. So real estate is one of those big money store of values today. But in the end, Bitcoin will have the same scarcity, the same stock-to-flow ratio as real estate, and it will be portable and communicatable by a phone line, by an internet connection. So, it will be better than gold and real estate together. And once people see that, the lids are off and we go much higher in price than we are today. How do you think about those other assets, right? Either for your own portfolio or for those investors? Is this something where, let's take real estate investors, they begin to see

Starting point is 00:44:00 that asset appreciation, they see their rents going up, they're continuing to make more and more money. And is it a thing where like that capital eventually will flow into Bitcoin as well? Because they understand store value, they understand scarcity, they understand like a hard asset compared to that fiat devaluation. Or do you think that people who have been investing in the analog markets, like a real estate investor, they just have a hard time understanding buying a virtual item or something that is this like global digital decentralized store of value? Yeah, both points are true, I think. So money will start to flow from real estate and gold and other investments towards Bitcoin, the new investment. And yes, it is a generational thing as well, because the older guys that are not used to computers, they will have difficulty with understanding virtual assets. You see it with Peter Schiff. I know a lot of people that are like Peter Schiff, the old gold bucks, if you will. And I was a gold buck at the time. But people that cannot program, that are late in the computer thing, they will not appreciate the virtual aspect of Bitcoin and they cannot understand digital scarcity.

Starting point is 00:45:18 So they'll, they'll clamp to, to, to real estate and, and, and their, their trusted assets like, like gold. But, but in the end, yeah, the younger people will, will, will turn up and, and, and, and have all the money. And those are people that have been teached computers and they have been on their iPhone all day. And there's nothing scary about digital assets at all. And that's what you see in family offices. So the younger generation is pitching about Bitcoin and the older generation is against it. And they try 1% and that becomes 10% of the allocation. And I think that's how it will go. And even with my own portfolio, I was like most people, diversified, 25% real estate, 25% equities, 25% gold, 25% new stuff, alternative stuff, say Bitcoin.

Starting point is 00:46:21 But that Bitcoin percentage grew and grew and you learn and you think like, well, yeah, I'm not going to rebalance. I'm not going to sell my best running asset to put it into gold or something. or buy an extra house. Why should I? So yeah, I think it will be a very natural thing with the new generations coming into power. And from a gold perspective, everyone is very interested in the kind of the flippening, right? This idea that Bitcoin's market cap will eventually grow to be bigger than gold's. Most people will point to gold's market cap at $10, $11 trillion and Bitcoin being right over $1 trillion, so kind of 10, 11x. One of the things I've been very interested in is I actually think that gold's market cap is going to collapse

Starting point is 00:47:05 over time. And so the flippening doesn't happen around 10, 11 trillion. It happens somewhere lower. And maybe that's 9 trillion. Maybe that's, you know, 6, 7, 8 trillion. I don't really know where. But just the idea that in order for Bitcoin to continue to grow, we are likely to see a collapse in gold's market cap. Is that your view as well or do you disagree? Yeah, I'm not a gold expert, but I know a lot of gold experts and I talk a lot with them. So I might be wrong on the gold thing, but I agree that I think gold will eventually go down in market cap and lose that money to other investments like real estate or Bitcoin. what I think the big bet that gold investors take is that it will once again be used by central bankers as the backing of a new world currency. And that could very well be, right? Central banks

Starting point is 00:48:06 are talking of the next Bretton Woods moment. They are talking about a global currency. Could very well be the ims uh special drawing rise the ser and and yes maybe that would be a uh currency a a as they are backed by gold but that's the entire bet the entire play they're doing so if that happens of course gold will pump will go up in market cap but i don't think they're going to do that and i and in fact bitcoin is much cleaner in in um with with respect that it does not have to be uh backed by anything it's backed by well um the energy uh and the mining in in bitcoin but not by another asset and not an account or an accountability problem that's associated with that and that we see in gold for example because yeah how much gold is there in fort knox how much gold

Starting point is 00:49:03 do the chinese central bank how much do they really have we don't know and and with bitcoin is very transparent. It's all on the blockchain. And in the end, from a thermodynamic point of view, from an energy point of view, that is so much more efficient for the human race. And I guess we will tilt towards Bitcoin because it's just better money. I tend to agree. Do you think that eventually the nation states adopt Bitcoin and it kind of grows to be a global reserve currency? Do you think it's a currency of the internet? How do you see kind of the ultimate destination for this asset if you think it's better money? Yeah, I think governments will adapt Bitcoin like El Salvador did. It kind of amazes me that not

Starting point is 00:49:50 other states and nations have adopted it because it's the most logical thing to do, especially if They're under the pressure and regime of the IMF if they're kept on a leash with debt, which is certainly something that most countries will probably hate. But of course, the leaders of those companies will be greatly paid by IMF to keep that status quo. But yeah, most countries would be better off by switching to something other than debt and especially US dollar denominated debt. So especially in South America, Mid-America, Africa, there must be countries that are going that route. And I'm following the Brazilian trend closely because that government is doing some very spectacular stuff. and i'm also following some eastern european countries like the ukraine and and the countries that belong to the former russia and are now sort of more oriented to to europe but but but not part

Starting point is 00:51:04 of the european union so so they yeah they can they can switch to bitcoin i think some some countries will and i really hope that that will happen on the other hand um i do think it's in the end a thing that's not decided by by states especially in the united states um and the europe it's it's something that's also decided by banks that um that are already much larger larger than most states especially um states like the netherlands where i live which is very small and a typical bank is like like a multiple in size of uh that small country so so companies banks and also people um will decide that they park their money in bitcoin and not in in a negative interest rate yielding uh saving accounts at the bank and that will that will be

Starting point is 00:51:57 a large and growing force with that same exponential uh constant exponential that we see in the bitcoin price or my follower count or or some other things that go exponential very interesting plan b i could literally talk to you for hours uh over the years uh as i've seen uh your audience grow uh seeing you put out more and more content i've just been super impressed um and so uh i think now i think this is true uh michael saylor myself and you all have 1 million followers my hope is that you beat me to 2 million because if you beat me to 2 million And that means that you've not only continued, but you've likely been right, which means that most people who are listening to this would would be very, very big fans of you. So, you know, just from everyone else and me, just thank you for all the work that you've done, all the contribution you've made to the community.

Starting point is 00:52:52 It's it's pretty cool to see how somebody who literally I've never met in person. I don't know your name. I have no clue what you look like. I'm talking to a pseudonymous identity on the internet. And you've touched so many people, been able to build this large following, and it's all because of the quality of the work. It just stands on that alone. It's pretty incredible. So just thank you for doing all that. Well, thank you very much. And thank you for that last minute boost around the 1 million as well. That really did it. And I'm going after you guys, right? Sailor and you are above me. And I sort of calculated already that maybe before the summer at the current growth rate, I could be number one.

Starting point is 00:53:35 But who knows? Well, listen, I'm here putting your link for people to follow you on Twitter and the chat. I may stop doing that if I know you're coming for me. No, listen. Thanks for everything, man. Of course. I appreciate you coming on. I think my brothers every day, they say, well, plan B said.

Starting point is 00:53:51 So they're fans as well. So anyone who's listening to this, make sure you go follow him on Twitter. And we'll talk soon, my friend. Thanks, guys. All right, bye.

The Pomp Podcast - #686 Bitcoin Could Go To $5 Million w/ Plan B

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