The Pomp Podcast - #733 Bitcoin's Black Friday Sale w/ Dylan LeClair

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. Dylan Leclerc is the Senior Market Analyst at UTXO Management, a digital asset fund investing in the analog to digital transformation of money and the emergent financial system. In this conversation, we discuss Bitcoin, on-chain metrics, market structure, and what to expect from the rest of the Bitcoin bull market. I really enjoyed this conversation with Dylan, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Crypto.com. They're helping to mainstream the crypto industry,

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Starting point is 00:03:12 or go to citycoins.co to join the community discord and contribute to the movement, citycoins.co. All right, let's get into this episode. I hope you guys enjoyed this one. 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.

Starting point is 00:03:30 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. Dylan, talk us through the price is going down right now. What's up with Bitcoin's price?

Starting point is 00:03:48 Why is it going down? Yeah, I think it's just some macroeconomic uncertainty. Some of the stuff with the new variant, which is, you know, you can, I guess, assess the validity of that, you know, yourself. But I think that's, you know, you're seeing equity sell off. You're seeing, you know, like crude oils down like 13% today. Just various asset classes are selling off and Bitcoin just kind of reacting sort of as a risk on asset but um you know really it's just i think investors are kind of uh searching

Starting point is 00:04:16 for a little bit of protection not in the way that we think of it uh in the terms of like they're going to print a lot of money which i think that's the response that's going to come uh with any sort of you know macroeconomic shock uh but just on a you know intraday time frame i think that's what's occurring all right and when you see that are there specific metrics in the bitcoin network that you look at when there's something that appears to be affecting it from outside like an external shock like this. Is there things that you look at for either measuring health or things that you look at? Like if this happens, I'd be really worried. Yeah. So I think, you know, looking at something like long-term holders, you know,

Starting point is 00:04:49 coin days destroyed, stuff like that, where you can see like day to day what's happening with kind of old coins. I'm seeing just like a little bit of elevated spikes on both of those things today. And so I think that's just, you know, like with long-term holders that, you know, there was a decline of about 76,000 Bitcoin, which sounds like a lot, but it's, you know, we're still far above the levels we were at this summer in terms of accumulation. So I'm not too worrisome, but just kind of I think it's investors are looking for a little bit of protection and maybe maybe taking a small amount of chips off the table. Got it. And when we start to think about the numbers that I pulled up earlier in the show, so point oh one Bitcoin balance on Bitcoin

Starting point is 00:05:26 addresses, the number of Bitcoin addresses with point oh one as the balance or more hit an all time high. We're now at almost nine point three million. Also, eighty nine percent of Bitcoin is in profit. Do you put any credence or value to like some of those underlying metrics that continue to hit all time highs or remain very, very attractive? Or is this simply a game of supply demand? Everything else is kind of a function or an outcome of the supply demand. That's all you care about is looking at supply and demand. Yeah. So, I mean, I think there's there's a couple of different cohorts of Bitcoin investors or kind of, you know, supply and demand. There's the stackers and the hodlers who, you know, Strike just rolled out hourly DCA, right? So I set up an

Starting point is 00:06:06 hourly DCA and every single, you know, every single hour I'm taking some Satoshis off the market. And I know there are a ton of people that are also doing that and at a lot larger scale than I am all over the world. So that's kind of like that base level demand. And you're seeing that that's occurred for the last 10 years and that will continue to occur. But you also see, you know, with the derivatives market and with the Bitcoin on exchanges, there's like a few million Bitcoin, about 2, 3 million Bitcoin that are basically just wash traded day to day. And, you know, whether it's a headline, whether it's CPI or the coronavirus, you know, variant risk and all this stuff, it's just headline traders. And so, you know, they kind of whipsaw the price

Starting point is 00:06:42 round over the short term, over the interim, but over the, you know, weeks, months, quarter year timeframe, it's really the stackers, the hodlers that kind of set the floor and, you know, kind of create this reservation demand for Bitcoin. All right. And then when you start to look at things like DCA via that, is that where you see the world kind of moving to is just more of like this automatic, uh, DCA streaming payments. Like people just kind of set it and forget it. Or do you think that as Bitcoin's price goes up, people will still look at this as like a, a very much like macro investment thesis. Like, okay, here's my thesis. Here's what my allocation of my portfolio is. Here's what I'm willing to risk. Here's how much I'm looking for as a upside.

Starting point is 00:07:21 Here's what I'm going to sell out. If there's downside risk management, like, how do you think this plays out? Is it more of an investment asset or people really do look at it as a savings account? I think it's both. And that's what's the fascinating thing about it is like, and I kind of play both a little bit myself where I view it as my long-term savings account as my savings medium. You know, I have a stash that I'm not going to touch for decades. You know, hopefully leave it to, you know, my kids that I don't even have yet. But also at the same time, it's treated as kind of this, this risk on risk off asset, um, day to day. And so, you know, and like with the derivatives, like we were talking about, um, you're going to see stuff, uh, on the shorter timeframes where

Starting point is 00:08:00 we're at pumps like crazy or dumps. And, and a lot of people are just kind of confused by that volatility and saying, how is this possibly, uh, you know, a safe Haven, uh, you know, medium for, for, for your long-term value. But, um, you know, the, there's kind of those, those two investor classes, like we talked about, or maybe not investors, but the savers, the hodlers, uh, and then kind of the day traders. And so, you know, you can, you can be both, but I think for most people around the world, more and more people are kind of treating it as the savings medium. And I'm just going to passively allocate to this on a day-to-day basis or week

Starting point is 00:08:30 to week or whatever it is. And, you know, whether that's corporations, whether that's a wall street institutions, whether that's nation States, or just individuals, I think, you know, broadly more people are adopting this and with absolute scarcity, you know, the price can only go one way in the longterm. Got it. When Joe and John's got questions, they're gonna ask you here in a second. but uh one other thing that i'm very interested in is uh we've now seen bitcoin city and we talked

Starting point is 00:08:54 a little bit about this uh earlier in the week but it feels like this bitcoin backed bond uh we continue to see samson mao talk a ton about there's lots of interest lots of interest uh you still feel pretty strongly that this thing's going to be like oversubscribed and lots of people are going to want access to it like i do or after having some more time to think about it like have your thoughts changed a little bit as to what the reception for that bitcoin backed bond might be I think it's pretty interesting just in the sense that, you know, with fixed income, there's no upside. It's really only downside in the sense that you're getting paid a fixed amount of fiat currency traditionally with fixed income. And so any sort of inflation risk or, you know, usually it's not at a sovereign level, but any sort of default risk, there's really only downside. You know, if you're talking about other sorts of investments, whether it's equities, Bitcoin, you're thinking about how much can I make? But fixed income investors, you know, they're thinking about how much can I lose?

Starting point is 00:09:44 And with yields around the world, basically at record lows, you're not even accounting for deflation or default risk. Fixed income investors really are in a tough spot. So when you have kind of this call option upside with the Bitcoin exposure that El Salvador's Bitcoin bond comes with, I think a lot of, you know, maybe investors or fixed income investors that were skeptical of Bitcoin in the past are looking at this thing that's been the best performing asset probably, I think, eight years out of the last decade and say, hey, you know, this is this is pretty interesting. Got it. Joe, John, what questions do you guys have for Dylan? Dylan, a lot of people joke about everyone talking to their grandparents and their parents and their siblings and everything like that and selling them on Bitcoin during the holidays. I'm curious, is there like actually anything on chain that we can look at to see if any of this

Starting point is 00:10:29 is happening on a substantial level or not? Not that I've seen. I mean, anecdotally, I threw out some joke tweets yesterday. No, my uncle Jim did not mortgage the house to buy Bitcoin on the spot. But I mean, I have had all the conversations with all of them and Bitcoin did come up, you know, 10, 20 times throughout the last couple of days.

Starting point is 00:10:52 And so I think that's happening around the world. I mean, you know, there's there's that that big pointer in the in the friend group in the family that continues to talk about it year over year. And, you know, the results don't lie. So in terms of like whether we can see that in the data in terms of yesterday, I don't I don't think so. At least not from what I've seen. But I think, you know, there's just that that kind of that Lindy effect. And, you know, that that crazy cousin, you know, is continues continues to be right. And so, you know, there's something to say about that. John, what questions you have? what's up Dylan nice to see you in Florida you look uh you look happy I'm glad thanks everyone well for you so my question is what is your argument for people that say like how do I

Starting point is 00:11:27 convince people when I get together with the for the holidays how do I convince them that Bitcoin is a store value like what Bitcoin is like what is your easiest 30 second pitch for people to say yeah um I think one of the things that's worked really well for me and it may not be like hold up true right now with the recent price dump but um I checked as of like a week or two ago, it was, you took 10 bucks a day over the last four years and just passively allocated to it instead of going to the gas station or, you know, 10 bucks a day, right? It's not too much. 10 times 365 times four, that's about $14,000 passively put away. And that's of about a week ago, that was $100,000. And so obviously, as Bitcoin grows, those returns are going to be

Starting point is 00:12:06 diminished. The upside isn't what it was four years ago or four years before that. But just, you know, in terms of a lot of people get scared away by the volatility, but, you know, from a compound annual growth rate perspective, not many asset classes are going to beat that sort of performance. And I think that's going to hold true going into the future. And a lot of, you know, there's a lot of shock and awe when you kind of throw those numbers around saying, Hey, you know, just 10 bucks a day, you know, a lot of, a lot of people that aren't investors or don't know where to even start here that, and you know, their eyes kind of get a little wide. So that's what I've been using as my kind of 32nd pitch. Boomers at the table might, their jaws might

Starting point is 00:12:40 hit the floor if you talk about the amount that it's appreciated over the last decade compared to bonds or anything else yeah exactly i mean those treasury bonds that you know whatever 1.5 don't look too attractive dylan another thing that we saw this morning is uh singapore has uh approved two bitcoin spot funds how do you think about like geopolitical competition uh from other regulatory regimes with the united states if the u.s doesn't approve a bitcoin spot ETF and kind of continues to drag its feet on some of that stuff. Do you see investors wanting just go get the exposure in these other markets or is still the U.S. kind of the king? And once it gets approved, there'll still be massive capital inflows, in your opinion. Yeah, I mean,

Starting point is 00:13:20 I think U.S. capital, public capital markets are the biggest in the world and will continue to, you know, there's just no kind of competition from just total size perspective. But in terms of like the Bitcoin geopolitical kind of game theory or maybe jurisdictional arbitrage, It's really, really interesting. And seeing that, especially following the China ban earlier in the year, seeing some politicians say, you know, we have to capitalize East versus West and we want to come out ahead. And this is a matter of national security. I mean, it's playing out how a lot of people said it would play out in theory, but it's not theory anymore. And I think that's one of the things that the biggest Bitcoin skeptics still are missing. It's like, you know, we're going to ban

Starting point is 00:13:55 Bitcoin. And it's like, well, obviously we're not because there's so much interest in this. There's so much vested interest in this asset class, whether that's from the political standpoint or just in terms of the pure capital behind it and all the lobbying efforts that are happening beneath the surface. So we still don't have a spot ETF, but there's just no way a ban will occur. And I think eventually the pressure will mount so high that we have all these other countries that have it. Why don't our capital markets have one? And so we'll probably see that in 2022, but the timeline on that is still unknown. Got it. And then last question I have for you, and then we'll let you go and let you go back to your family and enjoy in florida is when you look out at the bull market

Starting point is 00:14:35 obviously this price drawdown uh there's a lot of people who are nervous they're scared they're they're fearful does anything change about your outlook or do you still see us uh kind of in a continuing bull market and have a pretty um kind of deep conviction and that price will go much much higher you know through the end of this year and potentially into q1 of next year yeah i mean i think in terms of like the thesis it's completely unchanged in terms of the recent events over the last week, over the last couple of weeks, we talked earlier this week about the dollar strengthening against other fiat's. And even though, you know, inflation is running hot in the U.S., a strengthening dollar in the global economic system is is bad news for all asset

Starting point is 00:15:10 classes. And so, you know, that's what we saw in 08. That's what we saw in 2020. But but the good news is any sort of response to some sort of dollar shock and asset sell off is more of the same. Right. So, you know, it's kind of heads heads you win tails. You also win in the sense that they're going to continue to have to print a lot of money uh the response can be more of the same and even if the you know the fed or you know politicians jawbone we know what's going to happen money supply is going to increase and you know basically equities and every sort of asset class bitcoin included even if they don't admit it uh keeping that price sustained is a matter of national security just with with you know how the the financial system economic system is currently

Starting point is 00:15:48 uh stocks everything can't go down for a sustained period of time uh just because with how the fiat system is built and so you know we kind of know the long game is that you know if there's a shock to the downside it's an opportunity um because you know the response will be more of the same and bitcoin is the asset you want to hold in that scenario makes sense to me real quick follower check dylan's at 89 000 means by the end of the month he'll be at 100 keep tweeting don't mess up keep tweeting be at 100 by the end of the year that means we got to put one big 50k follower month together in december and we're at 150k like i said he would be you you got it in you I think so, hopefully.

Starting point is 00:16:24 John, can you get to 100K by the end of the year? I'm trying. It won't be for lack of effort, I'll tell you that. All right, Dylan. I appreciate you taking a few minutes to jump on here. Obviously, you've been all over a lot of this stuff, and we appreciate all the data you've been sharing. Joe, John, you got any last comments, thoughts, statements?

Starting point is 00:16:47 I'm trying to order a Chick-fil-A over here. I appreciate you joining us for Thanksgiving, Dylan. I hope you have a wonderful holiday season and we'll talk soon. Good luck to the one 50. Go follow Dylan. What is it at Dylan LeClaire? Underscore. Yep.

Starting point is 00:16:58 Underscore. Gotcha. All right, buddy. Thank you so much. Appreciate you. Happy holidays.

The Pomp Podcast - #733 Bitcoin's Black Friday Sale w/ Dylan LeClair

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