The Pomp Podcast - Bitcoin’s Most Explosive Phase Starts Now | Anthony & John Pompliano

Starting point is 00:00:00 What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. 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

Starting point is 00:00:40 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. What's going on, guys? Today, we got a great episode with John Pompliano. In this conversation, I explain what's going on with Bitcoin, what I think will happen the rest of this year and why I think Bitcoin is going to go up, down, and then back up again. On top of that, I also talked through some of the metrics that I'm looking at to see whether Bitcoin is going to actually have a top and the four-year cycles will continue, or are we just going to continue to see this grind up? And then lastly, John and

Starting point is 00:01:14 I finished up by talking about how I'm thinking about investing, what's in my portfolio, and what are the things that I expect to happen in the future that will impact the way people allocate their capital. All this and more in this great conversation, tons of things I haven't talked about publicly before. So please watch till the end and let us know what you think. Here's my latest conversation with John Pompliano. All right, John, what's the first topic? All right. Bitcoin's price. We're sitting around 120,000, give or take a few thousand. Where do we go from here? What's going on? Higher, higher, much higher, much, much, much higher. You know why higher? Why? Because every single thing that people continue to say

Starting point is 00:01:49 is working against Bitcoin, it'll pass with time. Let me give you a couple of examples. First, inflation has been lower because tariffs are deflationary, not inflationary. People are now starting to realize that. Remember when they were telling us the recession, the Great Depression, the empty shelves, the world was going to end, people would stop trading with the United States, consumers were going to be all broke, all that nonsense. Throw it out the door. Wrong.

Starting point is 00:02:13 So now enthusiasm has come back in the market. We're back at all-time highs of stocks, Bitcoin, gold, etc. Now, I do believe we are going to see higher levels of inflation. But it's not because of tariffs. So if you go and you look, I recently saw our friends over at Wasteland Capital. What an incredible name. They did an analysis. All the things that are driving inflation don't have tariffs associated with them.

Starting point is 00:02:39 For example, shelter. Nobody is tariffing your house. Used cars. No one is tariffing your used car. So you go through these things. That's what's driving inflation. The things that are being tariffed are actually going down in price as predicted. If you remember a couple of months ago when I went through steel, solar panels,

Starting point is 00:03:02 washing machines, 2018 tariffs, I told you the prices are going down on these things, not up. I mean, I'm not going to say it, but you could say he told you so. And so if you look at that- He wants me to say he told you so. No, it's just true. Because you know why? I got a lot of heat for that at the time, right? People were really saying how stupid I was.

Starting point is 00:03:20 And yeah, I mean, some people think I'm stupid. Some people watch this video think I'm stupid. That's fine. But I told you what was going to happen. The only reason I wrote February 3rd, I went back and I read it this morning. On February 3rd, I wrote an entire piece. And what did I say in it? I said, I used to think that tariffs were inflationary. That's what I was taught in economics class. That's what every single investor I'd ever talked to had told me. That's what the mainstream media had told me, all this stuff. And when they started talking about tariffs, I went and I said, let me go read the source material for myself. Let me go check

Starting point is 00:03:49 it out. Let me go see what happened. 2018. And I was surprised. And when I got that new information, I changed my mind. And that's why I came out so vehemently and said the tariffs are going to be deflationary, not inflationary. Now, what does that do with Bitcoin? Once people realized the tariffs aren't this big boogeyman that they thought it was going to be, people started to pile their capital back into the market. And so now you see stocks up, Bitcoin up, gold up, et cetera. And people will yell and scream like, oh, he didn't do 150% tariff against China. Oh, he didn't do a 57% tariff, whatever. They're still very large tariffs. There's a 10% blanket tariff on all US imports. That is a real tariff. Look at the

Starting point is 00:04:25 tariff revenue. We're breaking tariff revenue records every month. And so I think that the thing that now is going to happen with Bitcoin is everyone's starting to say, wait a second here. There's a lot of manipulation going on in the traditional financial system. And so I need to find something that is going to actually perform. That's why I see Bitcoin and gold both going up. Now, why do I say that inflation is going to come? It's not because of the tariffs. We are going to get higher degrees of inflation over the next, call it six to nine months, because they are going to print money. They're going to cut interest rates and they're going to print money. Now, you can make the argument that we do need that, right? Why? Trueflation, the alternative

Starting point is 00:05:03 real-time inflation metric shows that we are currently sitting at 1.8% as of today. Now, why is 1.8% important? Well, it was at 3% in December. So if you zoom out just six months, all the noise, all the chaos, all the doomsday predictions, all the nonsense, we went from 3% inflation down to 1.8%. If we're at 1.8% and unemployment is just over 4%, that tells the Fed, cut rates. Guess what's going to happen? They're going to cut rates later this year. The market's pricing in up to three rate cuts. They start to cut rates. They don't know how to cut rates without printing money. They're going to start printing money. And so if you get rate cuts plus printing of money, guess what happens?

Starting point is 00:05:41 You're going to see inflation start to tick up. Now, I don't think that inflation is going to go to 5% or 6%, like all these people are predicting. I think inflation may go from the 1.8% that is the real-time metric today. It maybe goes like 2.2%, 2.3%. It doesn't sound like that much, but it starts to be 20% to 30% increase from where we are today. So what should that do?

Starting point is 00:06:01 Asset prices are going to go up. You're going to see Bitcoin, gold stocks, everything continue higher in the second half of this year. Now, why else is Bitcoin going up? A lot of people are buying it. And you're now starting to see the ETFs. You're seeing these treasury companies. And you are also now starting to see a bunch of other types of funds. One of the most interesting ones are these real estate Bitcoin funds. So you have Newmark that's come out and said that they're going to have real estate plus Bitcoin. They've got a unique way to think of the Bitcoin as collateral as part of the loans. You've got people like Grant Cardone who are coming out and they have real estate funds that are taking some of the money and they're putting it in Bitcoin. So you're starting to see Bitcoin getting stuffed into every corner of the financial system. And they want to figure out how do we take this asset that brings new users, new clients, new assets, new revenue, and put it into our

Starting point is 00:06:48 traditional products. The last thing I will say is that a lot of the money that has gone into these Bitcoin treasury companies, most of them, the capital has been contingent on closing, which means that people have said, I will give you 100, 500, $700 million, but they have not actually given it to the company yet. So if you go and you take a look at a bunch of these companies, for the most part, the funding is contingent on closing.

Starting point is 00:07:12 Guess what's gonna happen in the next 60 days? People are gonna start closing. Today, reportedly, the Nakamoto deal is gonna close. They're gonna get access to their capital. What do you think they're gonna do? David Bailey's out there tweeting, saying he's gonna go buy a lot of Bitcoin, right? What do you think is gonna happen in these other deals?

Starting point is 00:07:26 So there's a lot of buying demand that is coming. On top of that, what you are going to start to see is that the people who did buy Bitcoin and they were using certain capital, a lot of that capital was hedged, meaning people are going long the stock and they were short spot Bitcoin and they were trying to lock in the premium exposure. As those things get taken off, those hedges, you are going to see Bitcoin continue to rise in value. And so my prediction is the following, that we are going to see from our 120-ish thousand mark today, we're going to run in to the end of Q3, September. Why is September? When we get close to the end of September, you're going to have the options expirations all start to happen.

Starting point is 00:08:09 There, there will be some volatility and likely potential downside pressure. Once we get, I don't know, 7 to 10 days past that period, I could easily see mid-October, up only, baby, Q4, into November and maybe December. And here we go. So what you're going to see here is you are going to see the real start of what I would consider the second half of the bull market. It's going to start sometime either at the last two weeks of August or the first two weeks of September, sometime in that four-week period. you're going to see a run up into the options expiration. You're going to see some relief that happens around the end of September, early October. And then you're going to see a much higher leg up in second half of October, November, and maybe even into December.

Starting point is 00:08:55 And then where we go from there, I think is a very interesting conversation because I could see two different arguments. I could see, hey, four-year cycles don't go away. There will be these drawdowns. It will be less volatile, meaning that you're not going to get an 85% drawdown. Maybe you get something more like a 50% drawdown in the bear market. But I also could see an argument where you are going to actually watch Bitcoin continue to kind of grow at this 45 degree angle, which has been happening since the ETFs got approved. And if that is true, that means that we now have broken the four-year cycles. We have this persistent bid and you should see Bitcoin continue to kind of grow in value. Now, the reason why I say either or, I don't have a strong opinion about

Starting point is 00:09:36 that yet. I think we need to see more data to understand how parabolic is the move in the second half of 2025. If we get a lot of kind of explosive growth and it looks more like a parabolic move, then I would expect at some point us to get overvalued, overhyped, right? There's too much frothiness and then you'll get somewhat of a larger correction because you need to get rid of that frothiness. If we continue this kind of grind up, which is kind of crazy. If you think we were at $70,000 on November 1st last year. So we've ground from $70,000 to $120,000, $50,000 per Bitcoin increase in price in less than a year. So if we continue this grind up, then you never get the frothiness. You never get the exuberance and enthusiasm that then would

Starting point is 00:10:23 create this scenario and environment to then get a big correction. So I don't know. It's like, which way, Western man? I don't know which way yet until I see what happens in the second half this year, but the faster and higher we go up, the more that I think we'll have the four-year cycle and we'll get the correction. If we do not see that and we just continue to grind up, valala, I think is what they call that. A lot to unpack there. How much do you weight the different indicators, right? So M2 money supply is obviously something people track. Rate cuts are another thing, something people track. Inflation is another thing. How much do you weight these different indicators of like, if they never cut rates, but they end up printing

Starting point is 00:11:00 money, right? What does that look like? And like, which is more important for Bitcoin? Part of the reason that people got the tariffs wrong is because they were looking at it in a silo. The academic view of a tariff is if you increase the amount that it is for someone to bring their product into the US, then the person in the US who is selling that product is going to increase their price, which then will create inflation. But as people now are learning, you can't evaluate a single policy in a silo. There's the world, it's a complex economic machine. So for example, if you went back and you looked at the China tariffs, what you saw was actually there was only a 4% increase in the price of Chinese goods in America back in 2018. Why was

Starting point is 00:11:44 that? The tariff was like 25% or something, right? Well, what happened? All these different people along the supply chain ate a piece of the tariffs, the end consumer was only 4%. So the second you realize that, you say, oh, this isn't an academic exercise. This is a real-world analysis. So the same thing then starts to say, well, what if consumers shift their behavior? What happens if interest rates are moving at the same time? What happens if they're printing money? What happens if there is some sort of technology advancement that actually brings down the cost of the product, even though there is a tariff? Let's say TV prices are crashing, but there's a tariff in place. What if the demand for solar panels is so exponential that people aren't going

Starting point is 00:12:21 to stop buying the solar panels regardless of what the tariff is? And then all of a sudden, the next president comes in and he changes the tariff on Chinese made solar panels from 25% to 50%, right? It's a big complex economic machine. So go to Bitcoin. There's not one single indicator. You can't just look at money supply. You can't just look at interest rates. You can't just look at, let's say, a hash rate. You can't just look at OTC or exchange number of Bitcoin available. You can't just look at social enthusiasm and like the social chatter. All of these things are data points. And part of what makes it difficult to be an investor in a very dynamic world like Bitcoin is if you are going to try to choose when to buy or sell, then you are

Starting point is 00:13:04 going to have to constantly take in all these data points, synthesize them and make decisions. It's very, very difficult. That is why the people in Bitcoin who have simply dollar cost average into the assets that I'm never selling have done the best because they're just complete. It doesn't matter what the data says. I'm going to keep buying this thing. And as long as it goes up over the long period of time, I'm going to be okay. So if you say to me though, what are some of the data points that I think are most interesting to pay attention to? Maybe the data points that I would put more weight on given their historical relevance. M2 money supply is obviously very important. Sam Callahan and Lynn Alden did a fantastic study, I think it's probably a year

Starting point is 00:13:38 or two ago, where they went and they looked at the sensitivity of all of these different assets to global money supply growth. And what they found was Bitcoin was the most sensitive. So when global money supply grows, a lot of assets go up, Bitcoin, gold, stocks, real estate, et cetera. But Bitcoin goes up the most. It's the most sensitive to that growth. I don't think that that has changed. And so if money supply continues to grow as it has been, I would expect Bitcoin to follow

Starting point is 00:14:02 that. Now, is it a perfect, you can pinpoint where it's going to go from a price standpoint. Maybe somebody can, I can't do that. I just look at direction. The second data point that a lot of people don't usually talk about, which I think is pretty important. If I remember it correctly, it is the 200-week moving average crosses the previous all-time high. So the previous all-time high was $69,000 in the 2021 cycle. The 200-week moving average has been moving up, up, up. Last time I looked, it was somewhere around like

Starting point is 00:14:37 $55,000. So in past cycles, a great top signal has been whenever that 200-week moving average crosses what would be $69,000. Now, again, it goes back to, that doesn't mean it's going to work this time. It doesn't mean there's going to be a top. It may just grind up all that stuff. I think that's a very interesting data point I don't hear a lot of people talking about. Another data point that I usually like to take a look at is I actually put a lot of weight on the social conversation when you start to see people who historically have been bearish capitulating. So the second that I see people who have been like anti-Bitcoin or maybe even like cautious, and all of a sudden they flip to exuberance, I get very nervous. And historically,

Starting point is 00:15:24 I've not sold in those times, but I've started to maybe, hey, in general, I should slow down investing. People forget. And you can go look this up online. I published it publicly. November of 2021, I wrote a letter to all of the LPs of their capital. I was managing an adventure capital fund at the time. And I said, I'm returning all the uninvested capital. November 2021, top of the market. I nailed it to the month. I didn't sell anything. Dummy. I'm not the smartest guy in the world. So I don't really get credit for feeling like this is crazy. But I started to realize this is really hard to deploy capital in this environment and make a lot of money right now in hindsight if i was smart i would have also sold a bunch whatever i could have sold right

Starting point is 00:16:13 because it was top of the market and you could have bought back lower so i think that what you're looking for is again a couple of data points and with bitcoin specifically global money supply and then this 200 week moving average that crosses over the previous all-time high i think are two like pretty important data points. And then the third one, and maybe one that I don't think people always appreciate as much is not only is the social chatter important, but also find smart people and talk to them. And guess what usually happens? You will see a lot of smart people start to say, I think that we are overvalued. I think we're in bad shape, right? Now you got to be careful because the stock market right now, 3.15X valuation multiple. Okay. That's the highest

Starting point is 00:16:59 in history. There's a lot of people saying the stock market is overvalued. This is the worst overvaluation we've ever seen, blah, blah, blah, whatever. Well, we've also never seen companies like Facebook that are printing billions of dollars. We've never seen companies like Palantir that are saying, we are actually going to produce more revenue and profits with less employees. We're going to go try to fire 400, 800 of our employees, right? The AI story, the technology story is making everything more efficient. So naturally they should get a higher multiple or higher valuation. Bitcoin is a little bit different. Bitcoin does not have some huge tailwind because AI is now going to be like on the blockchain or something, right? There's a lot

Starting point is 00:17:42 of tailwinds that are external to Bitcoin that make Bitcoin more attractive. But I think that what you have to start to really look at is say to yourself, okay, if a lot of the smart people in Bitcoin are starting to say, this is getting crazy now, one of two things is true. Either they're right, or I tend to think that revolutions don't happen overnight in financial assets. I tend to think that they are kind of this grind up. And I think what you're seeing now is that that's pretty much exactly what's been happening is Bitcoin has just constantly got this bid and you see it, 401ks, those are coming, $8, $9 trillion. Now we're going to be able to be putting Bitcoin. You obviously have the ETFs. You're going to have billions of dollars coming

Starting point is 00:18:24 in from the Bitcoin treasury companies. I expect full well that the Harvard endowment, which bought over $100 million of ETF exposure, a lot of various endowments, hospital systems, insurance companies, private foundations, they're all saying to themselves, well, wait a second, I don't need to invest in these crypto funds anymore. I can just go buy spot myself. Maybe we should make it a 2% allocation in our portfolio. All of this is persistent bids on the asset. And so I think that is where you start to really just pay attention and say, these are the data points that are driving me to say Bitcoin is going higher over the next five months or so. Yeah. One of the things that you mentioned that I've always found fascinating about Bitcoin

Starting point is 00:19:09 specifically is it's one of the first technologies in my time that I've seen so many people that are considered smart, right? Have different views on an asset class, right? Gold is normally like everyone knows what gold is. Everyone knows it will probably go up over time. It's sound money, whatever. But Bitcoin has so many people on both sides of the fence and we're still kind of playing this game to figure it out. One of the things I want to talk about is that zero of 30 bull market indicators have been hit, but it seems like we're in a bull market. It feels like we're in a bull market, both on a technical basis and then also like a vibe basis. Zero of 30 bull market top indicators has been hit. So yes, we are on a bull market,

Starting point is 00:19:49 which is what you feel, what you see, the price, the enthusiasm, all that stuff. But those top indicators, none of them have been hit yet. Now, how much credit do you give each one? What's the importance? People are going to all have different things they want to look at. I told you what I like to look at, but I don't think you got to hit all 30 of them, right? But if all of a sudden you had 10 or 15 of them, that's a little bit closer to the top than you were before, right? And so I think that it's just this very interesting market change where, I mean, look, Bitcoin is at $120,000.

Starting point is 00:20:25 I don't see, outside of financial television, I don't see the mainstream media talking about Bitcoin. You know, we've seen CBS News recently did a piece on like the Bitcoin conference. We've seen, you know, every now and then there's kind of a story. It's more of like a human interest type story, whatever. But you don't see the like frothiness, right? You don't have people from high school texting you being like, yo, you got some of them coins, right? Like, you know, if you think back to 2021, I told a story before, right? I was at dinner with a very well-known investor. I got in the car in December of 2021 and Polina was with me. Today's episode is brought to you by Simple Mining. Have you ever been interested in mining Bitcoin?

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Starting point is 00:24:24 into the bull market now one thing we could talk about which i don't know if it's on your list of things to discuss or not you want to talk about ethereum yeah let's do it a lot of people very bullish on ethereum right um before all the uh ethereum uh folks come after me and try to put my head on the stake um be careful bitcoin folks are probably coming after you too i i that's fine i'd sit in the middle um i started out mining ethereum ether uh i think i was mining somewhere in the like six to eight dollar range uh it's like four thousand dollars now like that would have been a lot of money. I was dumb. I sold most of it or all of it at the time at $150 or some crazy number. And then eventually tried to make up for my mistakes, all this stuff. But

Starting point is 00:25:11 I think that there is this narrative that Wall Street is going to put on an asset, which will lead to some flows. But there's one thing that Wall Street has historically shown that they do not understand, which is the disruption via innovation of technology. And I think that's what we're watching play out here. So I publicly have come out and said that I believe in December of 2023, I sold Ethereum that I had, and I bought Solana. I'm probably not going to be holding Solana 10 years from now, right? Probably not even two years from now. But from a pure short-term speculative trade, I said Solana is going to go up more than Ethereum will. That has played out. But I understand where the narrative is coming from. The reason why I understand where the narrative is coming from is because Wall Street is driven by narratives. But narratives can disappear as fast as they appear. And I think what you are going to watch here is you are going to see an assault on the Ethereum narrative over the next three to six months, where a lot of the things that they've been hanging their hat on are going to look very, very wrong.

Starting point is 00:26:32 So I saw recently somebody went on television in the Ether community and they said that Ethereum could be bigger than Bitcoin. Stop. Stop it. I think that Ethereum over the last year is still down like 20% against Bitcoin. It has crashed against Bitcoin over the last five years or whatever. The Bitcoin rate of return of most altcoins is negative. Now, that doesn't mean people can't make money today. There's a lot of people who are going to go buy this. There's yield. There's all these stories to it. I think that what we are going to find out though is specifically in the public markets, if you are going to use an asset as a reserve asset, you want something that is built to store value that is not the role of most of the alt coins they are more technology

Starting point is 00:27:30 platforms they are you're trying to do other things it's not good or bad just is what it is like all if you want to put all this like morality and uh tribalism and all it's like it's technology right and you may agree with you may not agree with you may want your portfolio you may not want in your portfolio whatever i don't blame any of these people i know people who have made an absolute killing holding a theory you might know people who are like i lost a ton of money i'm an idiot and they went and they did something else right like everything in between but i do think that people are drastically underestimating bitcoin's potential to serve as a global reserve asset which means that if it is valued at 2.3 trillion dollars today it's going to be worth a

Starting point is 00:28:11 lot more than that in the future simultaneous to that i think that they are over estimating this whole like world computer, blah, blah, blah, whatever. And what I think you're going to start to see is general purpose is not going to be a thing. Because what you're going to start is if you tried to build a general purpose blockchain, you want people to use it for all these different reasons. There will always be someone who can show up

Starting point is 00:28:43 and build something specific for a use case that will likely serve that customer base better, right? If you think about marketplaces in the traditional world, forget crypto for a second, name one general purpose marketplace. People might say maybe Amazon, right? Or whatever. Well, I would argue that Amazon actually

Starting point is 00:29:05 is not a general purpose marketplace. Amazon sells a lot of stuff, but there's a lot of stuff it doesn't sell, right? How many people are buying sports cards on Amazon? How many people are buying antiques on Amazon? How many people are buying cars on Amazon? How many people, right? We can just go through all, there's a lot of products that aren't sold there.

Starting point is 00:29:24 Now they do sell a lot, but what do they specialize in? Usually things that are lower value, things that if you press a button, you want them to show up quickly, right? Things that if you have a logistical network that is efficient and kind of very adept at being able to get to you. Amazon is really, really helpful, right? There's a price component to all these different things. But why is it that eBay exists? Well, that's a different type of marketplace specialization, right? Why is it that maybe let's say a marketplace where you can go and buy cars or even Craigslist, right? Now there's a geography specialization. There's all

Starting point is 00:30:04 these different things that people, they look at and they're like, oh, general purpose. Usually general purpose does not work. And so marketplace, one example, you look at payment systems, all this stuff. So what I think you're going to start to see here is that you're going to see people start to pick away at these narratives. Bitcoin ultimately is the single best store of value available in the market, in my personal opinion. Could it become a currency one day? Maybe. But right now it's a great store of value, Bitcoin rate of return. If you denominate your investment portfolio in bitcoin it is very difficult to beat bitcoin some people can do it but that is bitcoin's you know narrative that that is why bitcoin is very successful it's got

Starting point is 00:30:45 a very clean clear concise story if you look at right now what some of the enthusiasm around let's say ethereum is and some of the other all coins but ethereum in particular stable coins tether a lot of activities happening on tron i don't see a lot of people being like let's go buy tron because Tether's really popular there. So why would you then go buy Ethereum because stable coins are supposedly going to be popular there, right? The thesis should apply in both cases, right?

Starting point is 00:31:15 But if you're like, oh, well, we don't like the Tron thing, then why would you like this one? So I think that's one whole thing. The other thing is that there is going to be an absolute assault on Ethereum coming from stable coin specific blockchains. These are blockchains that are purpose-built for stable coin usage.

Starting point is 00:31:34 And people will say, well, I don't think that's going to be successful. Let's see. I've been doing a lot of work looking into these. There's a couple of them, right? I don't know if they're going to work. Pretty interesting though. Pretty successful teams,

Starting point is 00:31:46 the right people backing some of these. Like I think that that's going to be a narrative that people need to pay more attention to. Then you look at something like yield. Okay, well, if people want yield connected to quote unquote crypto, all of a sudden strategy just released something that pays nine percent annual yield how many staking platforms give you more than nine percent not many okay right so like you start to

Starting point is 00:32:15 see where you're getting all of this fractional uh kind of interest energy attention etc now bring it back i'm not saying that somebody should buy or sell something i'm not saying that something is good or bad. What I'm calling out is that whenever I see this very rapid shift in a narrative, I immediately say to myself, is the underlying technology, network, statistics, users, transaction volume, is it changing to warrant that rapid change? I don't see it. By the way, I don't have skin in the game. I'm not short and I'm not long. I'm merely a market commentator so maybe i'm wrong right i'm not going to get punished if i'm wrong i'm not going to be rewarded if i'm right but very quick look i think that a lot of the enthusiasm and the narrative

Starting point is 00:33:09 shift i just don't see what is supporting that other than okay the bitcoin thing worked what's the next biggest one it's what's the silver to the gold by the way worked out pretty good for silver right like still working out 100 could work so then if you go further down the line there's a lot of chains that are trying to figure out what is their thing should we be general purpose or should we be specific and i think that's part of what the market has to figure out here because as the technologists figure that out and try to find product market fit and start to get usage etc then you're going to start to see i mean think about we have a uh a ton coin uh treasury We have a BNB treasury.

Starting point is 00:33:53 Tron, I believe, is going public in the United States. You go through all of these. This is going to happen whether Bitcoiners like it or not. The question becomes what's going to happen to these things? Are they going to be successful? And the market will decide. The market is ultimately going to be the referee here. And I find it fascinating that in order to do these, somebody had to raise the money.

Starting point is 00:34:17 Somebody's giving them the money. Let's see what happens. How should investors think about it? There's so many different assets. You can put your money so many different places right now, whether to generate yield, see the asset appreciation. You can go and say, hey, look, I want to be... I'm a long-term holder of Bitcoin. Okay, cool. I have my pillar of wealth, call it there. And I would like to build up some other assets in my portfolio. How should they think about entering the market and being a market participant? It's nearly impossible to describe one size fits all. I think a lot of it

Starting point is 00:34:48 um really depends i mean look i'll i'll explain for maybe how my mind has changed over time don't think it was a secret that you know 70 years ago i didn't have a lot of cash i had a lot of bitcoin on a percentage basis like it was you know hey look uh i like the bitcoin thing you know um i'm pretty much all in you know a very high percentage of my net worth let's see what happens Your risk appetite was also much higher. Risk appetite was through the roof, right? I basically had, you know, a small New York City apartment. I had a girlfriend and I had to eat.

Starting point is 00:35:27 That was pretty much my expenses, right? Everything else went into Bitcoin? Yeah. And by the way, you know, people have seen the photo, right? Like, Polina was amazing. There was times where I was an idiot and I was like, oh, we shouldn't get a couch for like another month because I want to like buy more Bitcoin. like, I mean, in hindsight, yes, great financial decision. There's a balance between like living

Starting point is 00:35:47 your life, not like a moron that doesn't have a couch. Right. So, um, but when you're young, like you kind of, I mean, yeah, it would've been nice to have the couch, but like, you kind of don't care. Right. You're like, this is like more important. So think about that now. Right. I got kids, I'm married, I got responsibilities I didn't have before, all that kind of stuff. And so you say to yourself, like cash becomes more important. Having liquidity is way more important, right? If you have higher monthly expenses. I don't know anyone who is 25 and single or maybe has like a boyfriend, girlfriend, right? And has very low expenses that doesn't have higher expenses by the time that they're in their mid thirties, right? If they're married, got kids, all this

Starting point is 00:36:31 kind of stuff. So liquidity, right? How do you manage that liquidity? What is everyone's comfort level. I have some friends who keep three months of cash. I have one friend that keeps two years of cash and everything in between, right? It's just, what is your comfort level? What are your expenses? What are those numbers, right? By the way, I know people who live in New York City, they spend, you know, not a lot of money. I know some people in New York City that spend like millions of dollars a year just on like living expenses, right? And everything in between. So I think that cash is actually a part of quote unquote, your portfolio that a lot of people don't think about. The second thing is if you think about the stock market, the stock market

Starting point is 00:37:07 has now become this way to insulate yourself from inflation. So you're getting this monetary premium on stocks. But one of the things I think is really interesting, and I've been spending a lot of time thinking about this and talking to people about this, et cetera, is we are for the first time seeing retail investors start to really become activists. So before it was kind of like, retail investors were piling into stocks in this meme function. And it was just like, we know the company's bad, but screw it, me and all the boys are going to go buy it and hopefully it goes up. That is more gambling. That is more speculation. That is more this meme craze. What you're starting to see now is actually people are showing up to stocks and they're saying,

Starting point is 00:37:55 hey, we as shareholders have a voice. We think you guys need to do ABCD things differently or better. And there's almost this like external governance and the crowd is holding the company accountable, right? And so, Open Door is a great example of this. I think there's a couple of others that people are looking at. That is very different style of investing than buying the S&P 500. And so one of the things that has got a lot of attention in the stock market is that the S&P 500, the top seven to 10 stocks are dominating all the returns. Well, they're the best businesses ever created in human history. Just look at the operating leverage and just the scale and the growth, right? It's incredible what they have built. They probably should be dominating the

Starting point is 00:38:48 returns, right? There's nobody else like them. And so I think that that is another part that people are trying to figure out is like, is it a mag seven story or is it like a US stock market story? I recently wrote about, I found it very interesting in 2000, Catherine Boyle from A16Z pointed out that three out of the 10 largest companies in the United States were American. Today it's eight out of the top 10. And then also I believe now 22 of the top 25 largest companies in the US today are American as well. So this has been a American led technology revolution where the American capital markets, American entrepreneurs, and American innovation has really driven a lot of growth. And so one of the arguments that people have is like, well,

Starting point is 00:39:30 emerging markets will catch up. Emerging markets, like a mean reversion will happen and you'll see that I'm not so sold on that, right? Yes. Are there companies around the world that will do well? Of course, right? I mean, one of the funny things that happened in the last two or three years is like German defense stocks exploded, right? And there's war going on in Europe, right? All this stuff, but like they kind of like became almost like meme stocks to a degree, but they obviously, you know, the defense related. And so they all went up. So there's pockets. There's just nothing like the American companies, right? And so I think that they're just dominating in a way that we just historically did not see 25 years ago. And then you start to look

Starting point is 00:40:08 at some other assets. So real estate is one example. Ray Dalio just came out and he said he doesn't think real estate is a good investment. back to you as yield. With a minimum lockup of just one day, when the time lock ends, you get your Bitcoin back untouched. Still your keys, still your coins, now your yield. For even higher rates, stake core alongside your Bitcoin and multiply your yield. And if you want to see what your Bitcoin is securing, join millions of others in exploring the largest Bitcoin DeFi ecosystem. There are over 100 live apps in the network and the deepest liquidity in all of Bitcoin DeFi. Get off zero and start earning yield on even just 1% of your Bitcoin by going to stake.cordow.org

Starting point is 00:41:15 slash pomp. Again, that's stake.cordow.org slash pomp, or go click the link in the description. His point was it's easily taxed in a non-attractive way. You can't move it. There's all these things that happen. And then he was pointing at the fact that real estate is very interest rate sensitive, not just inflation sensitive. And so he thinks that actually the real return on real estate is going to be much lower than people historically have thought because of the interest rate situation in the United States. There's plenty of real estate investors that will watch this or her race comments. They completely disagree. That's fine. Right. There's tax incentives in terms of depreciation and all that kind of stuff.

Starting point is 00:41:55 But like, it goes back to how do you think about investing and what are you trying to do? Now, you asked what I think. My entire world now is predicated around two things. I have talked about this idea that every investor gets one good, big idea. And then your job as an investor is to find that one good, big idea and try to find as many ways to express that idea in your lifetime. Warren Buffett, I can buy things for less than they're worth. It's like the simplest idea of all time. He did it over and over and over again and put together one of the greatest investing track records

Starting point is 00:42:32 of all time. Great. Carl Icahn, corporate raider. They figured out activism. They went and did it over and over and over again, built $4 billion net worth. If you go and you take a look at maybe somebody like a Steve Cohen,

Starting point is 00:42:50 research-driven multi-strat hedge fund. Figured it out, started investing all these different assets, Use research, bam, owns the New York Mets. I think that my one big idea, they're never going to stop printing money. Okay. How do you express that?

Starting point is 00:43:12 Bitcoin rate of return. That's it. Are you outperforming Bitcoin? Denominate everything in Bitcoin. Since 2020, the S&P 500 is up something like 100%. Great. In five years, you doubled your money. If you denominate the S&P 500 in Bitcoin terms, it's down more than 85%.

Starting point is 00:43:34 So now all of a sudden, maybe it was just an optical illusion that you thought you had doubled your money. It's all about the denominator. And so for me, that Bitcoin rate of return becomes my denominator. I want to outperform Bitcoin, or if I can't beat it, I got to buy it. And so to me, that is now how I evaluate everything. And guess what? A lot of investments that I otherwise would have been interested in quickly become less interesting because Bitcoin has a degree of asymmetry to it. It has a degree

Starting point is 00:44:05 of resilience to it, and it has a degree of liquidity to it that other assets don't bring. And so for me, that's how I start to think about asset allocation. And it doesn't mean that I always optimize for, and it doesn't mean that I always optimize for how to make as much money as possible. It's always funny. There's things that I own, commercial real estate. I don't own a lot, but I got a couple of things dabbled here and there. Is it going to outperform Bitcoin? Probably not. Should I, if I really was like, hey, I'm optimizing for every last dollar, should I go sell it? Probably. Take it, buy more Bitcoin, whatever. At some point you're like, look, there's work involved, there's taxes involved, right? There's all these components

Starting point is 00:44:56 to it. And also frankly, like, although it's not a lot of diversification, a little bit of diversification never hurt anyone, right? And so I think that that's really what you're going to start to see here is a lot of the like hardcore terminally online Bitcoiners, as they get a little bit older, they start to get married, they have kids, they get more responsibilities, et cetera. A lot of them will say, hey, the Bitcoin that I have, I'm going to continue to hold. And then every net new dollar that I'm going to deploy, maybe it used to be 100 cents on the dollar that went into my investment portfolio, went to Bitcoin. Maybe that'll be 80 cents. 20 cents I'm going to go put in cash or in fixed income or something that has some other purpose than let me buy the asset that's going to go up the most, but whatever.

Starting point is 00:45:42 Because I just don't think there's a replacement for Bitcoin. Yeah. Okay. Let's end on this. Bitcoin will now be included in retirement accounts. It looks like that's going to access a lot of capital. The reason I bring it up is actually for a different reason. Treasuries are in people's accounts, retirement accounts, and that's a big portion of their retirement accounts. People say Bitcoin is risky. I know you have a little bit of a contrarian view that treasuries are just as risky as Bitcoin, more risky than Bitcoin. explain your thinking, Matt. Well, math. If you look at the performance.

Starting point is 00:46:16 You mind elaborating a little bit? Yeah. The last five years, if you look at treasury, I mean, go look at TLT. TLT is iShares 20 plus year treasury bond fund, right? ETF. It's down 50% in the last five years. Bitcoin is up like 12X in the same time period. So which one did you want to own, right? Now, why is that? Well, one has a structural tailwind, Bitcoin, and one has a structural headwind, treasuries. And so if you go and you look right now on treasuries, depending on which treasury, the date, all this kind of stuff, four, four and a half percent, right? Okay. Let's say pay no taxes on that four, four and a half percent. Okay. Do you know what the depreciation of the u.s dollar has been annually since 1971 i do not over four percent so there's

Starting point is 00:47:10 two percent fed target inflation rate lie the dollar over the last 50 something years has depreciated more than four percent a year every year since 1971 that's got to be because the recent depreciation over the last like five years has accelerated so much some of it but still it was depreciating at more than two percent before that so if you look at your real rate of return on the yield of the treasury you're lucky if it's positive it's probably break even right okay then what happens to the actual asset itself well that's down only because you're continuing to see people dump treasuries, right? Some of the biggest buyers. Now there are some replacements, stable coins, et cetera, right? But there's a problem. And so if you are buying an

Starting point is 00:48:08 asset that is essentially guaranteed to lose money on a real return basis standpoint, isn't that risky? We're not talking about an attractive return. The critics will literally, they're gonna hear that and they will argue with me it's not a negative real rate of return it's a flat to slightly positive okay let's say that you're right you're not but let's say you're right do you hear what you're saying you're arguing with me over whether it's actually a negative rate return or if it's a 0.5 positive return like take that whole argument throw it in the trash right it's risky and so it goes back to who is claiming something is safe it's the people whose job is usually don't get fired again they have a fiduciary responsibility

Starting point is 00:49:01 all this stuff right so like i don't blame the people it's a system that they operate within show me the incentive i'll show you the outcome i think that having the old 60 40 portfolio is highly, highly more risk than people will explain. Because 40% of your portfolio are usually in assets that are guaranteed to lose value over time. So I think that there's a modern 60 to 40 portfolio. 60% stocks, 40% Bitcoin. Drop the bonds, buy the Bitcoin.

Starting point is 00:49:37 And people, oh, this is crazy. This Luddite Bitcoin or whatever. You ever heard of Rick Edelman? Yeah. rick edelman hall of fame personal financial advisor that is true they have a hall of fame personal financial advisor rick edelman's right in there he says now the most aggressive people exposure to crypto 40 okay well if you're a young person you're supposed to be aggressive if you're 70 don't be as aggressive right but his non-aggressive i think he's like most conservative

Starting point is 00:50:10 is 10%. Don't take it from me, take it from the guy in the Hall of Fame, right? I don't know what you got to do to get in the Hall of Fame, but he's built pretty good business, pretty smart guy, right? So if he, as somebody who is regularly recognized for seeing into the future, for understanding technology, for seeing around the corner, is saying 10% to 40% exposure to, he says crypto, I say Bitcoin, right? 10% to 40%. Why are people still saying 40% bonds, 60% stocks. So retirement accounts, there's this great saying that I've seen people say online, which is Bitcoin is my retirement savings or Bitcoin is my retirement plan. And one Bitcoin, I don't know. If people get to one Bitcoin, what do you think is going to be worth more in their

Starting point is 00:51:00 future? Their 401k, their IRA with traditional assets or the one Bitcoin? I don't know. tell you what i would bet on though and so a lot of people are starting to say well guess what now let me buy bitcoin in my 401k right or i can buy the etfs or whatever like i think that's where you're seeing this is there's just a lot of people who say um the productivity of stocks may not be what we thought it was oh wait what buffett what we want to talk about him just step down l most underperformance of the S&P 500 since he stepped down in Berkshire's history. Why? Remember what I used to say? Berkshire Hathaway was the boomer meme stock and it got exposed. Everyone was telling me how that was a crazy thing to say. People were yelling and screaming at me.

Starting point is 00:51:53 Warren Buffett stepped down and the stock cratered. The assets are the same. What happened? They were trading at a premium because Buffett's name, because Buffett was overseeing them. When he stepped down, the stock went down. That is the Buffett meme. That is the market value of the Buffett meme. The premium. The Buffett premium. So you can call it a premium.

Starting point is 00:52:17 You can call it whatever. Now, if you go and you take a look at gold, for the last 25 years, gold is outperforming the S&P. If you look at the last 10 years, gold is outperforming the S&P. It's about equal over 10 years. the whole thing of the stock market is buy productive assets don't buy non-productive assets how's gold beating you for 25 years world's changing my friend i think people are waking up they're starting to see a lot of data my guess is bitcoin's gonna keep winning awesome all right thank you thanks guys talk next week

The Pomp Podcast - Bitcoin’s Most Explosive Phase Starts Now | Anthony & John Pompliano

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