The Pomp Podcast - The Bitcoin Rotation No One Sees Coming | Jordi Visser

Starting point is 00:00:00 This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales. Using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. Guess what? There are 7 billion people on the planet who've never been able to partake in capitalism. That is the positive story for Bitcoin. It's going to happen so fast that

Starting point is 00:00:39 individuals, companies, governments will not be able to move fast enough. And that's what's starting to happen. That's what I'm kind of looking for is that the risk is for the next three weeks. And at that point, maybe Bitcoin's down at 40,000 or maybe it hangs in here and it seems to rotation. What's going on, guys? Today, we've got an amazing conversation with Jordy Visser. We've recorded this live in front of a huge audience, 2,500 people at Bitcoin Investor Week this week. Now, right before Jordy came on the stage, I was interviewing Kathy Wood and Kathy was talking about deflation being a big risk. And a lot of the tech stocks or software companies, how she thought that the recent pullback in those stocks was actually something

Starting point is 00:01:19 that's just going to be a blip on the radar. Jordy disagreed. And that was the first thing he wanted to talk about when he came on the stage so here's my conversation with Jordy Visser by the way before you ask me a question I disagree with half of what Kathy said so if you want to start there we can go there uh trust me you already have told me that so I can't wait uh which parts do you disagree with um you should have had him just like battle it out you know it'd be amazing no no this is really important and I mean I I vehemently disagree wholeheartedly with this uh covid comparison so for all of you your portfolio is everything i will i will tell you a fact um ai is not a temporary thing so when i hear someone compare this to covid that would

Starting point is 00:02:04 mean this is just a panic thing this is not algorithmic so you know if you guys have listened to our show i have been emphatic about the fact that by 2030 most of the s&p 500 companies are going to be disrupted. So I just want you to look up a statement. And this is what I'm going to do on the weekend. Elon Musk has said that AI is a supersonic tsunami. What is happening in the market right now is exactly that. Software names can't catch a bid for a reason. They're making money. This is not about what they are today. A growth company, and this will all lead into positive things for Bitcoin eventually, so don't worry about it. But when Kathy talks about this being temporary, that is a mistake for everyone whose own software names. This is never going

Starting point is 00:02:55 away. There are no winners in terms of winning. The winners are not public companies. So when Kathy tells you there are winners in AI, I don't work for a public company anymore. I don't work for a company. I chose that because the power of AI is for individuals sitting at home. And guess what? There are seven billion people on the planet who've never been able to partake in capitalism. That is the positive story for Bitcoin. But everyone has free intelligence now, everybody. So what is going on literally as we sit here? And I at a morning meeting today, I said to everyone, Opus 4.6 came out last week. I didn't have the time last week to spend with it. Guys, it's five times more powerful than Opus 4.5, which is what caused this whole disruption.

Starting point is 00:03:43 So we are speeding up at a point where recursive self-improvement is happening as we speak, which means the models are building themselves. So to sit there and think that there is a public company with individuals and friction having worked in it and watch the pantry conversations with people that don't work hard, this is over, meaning this stuff is real. So the market has to digest this. It has to go through this. And I bring this up because this is not going to change.

Starting point is 00:04:09 So the hyperscalers are at risk. The software companies are at risk. Not to collapse because they're going to make money, but what is happening in the market is they are dealing with the fact that no company now has a moat. Their businesses are no longer defensible, and my attraction to Bitcoin was based on my belief that the only moat that Bitcoin has is what Mike Novogratz said. It is a community-based asset that is built on code, and the game of investing money is a game of musical chairs. There's a rotation happening, and people are avoiding everything that's built on code. They're moving it into physical things, which will continue because we're in a race to build out the data center. So I do not want people leaving here thinking they can just go out and buy any technology innovation name because AI is coming for all of them.

Starting point is 00:04:54 And I think it's going to be a long, long road for a lot of these software companies over the course of the next five years trying to deal with this. Google, I think, was mocked two years ago. They're behind in AI. They don't know what they're doing. They're asleep at the wheel. Now, I think a lot of people are saying, wow, Google is doing very well and they're going to be able to leverage their distribution and this tech they've been able to build, et cetera. Why doesn't every one of these tech names just go build AI, use AI, incorporate it into their business? Like, what is the disconnect there?

Starting point is 00:05:25 Well, there's two problems with this. So, and again, Google is going to get caught up in this as well, even though their model is great and everyone loves them. In the most recent earnings reports, we had a total of $1.2 trillion of what are called RPOs, which you can think of as liabilities or future orders that hopefully they'll get. And those are based on building out data centers. And in this country, we are getting data center cancellations every single day across the country. You're getting all toxins and stuff that are showing up. This is going to be a major story. I think Google falls into the same trap.

Starting point is 00:06:02 The only way they can monetize this is actually to have the ability of letting all these AI agents run on their data centers, but they don't have the data centers to handle the flow and the volume. We're at the agentic acceleration right now. AI agents are working, they're running, they're going fast. And so the only way that they can make the money off it at this point is through the cloud usage, and they're not going to have enough cloud usage because they can't get the data center. So when you mention Google, they fall in the same micro problem as Microsoft. The only difference with Microsoft is they actually have something that's usable. But there's a new problem that also fits in with these companies that people have to understand. I'm finally using a Chinese model.

Starting point is 00:06:39 I've never done that before. The reason I'm using now Kimi 2.5 is because I have my own machine with AI agents now. And again, I'm old school. I didn't know how to do anything on a computer, honestly, a year ago, 18 months ago, other than the basic stuff. And now I have AI agents running on a Mac mini inside my apartment. And I'm using a Chinese model because it's free. So the problem with Google and all these places, and this does get to the deflation thing that Kathy mentioned, and it's something that you've talked about. It's really hard to avoid the deflationary aspect.

Starting point is 00:07:12 And since most people and I was just at a conference where 80 something percent of endowments and foundations thought inflation was going to be higher a year from now. So the reality is we have a deflationary situation that's happening. And the reason is because AI is driving that deflation as we speak. do we actually get to deflation or is it just like this disinflationary where like we'll still have a little bit of inflation it'll just be much tamer and you know kind of under control maybe it's half a percent one percent one and a half percent but we don't actually go negative yeah you you highlight true flation repeatedly which is basically like it yeah no no i so the difference between true flation and and core cpi is pretty much all the shelter calculation well

Starting point is 00:07:57 one can count the other camp but yeah go ahead one uses 80 000 inputs one uses or what they say 35 million inputs so we'll we'll go through the what's better what's not um but the shelter component and how you deal with shelter is the difference in the calculation so if history serves well unless we're going to see a bounce in the housing market which i see zero chance of that happening given the fact that people are under pressure at their work. I don't see that going on. If the stock market falls, you're definitely not going to have it. What would cause deflation is if the stock market falls off. And the reason I brought up the supersonic tsunami, if all of you raised your hand and I said, what's the largest position in your portfolio?

Starting point is 00:08:39 And maybe you've got a trading account, but if you have a pension or you have anything, your biggest positions are software stocks. Not because you chose them, but because you're in the S&P 500 or you're in some kind of ETF that has mainly software in it. So I advise all of you to check that and go through it because that's the stuff that's pulling the market. At some point, if you imagine trying to transfer all of the money in the world so quickly, and that's what Elon Musk said, there's a tsunami, which is structural, but there's supersonic, which was all about the fact it's going to happen so fast that individuals, companies, governments will not be able to move fast enough. And that's what's starting to happen. I'm worried by what I saw

Starting point is 00:09:21 in the last week, mainly from Anthropic, because if you guys didn't see it, one of the lead researchers on their safety group resigned. And he talked about why he resigned. He's going to do poetry now. That's how scared he is of what's coming. Dario Modi wrote a paper on the negatives of ai and the reason he's writing that is because he has models six months ahead we're at the point now where they said we had the model opus 4.6 go through our code this is a mod ai company and see how many bugs they could find they found 500 security places they could break into that is the power of ai agents that's the power of these models if you can break into anthropic they can break into your bank account and everything else. So we've reached a point where the governments and

Starting point is 00:10:11 everyone in the world just has to deal with the fact that this is no longer a game. We've reached the point that security is going to be an issue. And again, if I go back to the Bitcoin story, this makes cryptography much more important. Whenever I hear quantum and quantum is not close to breaking anything there, we actually have something that will break things faster, which are agent swarms. And those are picking up now. And that's why go read about the safety person who resigned and went to go do poetry and go read Dario Moda. So let's say everything you just said is right. What do investors do? Do you invest in private companies? Do you hoard seashells? Do you buy Bitcoin? What do you do? So in the basics of what the government will do,

Starting point is 00:10:55 there's lots of companies that are going to make money. And in the case of the hyperscalers, what we're talking about now is not the S&P 500 not making money. We're actually talking about multiple compression, meaning they're moving the multiple of the market down. And the reason they're doing that is because every industry is now under attack as to whether their business is actually defendable against this side. Normally, that takes a long time. So one thing I do believe is that you'll get a panic. The hyperscalers are the most important thing. When I say the hyperscalers, this is not Tesla. This is not Nvidia. This is not Apple. This is the four companies spending $650 billion this year. This is Meta. This is Microsoft. This is Amazon. This

Starting point is 00:11:40 is Google. They're spending $650 billion this year. If they don't get the revenues in, then what happens is their equity has to go down and their equity has to go down from a cap structure basis. Now, again, they're making revenues over 15%. So this is not some bad story. They have the capital to do this, but they become the line in the sand for everything. My gut tells me if anything bad is going to happen, it's going to happen in the next month or two. And the reason I say that is because the condition of mutual funds and hedge funds in trying to reposition for this and the reason they reposition quickly is because they're paid on performance. And I was in that world. A hedge fund has month to month marks. If they're down 10 percent, they have to

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Starting point is 00:14:17 meaning you can keep borrowing against your collateral without closing a loan as the price appreciates. buy a house take a trip make a large purchase or diversify your investments without selling your bitcoin all deposits are held in secure mpc wallets and there is no rehypothecation find out more at abra.com and tell them pomp sent you again that's abra.com and tell them big pomp sent you you i think also have this thesis of like scarcity is valuable which is not unique i think to your view but you have talked about memory shortages you have talked about certain precious metals or industrial metals that are scarce. You've talked about

Starting point is 00:14:53 Bitcoin. Is that fair to say that that is a key theme in a world of abundance of intelligence and software? You actually want to find the scarcity? Yes. It only took me a year and a half of talking to him every week to figure that one out. So the beauty of of of the way I think about Bitcoin in this scenario. So I'm hoping it gets flushed with everything else. And all of you should hear too. This is a temporary thing and it's been matched up with SaaS. I'd be more worried about Bitcoin if SaaS was going higher and Bitcoin was going down. But these charts are overlaid for a reason because they're directly linked between the VC world and the investment side of the ecosystem, but also because of it's built on code. So it should go down. And my ultimate theme has

Starting point is 00:15:40 been that eventually when software is deemed to be problematic and AI is kind of this hard thing to invest in, which is where we are. Bitcoin would start to outperform. And then all of the meetings going on that you should invest in digital assets, you'll start to see the money flow in from the public companies and from the enterprises, from the wealth management people. But it's the only growth asset that is scarce. All these other places, commodities are not growth assets. Industrials are not growth assets. Now they are. Those are cyclical. Those are valued. They're not growth assets. And most money is in a growth bucket. So if Bitcoin can break away when SaaS bottoms, and that's what needs to happen is SaaS needs the bottom. And once it bottoms and

Starting point is 00:16:22 we've discounted enough, we're at the lowest multiples we've seen in the space since before the iPhone. So we're at a point where you could find a bottom at any point. And that's what I'm hoping is going to happen. But the repositioning that happens says, and the reason I say a month, Normally, these things carry into the end of a month when it's been this bad, and then you get another week of it, and then you bottom out. That's what I'm kind of looking for is that the risk is for the next three weeks. And at that point, maybe Bitcoin's down at $40,000, or maybe it hangs in here and it seems to rotation. Everyone in this room is an investor in some capacity, whether professionally or in their personal account. You have done this huge deep dive on using AI on a day-to-day basis.

Starting point is 00:17:07 you come from the investment world. What are your tips or maybe direction that you can give to these folks on where should they start or how should they be using these tools to become a better investor? The first thing I would do is just, if you were recording what I said, just put that in the chat, GBT, and find where my holes are and correct me on whatever things are there. I think people should be using it every day at this point, if not for you guys, for your kids. I think it's a mistake for anyone to not realize how fast it's moving. We're past the point, and I've said this for a while now, but we are really past the point. Opus 4.5 to Opus 4.6 is shocking to me. Eric Schmidt didn't think we'd be at recursive self-improvement until next year, maybe latter

Starting point is 00:17:51 part of this year. The fact that we're there now should scare the hell out of everyone because nobody's ready for it when the leaders of the frontier models are saying it. So my big thing is get used to it, incorporate it into your life. It's only going to accelerate faster and faster. And regardless if another data center is built, it's already insanely powerful what you can do with it. So I'm on it all day long as a curiosity freak. I love it. The world's not going away. Even if the stock market falls down, you're going to have lives. Use it for your health. Use it for your kids in terms of developing new skills that they can learn to deal with this. We just created more jobs in a month than we had in a long time.

Starting point is 00:18:28 Granted, they were all nurses and doctors in the health care field again. But there is a place where people can learn new skills. They can learn things. So I definitely highly recommend doing it. And you can always go to my website. And now I've got videos out on showing people how they can do the things that I do. I was talking to Russell Okun for a while. It was a great conversation.

Starting point is 00:18:51 And I was very impressed with the way that he's thinking about it. And we had a very deep conversation on the way to think about AI as a thinking partner and how to use it and the way you do with work. But we talked about the thing it can't replace. And so you guys all know this. For all the things I said about how it's disrupting businesses, it cannot handle human context. And it cannot understand what humans want to read. I write three to four papers a week. They would not – no one would care to read them if they were written by AI.

Starting point is 00:19:22 It takes my thinking about what someone else wants to read, what's in their mind, what they're worried about, what's going on. I'm actually speaking emphatically today to you guys because I want you to hear and be lucky that you're here to hear that, hey, if something goes on in the market, you heard it from me that there's something really alarming going on with Opus 4.6 and the safety person leaving at Anthropic and why this is a bigger story than it should be. Where can people go to subscribe to? You have two different sub stacks that you are writing. There's one for HRV and I got a lot of time on my hands. Okay. Well, we're all going to have a lot of time on our hands when AI takes all of our jobs. So, uh, you're ahead of the curve. Where can people go to subscribe to these? One is about health and HRV. The other is about markets and technology and kind of what you're seeing there. Uh, everything I write, everything I do on my

Starting point is 00:20:13 youtube is geared for people to hopefully keep up on things um hrv is a passion of mine happened during covid that i started to pay attention um if if you guys care about your health or family members even if it's just my aura ring i don't work for the company in fact i asked them if they wanted to be a part of my blog and they said no and i said fine um but it's really meant to help people have a warning system in their life if you've gotten to know me i'm a very uh mathematically driven analytics person. Everything is probability driven. I didn't want to die suddenly from the two things that cause you to die suddenly, cancer and heart disease of some sort. And I wanted to have a mechanism that would warn me. And I had to do two things for that to work. One is I had to raise

Starting point is 00:21:00 my HRV to a level that put me back in my 20s, which I did. And then the second thing is to monitor if it ever goes down sharply in a short amount of time, because that means your immune systems working so you can find that kind of stuff on my sub stack the rest of it my youtube and all this it's all related to ai crypto and macro and if you haven't seen my youtube everything i talked about today this weekend i will go through a lot of this with articles you can look at with data you can see i don't just shoot from the hip by things build up over time and i'm just more concerned about ai accelerating at a time when i still see people trying to buy software stocks Jordy Visser, everybody.

The Pomp Podcast - The Bitcoin Rotation No One Sees Coming | Jordi Visser

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