The Pomp Podcast
00:02:15 · Anthony Pompliano
[00:02:15] S0: They could be, but, like, that's the risk that you're taking. And so when you get that dislocation between the fundamentals and, and the narrative, then if you are correct and you have conviction and you are willing to have the courage to deploy capital into the asset, that's how you drive asymmetric return. Now with that said, let's go and look at what are some of the fundamentals. Well, first and foremost is a lot of Bitcoin's value is derived from the security of the network. For years, go back, check the tape, look at the receipts, I have been saying, people would ask, what is Bitcoin backed by? And I would always tell them, the single most valuable commodity in the world, computing power. And people are like, what do you mean computing power? Now everyone's talking about computing power as one of the most valuable commodities in the world. And so Bitcoin is backed by computing power. There's a scarcity of computing power in the world. People are literally scouring the earth and thinking about going to space to get more computing power. Bitcoin is the strongest computer network in the world, which means it's incredibly valuable. It is very secure. It's very decentralized. All of these components. And so that's first and foremost is if you look at hash rate, hash rate is back to almost all time highs, which is fascinating because the Bitcoin miners, many of them started to transition to become HPC or AI data centers. So you took a bunch of the large players and basically took them offline. Mhmm. But Hash rate is coming back and almost back to all time highs. My friend Will Clemente pointed that out. I thought that was a very, important observation. Second thing, where is a net new buyer going to come from in order for price to continue to appreciate? Well, we know that the Bitcoin ETFs have done that. We know that individuals are still continuing to accumulate. But now there is research coming out, I think it was Fidelity that put this out first, is that the perpetual preferreds coming from strategy, strive, etcetera, are producing net new demand for Bitcoin. I think there's over a 135,000 that have been purchased as part of the perpetual prefers. Why is that important? Well, if you can now take a 135,000 Bitcoin off the market and they go into these perpetual preferred vehicles, that is very similar to the ETFs.
00:04:23 · Anthony Pompliano, Polina Pompliano
I think the ETF number is something like 800,000 Bitcoin have gone into the ETFs. So you have almost a million Bitcoin between the ETFs and the perpetual preferreds that have already been taken off the market, and then you have perpetual preferreds that are continuing to increase. Strive took, I think, 5 or 6,000 Bitcoin in the last week and went and purchased it via proceeds from their perpetual preferreds. And so you say, okay. I have computing power and hash rate continuing to increase. I have this narrative dislocation, and I see a net new buyer in the market. Hey, man. I'm excited about Bitcoin. I'm not saying Bitcoin's going to 1,000,000. There's all kinds of crazy price predictions that people are throwing out there. I think Bitcoin goes to 1,000,000 at some point. Just don't think it's gonna happen next year, but I think that Bitcoin looks very attractive here. Because, basically, what you had is you had Bitcoin go from a 125 k down to, let's call it, 60 k or so. So a 50 ish percent drawdown. Great. Then guess what happened? It had this very violent puke, which usually marks the bottom of a bear market, and it has recovered back. And so what you have is you have kind of confirmation that the bear market is likely over. If that's the case, from here back to all time highs is about a 50 return. So at what point is that gonna happen? Is that gonna happen in three months, six months, twelve months, twenty four months, whatever? But a 50% return from here going back to all time highs. But then if you look historically [00:05:46] S1: about to hit the holidays.
00:05:46 · Polina Pompliano, Anthony Pompliano
[00:05:46] S1: about to hit the holidays. [00:05:48] S0: Then if you look at history, the fourth quarter tends to be very strong. [00:05:52] S1: What I'm saying.
00:05:53 · Anthony Pompliano
[00:05:53] S0: If you look at the equity market, the fourth quarter tends to be very strong. But more importantly is the fourth quarter of midterms tend to be even stronger. And so right now, in this 80 to 85 k range, what we're watching is a weakness. People are saying, oh, it's going to zero, all this stuff. Well, in the month of October, when you're going into midterms, usually, there's a lot of concern about there being no certainty. Who's gonna win? Are the Democrats gonna take congress? Are they gonna take the senate? Can the Republicans defend it? What's going on with Trump? JD Vance is running around the country, and he's doing all of these different, you know, speeches and rallies. Trump is campaigning. Which candidates are they gonna back? Are the Democrats gonna be strong enough? Can they exploit any of the mistakes the administer... It's all noise. So what happens is people basically want certainty. As we get close to the midterms and we get certainty, all of a sudden, people say, oh, nothing bad happened. Let me go keep investing my money, and they'll start pouring capital back into the equity market and into the Bitcoin market. And my guess is that going into the end of the year, you're gonna see strength in both equities and Bitcoin, and we're gonna end the year higher than where we are right now in both of those markets. So it goes back to if you have fundamentals, if you have seasonality type based stuff, and you have a very clear reason why the narrative has dislocated from those fundamentals, that's when you should be excited. And I think going back to the people calling it, going to zero, all this stuff, hey. Thank you. I appreciate all of that because it actually provides the opportunity. And if you look at... Again, what have we been doing in the public company for the last couple of months? We have a lot of Bitcoin. We've been selling Bitcoin at NAV and buying back shares, which is us buying more exposure. We're cranking on the Bitcoin exposure for every shareholder. We're trying to get more Bitcoin exposure because I have a generally bullish, view as to Bitcoin's future over the next, you know, twelve months or so.
00:07:44 · Polina Pompliano, Anthony Pompliano
[00:07:44] S1: So let me ask you this. Bitget CEO Gracie Chen says that Bitcoin could swing 30% in either direction in a month or two as the big AI IPOs hit. Why? [00:07:57] S0: Well, I think that anytime you have change in a market, there's always volatility. Volatility can work in both directions. Now one of the questions that people have had historically is, is AI sucking the air out of the room and capital is rotating towards AI and is moving away [00:08:12] S1: from question. [00:08:13] S0: From the Bitcoin, the Bitcoin market. Now I definitely think that there's been a lot of capital rotation. Specifically, we mentioned, you know, the miners moving to HPC, things like that. In my own investing, do I as aggressively buy Bitcoin every single day like I used to? No. But do I still want more and more Bitcoin exposure month after month, year after year? Absolutely. And so I'm continuing to increase that exposure. [00:08:40] S1: Hold on. [00:08:40] S0: But now when I get paid a dollar, maybe a 100% of it doesn't go to Bitcoin. Maybe it's, like, fifty fifty between Bitcoin and AI. [00:08:47] S1: Is that because the risk profile has changed, and also there's not as much upside as... On the Bitcoin train?
00:08:47 · Polina Pompliano, Anthony Pompliano
[00:08:47] S1: Is that because the risk profile has changed, and also there's not as much upside as... On the Bitcoin train? [00:08:52] S0: Yeah. I look at... Again, I I continue to say this, and I think that people almost think that it's like some, like, trite, you know, phrase. I look at AI is offense. Bitcoin is defense. I used to look at Bitcoin as offense. It was a thing that at, you know, a thousand bucks, $3,000, what... Whatever. The bottom of the 2018 market, as I've talked about plenty publicly, I looked at it as there is a generational wealth opportunity to buy an asset that had dropped 85%, and I didn't think anything had changed about the asset. And I was like, thank you very much. 85% discount at the store. How much can I buy? And then I kept buying and kept buying and kept buying. That was wealth generation. I still think that Bitcoin can generate a lot of wealth, but it is going to do it in a much more linear fashion at the... Compared to the asymmetry that we used to see. And you just look. Bitcoin went from 1,000 to 20,000 in 2017. Twenty x. It then dropped 85%, and then it went from $3,000 to $69,000. So if you go back to 2017 and you look at... It went from 1,000 to 20,000, dropped down to 3,000. Then it went from 3,000 to 69,000. Right? Then it dropped down to $15.16 k. Then it went from there to a 125 k. The returns are compressing. Yep. But who doesn't wanna see an asset in two years go from fifteen, sixteen thousand dollars to a 125,000? Are we really gonna complain?