The Pomp Letter

To investors,

The crypto market has been trading 24/7/365 since the first coins traded hands nearly 15 years ago. Anyone in the world with an internet connection can buy or sell assets, regardless of the time of day.

Weekdays? Market is open. Weekends? Market is open. Midnight? Market is open. Holidays? Market is open.

This type of always-on market is how assets should trade. It allows market participants maximum flexibility to express their views at all times. The US stock market hasn’t followed suit though.

Stocks still trade in the normal 9:30am to 4pm EST timeframe. While these hours of operation have worked for investors over the last few decades, there are new types of investors showing up who want better access to markets.

Lu Wang and Katherine Doherty wrote the following in Bloomberg over the weekend:

“Wall Street pros are feeling uneasy about retail investors again. Only this time it's not about the trades they're making — it’s about when they're making them.

The amateur-investing revolution that has swept US markets since the pandemic is helping fuel a boom in overnight stock trading. It’s playing out at the likes of Robinhood Markets Inc. and Interactive Brokers Group Inc., which have adopted ways to offer the buying and selling of American shares 24 hours a day, five days a week.

That has effectively eliminated the traditional eight-hour overnight break, and the move has proved so popular that others are taking note.”

According to Lu and Katherine, the benefits of trading outside the normal hours is obvious:

“It lets investors react to market-moving events whenever they occur. It also benefits retail traders who often don’t have the same opportunity as other players to transact during business hours (pre- and post-market volumes surged amid the influx of amateurs during the pandemic). Plus it serves international investors clamoring for a slice of US equity exceptionalism from distant time zones.”

And these benefits are leading to increased trading volumes for pre- and post-market trading hours.

So who are these people that want to trade outside normal hours?

The first example is a rise in algorithmic trading. Software doesn’t need time to eat or sleep. It doesn’t get sick. Computer code isn’t required to go to their child’s little league baseball game on Saturday. The code can execute 24/7/365, which means that money can be gained or lost at any time of day.

Another example is the young retail investor who has grown up with a phone in their hand. Persistent access to the internet created a desire to have persistent access to financial markets as well. These young people already have 24/7/365 access to the new financial system, so they want the same access for the old system.

This is proven when Lu and Katherine explained “after-hours trading accounts for as much as 25% of Robinhood’s total volumes.” Retail is at the gate.

Now before you roll your eyes, remember that many of the largest financial institutions are expanding their product offerings to court self-directed retail investors. Wall Street is beginning to realize how much money these individuals have, along with their willingness to invest in various ideas.

This brings me to where I think we are headed — the stock market will eventually trade 24/7/365. There are many nuances around things like clearing and settlement that need to be figured out, but persistent access to the market is coming.

This means that attractive investment opportunities are coming too. There will be points of illiquidity or mispricing that are introduced when market trading hours are expanded. The kinks will be worked out over time, but in the short-term those opportunities will be present.

Additionally, expanded hours of operations will lead to more trading volume, which most likely leads to higher prices across the stock market. This would be a welcomed tailwind by equity investors who are constantly looking for more catalysts to drive assets higher.

And lastly, 24/7/365 trading hours will be another building block for the automated future we are headed towards. Many are excited about artificial intelligence at the moment, but there is a larger trend at play. Assets are going to be digitized, they will be traded by algorithms, and settlement will be instantaneous.

I don’t know how long this evolution will take. The writing is on the wall though. Superior technology tends to triumph over people’s feelings. I am spending time thinking about where opportunity will exist in the new world so I am prepared.

You may want to spend a few hours doing the same.

Hope you all have a great start to your week. I’ll talk to everyone tomorrow.

-Anthony Pompliano

Alex Thorn is the Head of Firmwide Research at Galaxy Digital.

In this conversation, we talk about bitcoin, bitcoin mining, ETFs, regulation, politics, global adoption, potential problems, token unlocks, Galaxy Digital, and more.

Listen on iTunes: Click here

Listen on Spotify: Click here

My Conversation with Galaxy’s Alex Thorn

Podcast Sponsors

* CrossFi is the Apple Pay for Crypto. For the first time in history, anyone with a web 3 wallet can spend crypto through a physical or virtual Visa card where Visa is accepted.

* Domain Money makes financial planning straightforward and accessible.

* Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. 

* iTrustCapital allows you to buy and sell cryptocurrency in a tax-advantaged crypto IRA. Open and fund an account today to receive a $100 USD funding bonus.

* BetOnline -  Use crypto to bet on sports, casino games, horse racing, poker and more with promo code POMP100.

* Espresso Displays - The world's thinnest touchscreen portable monitor. Expand your workspace and work from anywhere.

* ResiClub - Your data-driven gateway to the US housing market.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

Many financial assets are trading sideways as we enter the summer months. This can cause investors to question whether certain investment ideas have been disproven and/or should be shut down.

Humans are really bad at being bored.

But Charlie Munger said it best when he stated, “the big money is not in the buying and the selling but in the waiting.” To those who can survive these sideways months are likely to have relief on the way in the second half of the year.

Bank of America’s research team recently put out a report showing a 25% increase in volatility from July to November of election years. You can expect movement in the second half of this year.

This level of volatility would be a welcomed change from the current boredom. During the boredom, some asset prices like bitcoin have traded slightly down. Some have traded flat. And others, like the S&P 500, continue to grind higher at a slow pace.

For example, the 500 largest companies in the US have not seen a draw-down of at least 2.05% in more than 375 days, which marks the longest such stretch since the Great Financial Crisis.

And we know that many new all-time highs packed into the first 6 months of the year usually leads to a monster year for the stock market. Momentum is a hell of a drug. Already this year, we have seen 30 new all-time highs in the S&P, which suggests the second half of the year should be volatile and fun.

And bitcoin seems to have some positive data, although the asset has traded off its all-time high a few weeks ago. Checkmate, one of the leading on-chain analysts, points out how weak the bitcoin drawdowns have been in this bull market.

So what is my take? Volatility in the stock market should be expected for the second half of the year, but bitcoin appears to be losing the asymmetric volatility in both directions. The asset doesn’t drawdown as much as it used to and my expectation is the asset won’t have the parabolic bull markets that we have grown accustomed to.

Bitcoin is growing up. The price will grind up over time. There are new market participants here. This is the next step of mass adoption.

Just don’t pigeon hole yourself into only investing in one asset. Volatility can show up in different places at different times. Make sure you are prepared to capitalize on it.

Hope you have a great day. I’ll talk to everyone tomorrow.

-Anthony Pompliano

Nic Carter is the Co-Founder and General Partner at Castle Island Ventures.

In this conversation, we talk about bitcoin, artificial intelligence, energy consumption, regulation, politics, Trump vs Biden stance on crypto, stablecoins, impact of ETH ETF, and future outlook on the industry.

Listen on iTunes: Click here

Listen on Spotify: Click here

My Conversation with Castle Island’s Nic Carter

Podcast Sponsors

* Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. 

* iTrustCapital allows you to buy and sell cryptocurrency in a tax-advantaged crypto IRA. Open and fund an account today to receive a $100 USD funding bonus.

* Supra - Join Supra’s early integration program for zero-cost access to the fastest oracles and dVRF across 50+ blockchains.

* BetOnline -  Use crypto to bet on sports, casino games, horse racing, poker and more with promo code POMP100.

* Espresso Displays - The world's thinnest touchscreen portable monitor. Expand your workspace and work from anywhere.

* CrossFi is the Apple Pay for Crypto. For the first time in history, anyone with a web 3 wallet can spend crypto through a physical or virtual Visa card where Visa is accepted.

* ResiClub - Your data-driven gateway to the US housing market.

* Opening Bell Daily - Get the 5-minute newsletter that Wall Street reads.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

Former Secretary of the Treasury Larry Summers put together a Twitter thread back in February which was widely ignored. In his comments, Summers makes an argument that increasing interest rates drastically accelerated the true inflation rate experienced by an average citizen. He specifically calls out this increased inflation was missed by the current CPI measurement.

For example, Summers argues the following:

“Pre-1983, mortgage costs were in the CPI as were car payments pre-1998. Now, price indexes do not include borrowing costs. Thus, when interest rates jumped last year, official inflation did not fully capture the effects it would have on consumer well-being.”

Summers goes on to show that citizens are very worried about the increasing borrowing costs.

“We also show that the underlying questions in the survey provide direct evidence that concerns of consumers about borrowing costs are at historic highs, surpassed only by the Volcker-era.”

The former Secretary of the Treasury was not looking to simply complain though. He and his colleagues created a new methodology to calculate CPI in an attempt to get closer to the truth about what has been going on.

“We then develop alternative CPI measures that explicitly incorporate the cost of money. The CPI does not only exclude mortgage costs, but also personal interest payments, which increased by more than 50 percent in 2023.”

This brings us to the main point that Summers wanted to make — inflation was substantially higher than what the official metric showed in the last few years.

“We show that if we make an effort to reconstruct the CPI of Okun’s era—which would have had inflation peak last year around 18%, we are able to explain 70% of the gap in consumer sentiment we saw last year.”

Calculating inflation is nearly impossible to do because every person experiences the phenomenon differently. We live in different areas. We buy different goods and services. The uniqueness of the problem makes deriving a single, accurate answer even harder.

But one thing is clear — everything has been getting more expensive.

Larry Summers’ calculation has inflation peaking at 18%. The Bureau of Labor Statistics had inflation peaking just over 9%. That is a wide gap.

Regardless of an exact number, it should be clear that interest payments and other interest rate-related costs should be factored into what people are living through right now. The headline CPI number may have come down, but these interest payments have no relief in sight.

Don’t expect good decisions to come out of the Federal Reserve as long as they are asked to evaluate bad data.

Hope you all have a great day. I’ll talk to everyone tomorrow.

-Anthony Pompliano

Annelise Osborne is the author of a brand new book, “From Hoodies to Suits: Innovating Digital Assets for Traditional Finance.” She also is the Chief Business Officer at Kadena.

In this conversation, we talk about a brand new trend where Wall Street is starting to interface with the hoodies, what the suits are interested in, where they are putting their money, what the hoodies are doing, banks vs. bitcoin, and more.

Listen on iTunes: Click here

Listen on Spotify: Click here

Why Wall Street Is All-In On Bitcoin & Crypto

Podcast Sponsors

* Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. 

* iTrustCapital allows you to buy and sell cryptocurrency in a tax-advantaged crypto IRA. Open and fund an account today to receive a $100 USD funding bonus.

* Supra - Join Supra’s early integration program for zero-cost access to the fastest oracles and dVRF across 50+ blockchains.

* BetOnline -  Use crypto to bet on sports, casino games, horse racing, poker and more with promo code POMP100.

* Espresso Displays - The world's thinnest touchscreen portable monitor. Expand your workspace and work from anywhere.

* CrossFi is the Apple Pay for Crypto. For the first time in history, anyone with a web 3 wallet can spend crypto through a physical or virtual Visa card where Visa is accepted.

* ResiClub - Your data-driven gateway to the US housing market.

* Opening Bell Daily - Get the 5-minute newsletter that Wall Street reads.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

The crypto market is separate and distinct from the stock market in many ways. The assets in this new industry trade 24/7/365, are available to anyone with an internet connection, and historically have gone up or down based on different value drivers than public equities.

But it would be a mistake to completely ignore what happens in the stock market when evaluating crypto assets. For example, the stock market and crypto both succumbed to rising interest rates during 2022 and 2023. As the cost of capital got more expensive, investor demand was destroyed. It didn’t matter what assets someone held.

This relationship between stocks and crypto is likely to only get more important over time too. Wall Street is starting to look more closely at various cryptocurrencies. They will slowly add them to their portfolio. This means that the institutional world will begin to allocate capital to crypto based on a similar risk-on or risk-off analysis.

Over time financial assets become more correlated as the holder base widens to include majority of finance.

So what is happening in the stock market right now?

Things look a little dicey. Michael Arouet points out that the Nasdaq index is the most overbought it has been since 2018.

Charles Schwab’s Kevin Gordon shows the “S&P 500 Tech sector's price/sales ratio is going vertical and at an all-time high.”

Like I said, things are getting dicey. This doesn’t mean that you should avoid investing in the stock market though. Since 1988, it has been more profitable to invest at all-time high prices than any other day in the market as long as your time horizon was at least 6 months.

And right now we have an all-time high of the S&P market cap concentrated in the 5 largest companies.

Where do we go from here? Your guess is as good as mine. But I do think it is important that crypto investors start paying more attention to the stock market.

Defiance Capital’s Arthur Cheong articulated this well recently with the following comments:

“Nuanced take: Entirely possible the crypto market is maturing and we dont see a complex wild swings with 70-80% drawdown every 2 years but instead a complex secular growth like what S&P 500 went through post 2008 GFC.

Excluding the Covid-19 crash on 2020, US stock market either range bound or gradually grind up where every bears calling for major crash proven wrong but returns also increasingly concentrate on the big cap and mega caps while value and small caps remain unloved for a long time.

Similar things playing out would mean most alts are uninvestable but some winners will deliver ground shattering returns and hopefully we get an Nvidia like outcome every few years while most alts are gonna disappoint.”

I have no clue if Arthur is right or not, but his nuanced take is worth considering. The crypto market is growing up. The assets have been de-risked from just a few years ago, so you shouldn’t expect to get paid as much in returns if you are taking less risk.

The ground is shifting. Update your mental models. Seek out as much information as you can. The future of your portfolio will depend on it.

Hope you all have a great end to your week. I’ll talk to everyone on Monday.

-Anthony Pompliano

JP Thor is one of the lead contributors to THORChain, master of the memes, and has some insane ideas.

In this conversation, we talk about his background, we talk about building a billion dollar platform with only 5 engineers in 18 months, promise of crypto, milestones and obstacles we need to overcome, and then conversation ends with some wild ideas you need to listen to.

Listen on iTunes: Click here

Listen on Spotify: Click here

THORChain Founder Built $2+ Billion Platform While Being Anonymous

Podcast Sponsors

* Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. 

* iTrustCapital allows you to buy and sell cryptocurrency in a tax-advantaged crypto IRA. Open and fund an account today to receive a $100 USD funding bonus.

* Supra - Join Supra’s early integration program for zero-cost access to the fastest oracles and dVRF across 50+ blockchains.

* BetOnline -  Use crypto to bet on sports, casino games, horse racing, poker and more with promo code POMP100.

* Espresso Displays - The world's thinnest touchscreen portable monitor. Expand your workspace and work from anywhere.

* CrossFi is the Apple Pay for Crypto. For the first time in history, anyone with a web 3 wallet can spend crypto through a physical or virtual Visa card where Visa is accepted.

* ResiClub - Your data-driven gateway to the US housing market.

* Opening Bell Daily - Get the 5-minute newsletter that Wall Street reads.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

A popular bitcoin maximalist talking point for years has been “bitcoin is the only crypto commodity and the rest of the tokens are unregistered securities.” How do I know that has been the talking point? Because it is something that I believed for a long time. It is something that I have heard repeated over and over again by various bitcoin friends.

But over the last 12 months I’ve changed my mind.

It became obvious that assets other than bitcoin would end up on Wall Street. Some of them would be considered a security, but most of them wouldn’t be. The issuers of these assets became too skilled at launching tokens and networks, while making sure to not create a security based on the traditional definition and regulation.

Yesterday we got word from Consensys, one of the most important players in the ethereum ecosystem, that the SEC has closed their investigation into ethereum 2.0.

They wrote:

“Today we’re happy to announce a major win for Ethereum developers, technology providers, and industry participants: the Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0. This means that the SEC will not bring charges alleging that sales of ETH are securities transactions.”

This notice from regulators, combined with the incoming approval of the Ether ETFs, confirm that the SEC will not classify ethereum as a security. The CFTC has already classified the asset as a commodity and it appears that will be the agreed upon status moving forward.

There will be many people in the bitcoin community who ignore these data points. This will be a mistake. When the facts change, you must change your mind. It is a sign of intelligence when you do.

Ethereum’s classification as a commodity will have far-reaching implications in the market. As I wrote to you all on June 7th in my letter titled Altcoins Are Coming To Wall Street:

“Capital allocators have a lot of options of where to put their money. Stocks. Bonds. Currencies. Real estate. Commodities. Crypto. The list goes on and on.

But crypto appears to provide more risk than most asset classes, which in turn means that a higher potential return is present. You get paid for the risk you take. At least that is the way a market should work.

Now here is the part that may seem counterintuitive — Wall Street loves risk.

Many people believe the suits are risk-adverse. They aren’t smart. Wall Street doesn’t know what is going on. But that is wrong.

Wall Street has created the greatest casino in history. Every day trillions of dollars are wagered in the market based on risk-reward. The more risk that is present, the more someone on Wall Street will seek out the opportunity.”

The altcoin market provides volatility and risk. Wall Street is salivating over the opportunity to allocate to this part of the market. Now that ethereum is a commodity, I would expect regulatory clarity on a number of other assets in the next 12 months.

As we get that regulatory clarity, capital will flow. ETFs will be approved. Retail will keep buying. Institutions will get in the game. The market caps of many assets will grow to be much larger than we ever imagined.

And many of the altcoins will also be worth zero. They will end in ruin and tears.

But this is how markets work. A truly free market allows participants to allocate their private capital how they see fit. The rewards go to those who are right and the losses gravitate to those who are wrong.

Rather than debate which assets will win or lose, we can let the market be the referee. There is something beautiful in that.

Hope you all have a great day. I’ll talk to everyone tomorrow.

-Anthony Pompliano

Phil Rosen, the Co-Founder of Opening Bell Daily, interviews Anthony Pompliano. Topics include bitcoin, President Trump's recent support of the industry, interest rates, financial media, and more.

Listen on iTunes: Click here

Listen on Spotify: Click here

Anthony Pompliano on Bitcoin, Bull Markets, Interest Rates, and the Presidential Race

Podcast Sponsors

* Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. 

* iTrustCapital allows you to buy and sell cryptocurrency in a tax-advantaged crypto IRA. Open and fund an account today to receive a $100 USD funding bonus.

* Supra - Join Supra’s early integration program for zero-cost access to the fastest oracles and dVRF across 50+ blockchains.

* BetOnline -  Use crypto to bet on sports, casino games, horse racing, poker and more with promo code POMP100.

* Espresso Displays - The world's thinnest touchscreen portable monitor. Expand your workspace and work from anywhere.

* CrossFi is the Apple Pay for Crypto. For the first time in history, anyone with a web 3 wallet can spend crypto through a physical or virtual Visa card where Visa is accepted.

* ResiClub - Your data-driven gateway to the US housing market.

* Opening Bell Daily - Get the 5-minute newsletter that Wall Street reads.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

A few people have been asking me why bitcoin spot ETF inflows have been occurring, but the price of bitcoin is not drastically increasing. This is a good question, so I figured I would do my best to answer.

We must first understand that financial markets are highly complex. There is almost never a single answer for why the price of an asset is moving up, down, or sideways.

Bitcoin is the perfect example.

The second thing we must understand is that bitcoin’s volatility has been dropping significantly. Galaxy’s Head of Research Alex Thorn shared this chart, which shows a historically low reading on the 30-day realized volatility metric.

The next important data point is that ETF inflows have largely been from individual retail investors, not institutional allocators. CNBC’s Tanaya Macheel wrote over the weekend the following about comments made by Blackrock’s chief investment officer of ETF and index investments:

“The long-awaited bitcoin exchange traded funds launched in January, and financial advisors are on their way – though gradually – toward adopting them, according to BlackRock’s Samara Cohen.

For now, about 80% of bitcoin ETF purchases have likely been coming from “self-directed investors who have made their own allocation, often through an online brokerage account,” she said, speaking at the Coinbase State of Crypto Summit in New York City on Thursday.”

This is a narrative violation because people have been bragging about institutional adoption of the ETFs. I have also personally thought that much of the inflows must be coming from institutions given the billions of dollars that are now sitting in those funds.

It looks like I was wrong.

Bianco Research’s Jim Bianco points out a recent data point from JP Morgan suggesting that the spot ETFs are not only getting retail capital, but they are actually not receiving net new capital:

“tl:dr —$16 billion has flowed into bitcoin ETFs YTD. But $13 billion has left existing digital wallets, suggesting only $3 billion of net new money this year. As the chart from JPM below shows, estimates of flows into all digital assets are down from last year.

Add to this that BlackRock says (above) 80% of bitcoin ETF purchases have likely been coming from “self-directed investors who have made their own allocation via online brokerage accounts.

The narrative about these flows and their meaning does not match the reality of their actual nature. This means there has been hardly any adoption outside of degen money and swapping from on-chain to regulated brokerage accounts.

The movement from on-chain to regulated brokerage accounts is a big problem in the long run. What BTC needs is on-chain adoption. It needs to be part of a new financial system. The existence of the ETF is moving money off-chain, further away from this ultimate goal.”

Jim’s point here is interesting — not only is he arguing that retail has been moving capital from outside the system to inside the system, but he claims the ETFs are doing the opposite of what bitcoin originally set out to do.

This brings me to the Ether ETFs which will supposedly be approved before the end of the summer.

If these funds follow a similar path, there will be little to no institutional participation. Retail investors will move some of their capital from the spot asset to the spot ETF. And price will likely appreciate to a degree, but I doubt it will be the ~ 50% gain we saw in bitcoin’s price.

Lastly, it is important to be aware of the basis trade. Many of the sophisticated investors who are participating in the ETF market have been going long spot bitcoin and short futures. This allows them to clip basis points while remaining market neutral.

You can easily see the ETF inflows, but what most people have been missing in the analysis is the increase in short futures interest.

As I started this letter, financial markets are highly complex. There is never a single culprit for why an asset price goes up, down, or sideways. Bitcoin has been lulling everyone to sleep. Don’t view that as a bad thing. Spend your time trying to understand why it is happening.

Hope you all have a great day. I’ll talk to everyone tomorrow.

-Anthony Pompliano

Phil Rosen, the Co-Founder of Opening Bell Daily, interviews Anthony Pompliano. Topics include bitcoin, President Trump's recent support of the industry, interest rates, financial media, and more.

Listen on iTunes: Click here

Listen on Spotify: Click here

Anthony Pompliano on Bitcoin, Bull Markets, Interest Rates, and the Presidential Race

Podcast Sponsors

* Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. 

* iTrustCapital allows you to buy and sell cryptocurrency in a tax-advantaged crypto IRA. Open and fund an account today to receive a $100 USD funding bonus.

* Supra - Join Supra’s early integration program for zero-cost access to the fastest oracles and dVRF across 50+ blockchains.

* BetOnline -  Use crypto to bet on sports, casino games, horse racing, poker and more with promo code POMP100.

* Espresso Displays - The world's thinnest touchscreen portable monitor. Expand your workspace and work from anywhere.

* CrossFi is the Apple Pay for Crypto. For the first time in history, anyone with a web 3 wallet can spend crypto through a physical or virtual Visa card where Visa is accepted.

* ResiClub - Your data-driven gateway to the US housing market.

* Opening Bell Daily - Get the 5-minute newsletter that Wall Street reads.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

The Wall Street Journal published an op-ed over the weekend from former House speaker Paul Ryan titled Crypto Could Stave Off A US Debt Crisis.

In the article, Ryan highlights the impending crisis our country faces:

“The American experiment is being tested. Nowhere is this more evident than in the trajectory of the national debt. The U.S. is headed toward a predictable yet avoidable debt crisis. If nothing is done, the economy will stall while government promises of healthcare and retirement security will be broken. Cuts to national defense will put the country at risk.

With no fiscal solution in sight, the crisis is likely to start with a failed Treasury auction forcing an ugly surgery on the budget. As the economy contracts, the dollar will suffer a major confidence shock, further imperiling prospects for growth. The obvious answer is to deal with the root causes of the problem. Entitlement programs are driving the debt and require reform, but politicians can’t find the courage to do what needs to be done. The country thus proceeds down this perilous path. What can be done?”

One of Ryan’s proposed solution is to watch what is happening with dollar-backed stablecoins. He isn’t claiming that stablecoins will be the only solution, but the following two paragraphs highlight the current momentum in stablecoins and increasing importance of their rise:

“We might start by taking stablecoins seriously. According to the Treasury Department and DeFi Llama, a cryptocurrency analytics site, dollar-backed stablecoins are becoming an important net purchaser of U.S. government debt. If fiat-backed dollar stablecoin issuers were a country, it would sit just outside the top 10 in countries holding Treasurys—smaller than Hong Kong but larger than Saudi Arabia. If the sector continues to grow, stablecoins could become one of the largest purchasers of U.S. government debt and a reliable source of new demand.

Their emergence as a mechanism for promoting the dollar couldn’t be timelier. The U.S. benefits from the dollar’s status as the primary international reserve currency. Among the perks: cheap, reliable financing for fiscal spending and substantial influence over the global financial system. Most financial activities eventually flow through U.S. banks thanks to the dollar’s dominance. As the global economy becomes more digital and multipolar, the dollar’s primacy is constantly under threat.”

This analysis would be important regardless of who was presenting it, but it carries more weight when coming from the former House speaker. Paul Ryan intimately understands the economic and monetary policy issues we face as a country.

His focus on stablecoins will only bring more attention to the potential solution.

Stablecoins are not the only solution though — I was talking to friends at lunch yesterday about an interesting scenario worth sharing. The explosion in artificial intelligence is drastically increasing the efficiency and productivity of companies.

I am not talking about the shiny, new “AI companies” that seem to be everywhere, but rather the existing companies that are leveraging AI internally to improve operations.

These companies can now get more done with less people or less capital. This efficiency boom in productivity will lead to an increase in GDP. Based on some of the early data I am seeing, the GDP growth could be faster than the US debt growth.

If this holds, which there is no promise that it will, then we could have a scenario where the debt-to-GDP ratio declines in the US over the coming months and years. This seemed impossible less than two years ago. If it happens though, the GDP growth would be a much-needed relief valve for a debt environment that seems out-of-control.

The true solution is probably a mix of options. Stablecoins are going to provide a new set of buyers for US debt. Artificial intelligence is going to drive GDP growth at a faster pace than without it. Hopefully serious, responsible politicians are elected into office who attempt to balance the budget as well.

Complex problems like the US economy can’t be solved with magic bullets. We need many different things to go right, which means we need various groups of people to work together. Politicians on both sides of the aisle. Wall Street, Silicon Valley, and Washington DC. We need everyone.

Let’s work together like our country depends on it. Hope you all have a great day. I’ll talk to everyone tomorrow.

-Anthony Pompliano

Phil Rosen, the Co-Founder of Opening Bell Daily, interviews Anthony Pompliano. Topics include bitcoin, President Trump's recent support of the industry, interest rates, financial media, and more.

Listen on iTunes: Click here

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Anthony Pompliano on Bitcoin, Bull Markets, Interest Rates, and the Presidential Race

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* Supra - Join Supra’s early integration program for zero-cost access to the fastest oracles and dVRF across 50+ blockchains.

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* CrossFi is the Apple Pay for Crypto. For the first time in history, anyone with a web 3 wallet can spend crypto through a physical or virtual Visa card where Visa is accepted.

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You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

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To investors,

The public markets are starting to embrace bitcoin globally. MicroStrategy started the game with their announcement of a bitcoin treasury strategy. MicroStrategy owns 214,400 bitcoins as of May 1, 2024. The company claims the average purchase price of these bitcoin is $35,158 per bitcoin with a total cost of $7.5 billion.

Next we saw Tesla and Square (now known as Block) get in the game. Tesla has sold some of their bitcoin, but still holds approximately 9,720 for a total value of more than $670 million. Block is still holding more than 8,000 bitcoin themselves.

These three companies were the lone bitcoin trio for awhile. I don’t count the bitcoin miners and other crypto-native companies in this analysis. What made MicroStrategy/Tesla/Block special was the fact they had nothing to do with bitcoin/crypto, yet were choosing to embrace the asset as a reserve currency.

We no longer have a special trio though. The flood gates have opened in the last 6 months.

We have seen DeFi Technologies in Canada, Metaplanet in Japan, and Semler Scientific in the US announce a bitcoin treasury strategy. Each company saw their stock increase in value shortly after the announcements.

Game theory is going to take over now.

If a company sees an increase in their stock price in the short-term, and an increase in their balance sheet value over the long-term, then we should anticipate many companies to adopt bitcoin as a reserve asset in the future. Economic incentives are a powerful drug.

This does not mean a public company is going to move 100% of their assets into bitcoin. It means that a portion of the balance sheet will be converted to bitcoin and held for the long-term. Bitcoin doesn’t have to be the only reserve asset, it just has to be one of a few held by companies.

Something about this is counter-intuitive. Many people on Wall Street would point to a bitcoin treasury strategy as a gimmick. They will claim people are merely trying to increase their share price or grab headlines. While that could be true to a degree, these companies are actually pursuing a sound financial strategy built on timeless investing principles — they are putting their economic value in a long-term oriented asset.

Wall Street is full of short-termism. Everyone wants to know what you’re going to do in the next 90 days or what you did in the last quarter. Bitcoin may slowly change some of that thinking.

It is a competitive advantage to think long-term in a world full of people who don’t. As we continue to watch the US government, and many governments around the world, debase their currency bitcoin will likely become a more attractive asset.

Historically, US treasuries were considered a safe investment, but we can see how horrendous this strategy has been over the medium-term recently. Use the Vanguard Long-Term Treasury Index Fund ETF as an example — holders of these treasuries are down more than 25% over the last 5 years.

This doesn’t include the real loss, which could be double as bad.

What happens in a world where corporations stop using treasuries as a long-term vehicle for balance sheet management? How do things change if bitcoin becomes the default asset for a portion of the balance sheet?

I don’t know those answers, but it feels like we are going to start getting answers in the months and years to come.

Hope you all have a great end to your week. I’ll talk to everyone on Monday.

-Anthony Pompliano

Will Clemente is the Co-Founder of Reflexivity Research.

In this conversation, we talk about Bitcoin, Ethereum, Solana, meme coins, portfolio management, ETFs, regulation, culturally relevant ideas, what you should be paying attention to, and where opportunities exist in the next 18 months.

Listen on iTunes: Click here

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Will Clemente on the Bitcoin Bull Market

Podcast Sponsors

* Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. 

* iTrustCapital allows you to buy and sell cryptocurrency in a tax-advantaged crypto IRA. Open and fund an account today to receive a $100 USD funding bonus.

* Supra - Join Supra’s early integration program for zero-cost access to the fastest oracles and dVRF across 50+ blockchains.

* BetOnline -  Use crypto to bet on sports, casino games, horse racing, poker and more with promo code POMP100.

* Espresso Displays - The world's thinnest touchscreen portable monitor. Expand your workspace and work from anywhere.

* CrossFi is the Apple Pay for Crypto. For the first time in history, anyone with a web 3 wallet can spend crypto through a physical or virtual Visa card where Visa is accepted.

* ResiClub - Your data-driven gateway to the US housing market.

* Opening Bell Daily - Get the 5-minute newsletter that Wall Street reads.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

There are two goals when investing — protect your downside and optimize your upside. Most investors focus on the latter, but protecting your downside is critically important when investing in new asset classes.

A good investor must understand the risks. They must underwrite all possible situations. The more you know what you can lose, the more you can mitigate those situations.

But some investors take this too far. This is where the pessimists thrive. These doomsday advocates will find a low probability situation and harp on it endlessly. Their goal is to scare people, while believing they look smart.

That is not how markets work though. Probabilities live in the math discipline, not psychology. No amount of fear-mongering can change the probability of an outcome.

This is a point that I have been explaining for years now. The bitcoin critics are a prime example of what happens when you let sloppy thinking trick you into believing math doesn’t exist.

One of the main arguments that bitcoin critics have had for awhile is that the US government is going to ban bitcoin. These individuals point to the executive order criminalizing gold almost a century ago. They pontificate on academic theories for why bitcoin or crypto is bad for America.

It is all nonsense. Pessimists sound smart, optimists make money.

The truth is that these critics have been proven wrong. Bitcoin mining is solving many of America’s energy problems, bitcoin is protecting Americans’ purchasing power better than any other asset, and stablecoin issuers have become one of the largest buyers of US debt.

Crypto is solving real problems for the country.

Don’t just take my word for it though. President Trump met with many of the largest bitcoin miners yesterday at Mar-a-Largo. Bitcoin Magazine described the situation with the following:

“Donald Trump met with Bitcoin Magazine's CEO David Bailey and several prominent U.S. Bitcoin miners. The meeting saw Trump commit to championing Bitcoin mining both in Washington D.C. and on the global stage.

Among the attendees were representatives from leading Bitcoin mining firms, including CleanSpark, Riot Platforms, Marathon Digital, and other notable industry players. Key figures present included S Matthew Schultz from CleanSpark, Jason Les and Brian Morgenstern of Riot Platforms, Salman Khan of Marathon Digital, and Amanda Fabiano of Fabiano Consulting, formerly Head of Mining at Galaxy and Director of Bitcoin Mining at Fidelity.”

This situation would have been unfathomable just a few months ago. It doesn’t stop there. After the meeting, Trump took to Truth Social to confirm his interest in protecting bitcoin mining in the United States.

Forget the politics of who is saying the message. Focus on the fact that the leading Presidential candidate is openly supporting the industry. It is getting harder to see a world where the US government would ban bitcoin, shut down mining, or kick the crypto industry out of the country.

The technology has proven that it can solve too many problems.

Remember, investing is about protecting the downside and optimizing for the upside. Having the US government embrace bitcoin and crypto, rather than ban it, increases the odds that the downside is protected.

My guess is there will be more competition between Trump and Biden as we get closer to the election. Each candidate will make grand promises. They will do their best to gather votes from the industry. Some of the things they say will come true. Others will not.

It doesn’t matter though. Both candidates are headed in a pro-crypto direction. That will be a large tailwind for the industry in the coming years.

Hope you all have a great day. I’ll talk to everyone tomorrow.

-Anthony Pompliano

Will Clemente is the Co-Founder of Reflexivity Research.

In this conversation, we talk about Bitcoin, Ethereum, Solana, meme coins, portfolio management, ETFs, regulation, culturally relevant ideas, what you should be paying attention to, and where opportunities exist in the next 18 months.

Listen on iTunes: Click here

Listen on Spotify: Click here

Will Clemente on the Bitcoin Bull Market

Podcast Sponsors

* Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. 

* iTrustCapital allows you to buy and sell cryptocurrency in a tax-advantaged crypto IRA. Open and fund an account today to receive a $100 USD funding bonus.

* Supra - Join Supra’s early integration program for zero-cost access to the fastest oracles and dVRF across 50+ blockchains.

* BetOnline -  Use crypto to bet on sports, casino games, horse racing, poker and more with promo code POMP100.

* Espresso Displays - The world's thinnest touchscreen portable monitor. Expand your workspace and work from anywhere.

* CrossFi is the Apple Pay for Crypto. For the first time in history, anyone with a web 3 wallet can spend crypto through a physical or virtual Visa card where Visa is accepted.

* ResiClub - Your data-driven gateway to the US housing market.

* Opening Bell Daily - Get the 5-minute newsletter that Wall Street reads.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors, 

The last 15 years of investing have been dominated by private market investors. The average venture capital fund returned ~ 17% compounded. During the same time period, QQQ compounded at 13% annually. 

This 400 basis points of outperformance would make any market participant salivate.

But the analysis is not that simple. First, the average venture fund is probably holding shares in companies that haven’t been marked-to-market, so those companies are worth much less than currently stated. 

Remember, the data can be very confusing. On one hand, reports are that about 50% of venture funds fail to return their original investors’ capital.

But other reports claim that 50% of all venture funds actually outperform the stock market.

Regardless of which it is, everyone agrees that venture funds keeps investors illiquid for 8-12 years.

The story seems messier now, right? Are venture funds worth the complexity and uncertainty?

Just wait - it is only going to get more complex. There are nearly 3x more venture capital funds today compared to 15 years ago.

On top of the increase in venture funds, investors are also gaining new ways to access private market deals. The secondary market is more liquid than ever and we even have a closed-end, publicly traded fund that gives investors exposure to the most popular private companies.

These developments mean that competition is significantly increasing for venture capitalists. When competition increases, returns begin to compress.

My guess is that the average venture fund will not outperform QQQ by 400 basis points moving forward. The best VCs in the world will continue to dominate (and beat the market by a large margin), but the new competition is going to arb the outperformance away for the average fund.

Why is that important to understand?

Because I believe we are about to see a renaissance of public market investors. In a way, this is not some profound insight. Crypto has popularized publicly available, liquid financial markets. These digital assets are now collectively valued at more than $2.5 trillion.

So if you combine the popularity of crypto with the incoming competition in venture capital, you can see why the younger generation will start investing in the public stock market more often.

You have already seen public market hedge funds crossing over to invest in private markets, but now I am starting to see private market investors crossing over to invest in public markets. The largest example is Sequoia, but there are many others who have not explicitly stated their strategy expansion.

Critics of the “public markets will become more popular” view will point to the decline in number of US public companies. According to Google AI, “the number of publicly traded companies in the United States has been declining since the 1990s. In 1996, the number of companies peaked at around 8,090, but by 2019 it had dropped to 4,266. As of April 2024, the number was around 4,300.”

Proponents of the view will simply point to the current trend of public market infrastructure blending with crypto assets, which is highlighted by the ETFs, mainstream exchanges evaluating crypto, and legacy finance investment firms allocating billions of dollars to the new asset class.

I will take it one step further though — the best investors of the new generation won’t simply invest in crypto companies in the public market, but rather they will seek out the best investment opportunities regardless of the industry.

Venture capital will always have a place in an investors’ portfolio, especially if you invest with the best VCs. But public markets are going to make a roaring comeback in popularity over the coming years.

I see it in my own personal investing. I see it in my friends’ investing. And I can’t find a reason why the trends will slow down. Thankfully, more investors participating in the public market is ultimately a positive development for financial markets.

Now we need the amazing private companies to go public earlier. That won’t happen as long as the private market is flooded with cheap capital though.

Hope you all have a great day. I’ll talk to everyone tomorrow.

-Anthony Pompliano

Matthew Sigel is the Head of Digital Assets Research and Portfolio Manager at VanEck.

In this conversation, we talk about bitcoin, ethereum, miners, global adoption, regulation, conversations VanEck is having with their clients, where opportunities exist, and how crypto and politics are intersecting with each other.

Listen on iTunes: Click here

Listen on Spotify: Click here

VanEck’s Matthew Sigel Explains What The $100 Billion Asset Manager Is Doing In Crypto

Podcast Sponsors

* Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. 

* iTrustCapital allows you to buy and sell cryptocurrency in a tax-advantaged crypto IRA. Open and fund an account today to receive a $100 USD funding bonus.

* Supra - Join Supra’s early integration program for zero-cost access to the fastest oracles and dVRF across 50+ blockchains.

* BetOnline -  Use crypto to bet on sports, casino games, horse racing, poker and more with promo code POMP100.

* Espresso Displays - The world's thinnest touchscreen portable monitor. Expand your workspace and work from anywhere.

* CrossFi is the Apple Pay for Crypto. For the first time in history, anyone with a web 3 wallet can spend crypto through a physical or virtual Visa card where Visa is accepted.

* ResiClub - Your data-driven gateway to the US housing market.

* Opening Bell Daily - Get the 5-minute newsletter that Wall Street reads.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe