The Pomp Letter

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To investors,

The Sohn Conference was yesterday. This unique event brings together some of the world’s greatest investors to pitch their best investment ideas, while helping to raise money for philanthropic causes.

From their website: “The Sohn Conference Foundation takes a unique, selective investor’s approach to grant making. The Foundation supports cutting-edge research, innovative technologies, and bold initiatives that will have the greatest impact in treating and curing today’s public health priorities.”

Some of the picks from yesterday’s conference included Carpenter Technology Corp. (NYSE:CRS), Natera Inc. (NASDAQ:NTRA), European chemicals company Solvay, and cryptocurrency Ethereum.

Each of these picks has a solid thesis behind them, but I think they will be drastically outperformed by the stock that I would have pitched yesterday if I was at the conference.

My pick would be DeFi Technologies, Inc (NEO: DEFI) (GR: R9B) (OTC: DEFTF).

Let me explain my logic. The publicly-traded company has a few different products or services across the cryptocurrency sector, but there is one area that is worth truly understanding.

DeFi Technologies has a subsidiary called Valour Asset Management. This organization’s strategy is to create ETPs in non-US markets for the long-tail of cryptocurrency assets. The thesis is that investors in traditional markets and on Wall Street want exposure to potential 10x - 100x opportunities just as much as the degens of crypto do.

If Valour can be the first company to provide public market exposure to these assets, they will be able to attract meaningful capital to their ETPs. But that is when things get interesting.

Because Valour is holding crypto-native assets in these ETPs, they are able to generate higher fee revenue from these assets. Instead of charging less than 50 basis points as we are seeing for the bitcoin ETFs in America, Valour charges 1.5% or higher to manage the more esoteric assets. Additionally, many of the assets give Valour the ability to generate yield from staking or other crypto-native revenue opportunities. Lastly, Valour periodically engages in market-making for these assets which can generate additional fees.

By my calculation, Valour’s average fee generation on their AUM is approximately 7.2%. That is a monster number for the asset management industry.

This understanding alone would make DeFi Technologies and Valour an interesting potential investment. But you have to remember that these ETPs they manage are holding crypto assets, with Solana being their largest ETP, so the asset values continue to grow rapidly during a bull market.

For example, here is an excerpt from the company’s recent earnings report:

“Assets Under Management ("AUM") grew 476% to approximately $508 million as of December 31, 2023, up from $106 million as of December 31, 2022. Valour Inc. and Valour Digital Securities Limited's ("Valour's") current AUM stands at C$880 million.”

That means Valour’s AUM has grown more than 800% from December 2022 till today. There are very few businesses in the world who can see this type of revenue acceleration without having to expend an insane amount of money on sales and marketing.

As of this morning, the current market cap of the DeFi Technologies is about $140 million USD. That may seem reasonable on the ~ $10 million they reported for 2023.

There are two points that may change the way to look at those numbers though. It appears that more than 75% of those revenues were created during the last 90 days of the year. Additionally, given the ~ $650 million USD in current AUM, that would imply an annualized revenue run rate of $46.8 million.

Why is $46.8 million an interesting number?

That is the exact number that DeFi Technologies shared as the forward guidance for 2024 revenue. Here is the excerpt from the earnings report:

“Given the current AUM, price of digital assets and activity level in the digital asset market, the Company's annualized top-line revenue is forecasted to be approximately C$63.3 Million (USD 46.8 million) for 20241. Growth in AUM is expected to lead to proportional increases in revenue. Since there is a strong correlation between the Company's revenues and the digital asset market's price levels and activity, revenue trajectories will fluctuate with market conditions, while costs remain stable, reflecting Valour's business' scalability.”

An important note is that DeFi Technologies has a venture portfolio on their balance sheet that is currently marked at slightly over $32 million USD, so the business is essentially being valued today at approximately 2.5x this year’s revenue.

I am not a mathematician, but that seems insanely cheap for a company that is seeing revenue grow hundreds of percent.

Lastly, if we assume that crypto assets will continue in a bull market through the end of the year, DeFi Technologies becomes even more interesting. Let’s say that asset prices simply double from here through the end of the year, then you can conclude (based on the prior assumptions around AUM and fees) that DeFi Technologies would be doing close to $100 million annualized revenue run rate in that scenario.

My best analysis is that this stock is wildly undervalued at the moment and given the sector that it operates in, along with the products that it has in the market, there should be strong tailwinds through the rest of this year.

I think there were some strong pitches at Sohn yesterday, but there are strong odds in my personal opinion that DeFi Technologies will outperform all of them.

Before I let you go, I want to lay out a few disclaimers. I personally own DeFi Technologies stock. A company that I am a majority shareholder in also holds DeFi Technologies stock after we sold Reflexivity Research to the organization earlier this year. Some people may look at today’s letter as me talking my book, which has a hint of truth to it, but I think of it much more as I have skin-in-the-game and stand to lose money if I am wrong in my analysis.

Please don’t take today’s letter as investment advice. Do your own research. You all are adults who can think independently and critically. Stocks are wildly volatile, they can go up and down a lot, you can lose your money investing in the market, and nothing I have written here should be used by you to make investment decisions. No one, including me, is right 100% of the time.

It will be interesting to see how this letter ages over the coming months. Hope you all have a great day. I’ll talk to everyone tomorrow.

-Anthony Pompliano

Reader Note: Today is a free email available to everyone. If you would like to receive these letters each morning, please subscribe to become a paying member of The Pomp Letter by clicking here.

Cathie Wood is the Founder & CEO of Ark Invest. This conversation was recorded at Bitcoin Investor Day in New York.

In this conversation, Cathie talks about why she is so bullish on bitcoin, ETFs, macro factors, price target of $1.5 million, areas in the industry she is excited about, and more.

Listen on iTunes: Click here

Listen on Spotify: Click here

Cathie Wood: Bitcoin Could Reach $1.5 Million

Podcast Sponsors

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

* Propy - Now, anyone can start their on-chain journey by minting home addresses via PropyKeys and staking them for profit until they are ready to sell their home. 

* 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.

* Base - Base is shaping the future of the on-chain world with near-zero gas fees and rapid transaction speeds.

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

* Bay Area Times - A visual newsletter explaining the latest tech & business news.

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,

I started writing The Pomp Letter in May 2018. Next month will mark 6 years of writing every morning about bitcoin and financial markets. Throughout this time, I have been the sole writer and operator behind our work.

I started writing because it helped me to formulate my thoughts each day. You can’t write clearly if your thinking is messy. Although writing is the most selfish thing I do, it has been very cool to see The Pomp Letter grow to more than 30 million readers annually — this makes you part of one of the largest reader audiences in finance.

But now I want to do something even bigger and better.

Today I will announce a push into the traditional finance vertical. We are going to do original reporting through the same outlook on the world that you have come to expect from The Pomp Letter — an outlook that ignores mainstream narratives, obsesses over finding truth, and constantly questions everything. 

This is a big, bold bet on my part. It is a little scary and very risky. It is a bet worth making though.

In order to pull this off, I have teamed up with Phil Rosen — an award-winning journalist from Business Insider who previously wrote one of the most popular finance newsletters on Wall Street. 

Phil has a set of skills that I don't have. Together we are a great team. 

So…buckle up. We are going to start covering Wall Street just as passionately as we have covered bitcoin. You can expect unique insights, exclusive interviews, and a data-driven analysis of various markets that are driving capital flows across finance.

For those of you who only want bitcoin content, nothing will change for you. You will still get The Pomp Letter every morning. I will write it with the same focus and intensity that I have for the last 6 years.

The new content will be sent under the name Opening Bell Daily. We will slowly roll it out to each of you over the next two weeks. This is a deliberate strategy to ensure that the product and content is as high-quality as we can make it. Please give us feedback early on — feedback is a gift that will help us continue to improve.

If you don't want to join us for the ride into enemy territory (Wall Street!), I get it. You can unsubscribe from the new coverage by clicking the unsubscribe button when you receive the welcome email. I only want you to get information from us if you find it valuable and informative. There is more information in the press release below.

For those of you who want the Wall Street content, I can promise you we are going to do our best to build something that is worth 5 minutes of your precious time every morning. 

I appreciate all of you immensely. You have made the last 6 years incredibly fun and informative. I can't wait to see what the next 6 years hold. 

-Anthony Pompliano

PRESS RELEASE — Introducing Opening Bell Daily

This is one of the most pivotal financial chapters in our lifetime. 

Federal Reserve policy is up in the air, investors are piling into the stock market in droves, and the US economy is flashing signals of both an imminent recession and unusual strength. 

Meanwhile, the media landscape has never been more fractured. Smaller newsrooms continue to shutter and legacy outlets publish the most critical financial stories behind paywalls, leaving many readers out of the loop.  

Now, award-winning financial journalist Phil Rosen and investor Anthony Pompliano are teaming up to launch Opening Bell Daily, an independent news and research outlet committed to demystifying markets, investing, and Wall Street — at no cost to readers. 

Rosen, an outgoing senior reporter with Business Insider, will be the outlet’s lead editor. 

With a weekday newsletter and a long-form podcast, Opening Bell Daily will deliver original reporting, exclusive interviews, and expert analysis to an audience ranging from industry professionals to retail traders. 

The outlet will debut with iTrust Capital, a leading IRA platform, as its launch partner.  

“I quit a job I loved because I believe smart, even-handed financial news should not be a luxury,” Rosen said. “The economic and markets landscape is shifting fast, and I’m eager to make information more accessible and easier to understand.”

“I have been writing publicly about bitcoin and the macro environment for 6 years,” Pompliano said. “We now reach more than 3 million readers per month. But there is much more to financial markets than what I have historically covered, so I am excited to team up with Phil Rosen to expand into original reporting on the traditional finance industry.”

If you are a long-term optimist interested in becoming a smarter, more informed investor, Opening Bell Daily is for you. 

Markets move fast. We help you stay ahead. 

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 is an article in the Wall Street Journal titled “Bitcoin Is Soaring This Year. Goldman’s Crypto Skeptic Isn’t Biting.” The piece profiles Goldman Sachs’ Wealth Management Chief Investment Officer Sharmin Mossavar-Rahmani, who happens to be the firm’s second-longest tenured partner.

Although Sharmin has a storied career and deserves every ounce of respect she has earned throughout the years, there are numerous claims in this specific article that are inaccurate. I thought it would be helpful to go through them one-by-one.

First, Sharmin was talking to a Goldman Sachs intern in 2022 and posed two questions: “Have you thought about what it’s worth? Have you thought about at what point you’ll get out?”

These are fair questions to ask about any investment asset, but the questions are harder to ask about a native currency. For example, if I asked someone what is the US dollar worth, they would likely have a hard time quoting an acceptable answer. If I also asked an American at what point will they get out of the US dollar, people would look at me like I was crazy.

Bitcoin, the world’s largest and most valuable digital currency, is becoming the native currency of the internet. An entire generation that spends most of their time in front of a screen, and mainly interacts with other humans in the digital realm, sees bitcoin as the global internet reserve currency that serves as the default store-of-value.

The second point Sharmin makes in today’s article is “We do not think it is an investment asset class. We’re not believers in crypto.” This is a tough position to take on a $2.5 trillion asset class that is currently seeing tens of billions of dollars invested into it year-to-date from sophisticated institutional investors.

Sharmin is essentially claiming that she is smarter than everyone else and she is smarter than the market. Everyone else must be wrong. It is kind of wild to think this, but even more insane to say it out loud to the Wall Street Journal.

It would be one thing to say that you don’t think bitcoin’s future is bright. You could say that the assets may not be worth what people are valuing them at today. But to claim that the $2.5 trillion industry is not an asset class is simply detached from reality.

Third, WSJ’s Gregory Zuckerman writes that Sharmin’s “view is based on the fact that it is nearly impossible to accurately value cryptocurrencies, which don’t produce earnings, cash flow or dividends.” This is an easily disproven point and it highlights that Sharmin has likely not done the work to study the assets and the industry.

For example, bitcoin produces earnings via the block subsidy and transaction fees. Rather than those earnings being captured by a centralized entity on a single P&L, the earnings and cash-flow are captured collectively by the decentralized network participants. If you were to count up that revenue, you would see that bitcoin is currently producing more than $21 billion in annualized revenue from the block subsidy alone.

If you take this analysis a step further, there are plenty of blockchain protocols that allow for staking, which can be compared to dividends and/or cash-flow. I am not claiming that these assets are companies, nor am I claiming that it is a perfect 1-to-1 comparison, but I am stating that various crypto assets have earnings, cash-flow, and dividends. This means that Sharmin’s claim, which I find to be an intellectual crutch used by people who haven’t done the time to study the industry, is inaccurate.

Fourth, Sharmin claims that investors should steer clear of cryptocurrencies because of the crimes they facilitate. Again, this shows a lack of awareness of basic facts. As it has been proven time and again, nefarious or illegal transactions using crypto makes up less than 0.5% of all crypto transactions. Additionally, when compared to fiat currencies like the US dollar, crypto is not even in the same ball park in terms of popularity. And if those two points weren’t enough, law enforcement leadership has routinely told me that the public ledger component of a blockchain makes it very easy for them to track criminal activity, so they prefer when people are using these assets for criminal behavior.

Lastly, Sharmin points to the fact that bitcoin is “too volatile” to become a medium-of-exchange and that the industry “creates absolutely no value in any shape or form.” The idea of bitcoin being too volatile is really a comment on the exchange price between bitcoin and US dollars. One bitcoin continues to equal one bitcoin, just as one dollar equals one dollar. But since 2020, the US dollar has lost 25% of its purchasing power and bitcoin has gained 800% of its purchasing power — I will leave it to you all to decide which one of those scenarios is better for holders of the respective assets.

On Sharmin’s point of no value being created “in any shape or form,” this is obviously incorrect given the $2.5 trillion asset class, multiple public companies valued at tens of billions of dollars, more stablecoin transaction volume than Visa, and the most popular ETF launches in history.

After reading the Wall Street Journal article, I realized something — we are watching a last gasp from the traditional financial system. The old guard is screeching about their antiquated world view that is being disproven daily for the last 15 years.

The transition from an electronic CUSIP-based financial system to a digitally-native system is not going to happen overnight. It will take decades. But the trends are clear and the well-respected, highly accomplished people like Sharmin Mossavar-Rahmani are unfortunately going to be on the wrong side of history.

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

-Anthony Pompliano

Anthony Scaramucci is the Founder & Managing Partner of SkyBridge. This conversation was recorded at Bitcoin Investor Day in New York.

In this conversation, we talk about his thesis on bitcoin and cryptocurrency, macro environment, political landscape, who will be the next president, and future outlook for bitcoin.

Listen on iTunes: Click here

Listen on Spotify: Click here

Scaramucci: Sovereign Wealth Funds Are Buying Bitcoin

Podcast Sponsors

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

* Propy - Now, anyone can start their on-chain journey by minting home addresses via PropyKeys and staking them for profit until they are ready to sell their home. 

* 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.

* Base - Base is shaping the future of the on-chain world with near-zero gas fees and rapid transaction speeds.

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

* Bay Area Times - A visual newsletter explaining the latest tech & business news.

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 promise of crypto was that decentralization would rule the day. The story was centralized institutions had overreached and now we needed a new ownership or governance model in order to fully capture the potential of the internet.

Bitcoin’s launch marked the creation of the first mass market asset that found product-market fit. Decentralized money has a very large addressable market and it is encouraging to see hundreds of millions of people adopting the technology globally.

The second big wave came from smart contract platforms. Although there is debate around how decentralized Ethereum, Solana, or any other platform may be, it is hard to argue that these technology stacks are not more decentralized than the traditional technology industry provides. There are more than 260 million unique address on Ethereum currently. It is estimated the network has more than 500,000 daily active users and over 100 million people hold Ether, the chain’s native cryptocurrency.

So where is the third major area of innovation and adoption going to come from?

The short answer is that no one can predict the future perfectly. We don’t know. But there is something very interesting happening with exchanges at the moment. First, Uniswap is estimated to have over 2.5 million monthly active users. These users conduct billions of dollars in transactions per day across various blockchains.

For example, you can see Uniswap’s activity on Base, the new blockchain from Coinbase, has been skyrocketing.

Volume on the decentralized exchanges built on top of Base look exactly how you would want them to look if you were trying to find product-market fit.

This is an important development because Coinbase, one of the most popular centralized exchanges, has apparently realized they can be a major player in the decentralized game as well.

Coinbase is not doing this merely out of the goodness of their heart though. On one hand, a decentralized offering allows them to become more crypto native and resilient as regulators around the world put more pressure on them. On the other hand, Coinbase stands to make a lot of money if this is successful. According to Defi Llama’s 0xngmi, it appears Base is already on a $500 million annualized run rate and continuing to accelerate.

Coinbase and Base are not the only players in town though. Last night ShapeShift founder Erik Vorhees explained how successful their transition from a centralized player to a decentralized front-end for DEXs has been:

“Six years after ShapeShift's business collapsed under an onslaught of state tyranny, its transformation into a decentralized, open-source project has proven effective. Over the last month, huge trade volumes surging through ShapeShift helped carry Thorchain's monthly volume over $10 billion.

All of it permissionless and non-custodial; a beautiful resurrection of the dream that began way back in 2014 when we processed our first BTC to LTC trade without custody in the wake of the MtGox collapse. All credit for the recent resurgence belongs with the ShapeShift DAO, of which I am only a grateful observer and occasional participant.

Thank you guys. And thank you ThorChain for your resilience and ambition in building the most impressive DEX aparatus in all cryptoland. Despite every setback, crypto is relentlessly working, and the saddened defenders of those fiat ramparts have but years of decay ahead, while a more virtuous civilization builds justly upon their ruins.”

These decentralized exchanges are seeing big trading volumes. The underlying blockchains are becoming very interesting pieces of infrastructure that can’t be ignored. The front-end affiliates are driving adoption at a pace that industry leaders previously dreamed of.

It is too early to claim victory, but the recent developments signal a growing adoption of decentralization outside of just bitcoin and smart contract platforms. If the trend continues, the promise of crypto related to decentralization will be one step closer to coming to fruition.

Pretty cool to see.

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

-Anthony Pompliano

Mike Novogratz is the Founder & CEO of Galaxy Digital. This conversation was recorded at Bitcoin Investor Day in New York.

In this conversation, we talk about the macro environment, bitcoin, political overlay, regulation, what Galaxy is doing, and how Mike sees the next couple months playing out.

Listen on iTunes: Click here

Listen on Spotify: Click here

Mike Novogratz Explains Why Bitcoin Keeps Going Up

Podcast Sponsors

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

* Propy - Now, anyone can start their on-chain journey by minting home addresses via PropyKeys and staking them for profit until they are ready to sell their home. 

* 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.

* Base - Base is shaping the future of the on-chain world with near-zero gas fees and rapid transaction speeds.

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

* Bay Area Times - A visual newsletter explaining the latest tech & business news.

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

Today’s letter is brought to you by Espresso Displays!

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To investors,

Liquidity drives asset prices. As liquidity increases, asset prices go up. As liquidity is drained, asset prices go down. This is a fairly well understood phenomenon in economics and the professional investment community.

Historically, the problem is that liquidity can be very difficult to track. I recently met the team behind Liquidity Wiz and have been impressed with their product. It tracks liquidity by allowing the user to cut the data in a variety of different ways. As a disclaimer, I have no financial relationship with the company and am not incentivized to share their product. I am just a fan, but figured we could do a deep dive today on global liquidity using their data.

First, we can see that global liquidity is down approximately 8% over the last 12 months.

If we drill into the broad money supply growth by country, we can see that global liquidity has been driven by China’s continued expansion (blue line below).

It doesn’t hurt that China is not only growing their broad money supply, but they are also the largest country in the world by money supply with double the United States’ $20.8 trillion.

A deep dive into the liquidity cycle shows that the 3-month liquidity cycle reveals draining of liquidity globally since the local high in January of this year.

The 1-year cycle shows the same phenomenon, but this chart does a better job of highlighting how outrageous the increase in liquidity was during the 2020-2021 zero-interest rate days.

Next, we can see that bitcoin, gold, and the S&P 500 all tend to move in the same general direction based on these liquidity changes.

What is interesting though is that bitcoin and the stock market have been appreciating in price since the start of the year, yet global liquidity has been draining.

One argument is that markets are forward-looking and investors are trying to front run central banks. They want to buy assets before the Fed and others pivot to looser monetary policy, while simultaneously pumping the global economy with liquidity.

Remember, the Fed has been draining their balance sheet and trying to create tight financial conditions.

And the US central bank has been successful in getting year-over-year CPI to fall drastically from the elevated levels that we previously saw.

But if asset prices have continued to rise, despite the tighter financial conditions, then we must ask the question “what happens when loose monetary policy returns and global liquidity begins growing aggressively again?”

The simple answer is that asset prices will take off, just as we saw in 2020 and 2021. The investors who were able to hold on to their investments over the last 2-3 years during this tighter period will be rewarded. But it would be hard to argue that central banks around the world are excited about pivoting back to loose policies given where the stock market, bitcoin, and gold currently are.

Asset prices at all-time highs during tight conditions spell disaster for preventing euphoria and speculation when the macro environment improves.

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

-Anthony Pompliano

Reader Note: Today is a free email available to everyone. If you would like to receive these letters each morning, please subscribe to become a paying member of The Pomp Letter by clicking here.

John Arnold is the Principal at Ten31, a bitcoin focused investment platform.

In this conversation, we talk about the total addressable market for bitcoin, what that means for financial returns, where to place capital, products, services, industries that will get built around bitcoin, and more.

Listen on iTunes: Click here

Listen on Spotify: Click here

Bitcoin Is Eating The World with John Arnold

Podcast Sponsors

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

* Propy - Now, anyone can start their on-chain journey by minting home addresses via PropyKeys and staking them for profit until they are ready to sell their home. 

* 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.

* Base - Base is shaping the future of the on-chain world with near-zero gas fees and rapid transaction speeds.

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

* Bay Area Times - A visual newsletter explaining the latest tech & business news.

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,

We hosted the inaugural Bitcoin Investor Day on Friday. There were over 800 people who attended the event, which made it the single largest gathering of institutional investors interested in bitcoin in history. Insane to see that level of turnout for an event that was put together in less than 100 days.

The speaker lineup was really strong and I learned quite a bit. Here are a few of the biggest takeaways:

* Galaxy CEO Mike Novogratz claims bitcoin will continue to rise until government spending is brought under control: “What's the macro story for bitcoin? It's relatively simple. Our government can't keep its pants on and stop spending money. That went from a problem in the early 2000s to a crisis with Donald Trump and Joe Biden. They go down as the two presidents who destroyed our fiscal stability…Until you see a government, both Dems and Republicans, that says 'enough,' bitcoin's going to keep going higher.”

* Ark Invest CEO Cathie Wood has updated her bitcoin price target to $3.8 million: “Last year we put out our bull case for bitcoin. It was $1.5 million. With this institutional green light that the SEC has provided, kicking and screaming though it did, the analysis we've done is that if institutional investors were to allocate a little more than 5% of their portfolios to bitcoin, as we think they will over time, that alone would add $2.3 million to the projection I just gave you…We think [bitcoin] has miles to go. We're at the very beginning of really putting in place the financial ecosystem native to the internet and disintermediating all of the toll-takers.”

* Skybridge Founder Anthony Scaramucci explained his bitcoin investment strategy in simple terms: “The dead people at Charles Schwab do far better than the living people. So act like you're dead with your bitcoin and don't sell your bitcoin. Don't do anything with it. Hopefully, we can continue to coach our clients to listen to that mantra.”

* Blackrock’s Head of Digital Assets Robert Mitchnick revealed that their clients have very little interest in the long-tail of crypto assets: “For our clients, Bitcoin is overwhelmingly the number one priority. And then a little bit ethereum, and very little everything else.”

* Bitwise CEO Hunter Horsley highlighted that their firm did 20,000 investor meetings and calls last year, which has been a major contributor to why the crypto-native ETF provider has been able to attract more than $2 billion in AUM against formidable competitors like Blackrock and Fidelity.

* Grayscale’s Managing Director of Research explained that investors should expect GBTC’s management fee to continue to fall in the future.

Each of the conversations was recorded and will be published in audio and video form on my podcast over the coming weeks.

My biggest takeaway from the event was how impactful the spot bitcoin ETF approvals have been to institutional interest. I knew that the approvals had been helpful, but I was blown away by the night-and-day difference between the pre-and-post approval conversations.

Many organizations are now at a point where they want to allocate to the asset, but there are bureaucratic processes that must be followed. This means that many capital flows are delayed and will take weeks or months to enter the market.

Given this detail, it is encouraging to see the price appreciation without full institutional participation, because it signals increasing future demand that will show up post-halving. If things go as planned, we should continue to see bitcoin’s price rise through the end of 2024.

For years people would predict that the institutions were coming. Now the institutions are actually here. They are allocating to the asset. They have the green light and no one wants to miss out. Such a beautiful thing to see.

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

-Anthony Pompliano

Anthony Pompliano records a solo episode breaking down the question, "is this time different?"

Topics include historical bitcoin cycles, bitcoin halving, bitcoin drawdowns, interest rates, global liquidity, gold, volatility, El Salvador, Microstrategy, and more.

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Is This Bitcoin Cycle Different?

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To investors,

There is one phrase that has been seared into my brain over the last few months — “Depression or dog coins to a trillion.”

This sentence was shared with me by Asymmetric’s Joe McCann during an interview where we discussed the current economic situation in America. Joe’s comment was meant to highlight the difficulty that the Federal Reserve is facing.

The central bank can keep interest rates at the current level in an attempt to cool off some of the craziness in financial markets, especially since stocks and crypto are at all-time highs, but that would risk pushing the larger economy into a recession (note: depression sounds scarier for the shock effect of his comment).

No one wants a recession.

The alternative option is for the Fed to cut interest rates and stimulate the economy. Under this scenario, dog coins go to a trillion dollar market cap. In Joe’s phrase, dog coins are a proxy for the insanity that is playing out in the edges of financial markets.

If you scroll Twitter/X for a few minutes, you see numerous people talking about how much money they made by buying some stupid name cryptocurrency coin.

As Avi Felman points out here, the market makes no sense. Serious investors know that these assets have zero real world utility, nor do they have any fundamental value. The only reason that the memecoins are going up-and-down in value is because humans love to gamble. They love the promise of getting rich quickly.

But the history of finance has taught us how this ends — it is fun in the short-term and disastrous in the long-term. That won’t stop people from speculating on these new coins.

To put the velocity of this trend in context, Ram Ahluwalia highlighted that 2,500 memecoins were created on Solana in a single hour. Think of how insane that number is.

This is exactly what Travis Kling means when he talks about financial nihilism. Here is how he defined that phrase in a recent article:

“financial nihilism – the idea that cost of living is strangling most Americans; that upward mobility opportunity is out of reach for increasingly more people; that the American Dream is mostly a thing of the past; and that median home prices divided by median income is at a completely untenable level…Financial Nihilism goes hand in hand with Populism – a political approach that strives to appeal to ordinary people who feel that their concerns are disregarded by established elite groups.”

That sounds about right. People feel like there is no other option than to speculate in markets, regardless of how small the probability of this strategy working. Hope is not a math equation, but it sure feels good if you are desperate.

Speaking of desperation, remember the Fed is in a similar situation as individual Americans. They have a $34 trillion debt hanging over their head and no clear path to solving problem. If the dollar continues to be debased, the insanity of financial markets continues. If the Fed stops debasing the dollar, the US possibly defaults on the debt.

Heads you lose, tails you lose. Gamblers run the casino in either scenario.

So what is going to happen moving forward? This may shock you, but the central banks and governments are going to have to enter the corners of financial markets. The Fed is not going to buy dog coins, but we are starting to see larger governments become interested in bitcoin.

This morning a report surfaced from Arjun Kharpal with the following information:

“Japan’s government pension fund on Tuesday said it is requesting information on “illiquidity assets” such as bitcoin, as part of research into potential new investments.

The Government Pension Investment Fund (GPIF) of Japan, the world’s largest pension fund by assets under management on several different rankings, said it is looking for “basic information” on illiquid assets other than those in which it already invests.

GPIF said it currently puts funds in domestic and foreign bonds and stocks, real estate, infrastructure and private equity. It is now looking for information about other assets such as forests, farmland, gold and bitcoin and how these might be incorporated into the portfolio of pension funds.”

This doesn’t mean that GPIF is going to buy bitcoin, but it does mean that it is at least willing to evaluate the prospects of doing so. Remember, depression or dog coins to a trillion.

The game has changed. Asset allocators now have to consider a range of possibilities that they previously would have only laughed at. You can either stand in the way of the macro problems and get steamrolled, or you can join the insanity and position yourself to benefit from the macro tailwinds.

Slowly, but surely, more organizations are realizing that they may have no choice.

To conclude, the story of the crypto market right now is bitcoin and memecoins. They live at opposite ends of the risk spectrum, but that is what everyone is focused on. The natural barbell separates the logical capital allocators from the speculators and gamblers. But both groups seem to be winning at the moment, so we shouldn’t be surprised that this degree of success is attracting more people.

Let’s just hope the memecoins don’t end in misery, because then there will be a lot of people who wish they had simply stuck with bitcoin.

Have a great day. I’ll talk to everyone tomorrow.

-Anthony Pompliano

Arthur Hayes is the Co-Founder of BitMEX and CIO of Maelstrom Fund.

In this conversation, we talk about bitcoin, macro environment, banks, Microstrategy, Altcoin ETFs, stablecoins, various playbooks different nations are using, bull market predictions, portfolio construction, and more.

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Arthur Hayes: Bitcoin Is Going To $1 Million

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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.

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,

Bitcoin holders that previously showed strong-hands are starting to sell their bitcoin. This shouldn’t be a surprise — as the price of bitcoin rises, some percentage of holders are willing to sell their assets to take profit off the table.

We can see the number of bitcoin in the circulating supply that had not moved in at least 1-year topped out at just over 70% from November 2023 to late January 2024.

If zero bitcoin holders were willing to sell their bitcoin at the current price levels, the price of bitcoin would have to keep going up aggressively until the net new demand from spot ETFs could find a clearing price in the market.

Let’s zoom out and look at this same metric over time.

You can see a similar trend occurred in 2013, 2017, and 2020. Bitcoin holders began to sell their bitcoin as the bull market got kicked off. The selling of bitcoin continued to accelerate as the market saw prices increase over time.

Technically this chart is showing activity, so holders could also be spending their bitcoin, but for the purpose of our analysis we are going to consider that selling as well. Regardless of whether you are selling bitcoin for USD, a product, or a service, you are still getting rid of your bitcoin.

So a big takeaway from this metric is that the bull market has definitely begun. A small percentage of bitcoin (< 5%) that was previously dormant is now on the move. The 60% year-to-date increase in price, and the 140% increase over the last 12-months, has convinced some holders to part with their bitcoin.

This trend is confirmed by looking at the percentage of bitcoin that has not moved in the last 2-years as well. We saw a top to that metric in January 2024 as well.

We see the same thing when looking at the net change of the 30-day supply for long-term bitcoin holders. The deep drawdowns in red started in 2013, 2017, and 2020.

It seems like we will be able to add “2024” to that list by end of year. The good news? Bitcoin’s network is completely oblivious to what is happening with the asset’s dormancy. We have continued to see hash-rate increase at an exponential rate and we hit a new all-time high last night.

And interestingly enough — the number of successful transactions on the bitcoin network has seen a step-function change over the last 18 months or so.

I am not personally changing anything in my portfolio at the moment due to this information, but I am spending a lot of time watching it. The market is showing us that the weakest hands in the bitcoin industry have found their pain tolerance threshold to be around $70,000 per bitcoin.

They either sold because they needed to or they felt that the current offering price was more than sufficient. Most of the bitcoin holders, especially those who have been holding for at least 1 year, are not yet convinced that bitcoin’s price is high enough to part with their digital currency.

Just as in past cycles, this will change in the coming months or years. But in order to find out where that clearing price is, bitcoin’s price will have to continue to appreciate.

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

-Anthony Pompliano

Natalia Karayaneva is the Founder & CEO of Propy.

In this conversation, we talk about the real estate market, how blockchain technology can potentially make transactions cheaper and faster, why she is launching a brand new product, PropyKeys, and more.

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Crypto & Real Estate Discussion with Natalia Karayaneva

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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.

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 bitcoin spot ETFs have sucked all the air out of the room over the last two months. With more than $60 billion collectively in the various ETFs and more than $1 billion in net inflows, there is good reason for so many people to be paying attention.

But the new shiny development has allowed most people to stop thinking about a prior shiny story: nation-state adoption of bitcoin.

Back in the summer of 2021, the country of El Salvador decided to embrace bitcoin in a way that no other country ever had. They made bitcoin legal tender in the country. They created a bitcoin wallet app and gave every citizen $30 of bitcoin who wanted it. They also started mining bitcoin with their volcano-energy production facilities.

And the icing on the cake? The President of El Salvador started buying bitcoin directly on the country’s balance sheet.

His first purchase was 200 bitcoin on September 6, 2021 — a historic moment in history.

President Bukele followed up the first purchase with another 200 bitcoin later in the same day.

For those who were not paying attention at the time, you can imagine the reaction from people when they saw the President of a small country market-buying bitcoin and then tweeting after each purchase.

It was entertaining to say the least. The bitcoiners loved it. Nation states were finally adopting bitcoin. Shortly after Bukele began buying bitcoin, various politicians across Latin America pledged to help their countries buy bitcoin as well.

Almost none of them have been successful so far, especially when compared to the level of success and speed that Bukele has implemented in El Salvador.

That was the end of the story though, right? El Salvador bought some bitcoin and did a few experiments in their country. It was cute. The country is small. No one really cared after awhile. You didn’t hear any stories about bitcoin — instead most of the El Salvador stories were around the reduction in crime that the President was able to usher into reality.

The novelty of the bitcoin game had worn off.

Well, that all changed yesterday. President Bukele announced that El Salvador would be moving their bitcoin to cold storage and holding the cold storage device within the country’s borders.

This development alone would be newsworthy. A country’s leadership was taking custody of their bitcoin, which shows how well they understand the value proposition of bitcoin.

But there was a new detail in this announcement — Bukele tweeted the country’s bitcoin wallet address and it was revealed that El Salvador has 5,689 bitcoin which are worth more than $400 million today.

That may not seem like a massive number, but this is coming from a country that has less than $2.5 billion in total revenue and grants on an annualized basis.

So the ETFs are fun to watch because we get a daily update of the net inflows. We can see the price of the digital currency rapidly appreciating. And the mainstream media is covering the progress daily.

Just don’t forget that there are plenty of other people, corporations, and countries vying to get as much bitcoin as they can purchase as well. Watching El Salvador go from their first 200 bitcoin purchase to more than 5,000 bitcoin is quite impressive, especially since they did it so quietly.

We will find out in the coming decades how important it is for a country to buy and hold bitcoin, along with how prescient President Bukele will appear with the benefit of hindsight.

Hope you all have a great weekend. I’ll talk to each of you on Monday.

-Anthony Pompliano

Sam Corcos is the Founder & CEO of Levels.

In this conversation, we talk about how to run a high performing startup, calendar management, team management, personal productivity tips, decision making, networking, and more.

Listen on iTunes: Click here

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How To Run A High-Performance Startup

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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.

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

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To investors,

Inflation is becoming a big problem again. February’s core CPI numbers show that month-over-month inflation growth has been accelerating since October 2023.

Augusta Saraiva writes, “the so-called core consumer price index, which excludes food and energy costs, increased 0.4% from January, according to government data out Tuesday. From a year ago, it advanced 3.8%.”

Ken Griffin, the founder of Citadel, sees this rise in inflation as a key reason why the Federal Reserve should not rush to cut interest rates. Griffin said the following at a conference yesterday:

“If I’m them, I don’t want to cut too quickly. The worst thing they could end up doing is cutting, pausing and then changing direction back towards higher rates quickly. That would, in my opinion, be the most devastating course of action that they could pursue. So I think they are going to be a bit slower than what people were expecting two months ago in cutting rates. I think we are seeing that play out.”

It makes sense that people would be spooked if the Federal Reserve became unpredictable or volatile in their decision-making. But the truth is that the Fed shouldn’t be worried about their reputation at this point — they have a much bigger problem on their hands with the potential resurgence of inflation.

Unfortunately, we have a historical example of what could happen. The Great Inflation of 1965 - 1982 had an initial surge of inflation, followed by what seemed to be inflation falling to manageable levels, before inflation resurged to even higher levels of pain and destruction.

Michael Bryan, who served at the Federal Reserve Bank of Atlanta, describes that time period with the following paragraph:

“The Great Inflation was the defining macroeconomic event of the second half of the twentieth century. Over the nearly two decades it lasted, the global monetary system established during World War II was abandoned, there were four economic recessions, two severe energy shortages, and the unprecedented peacetime implementation of wage and price controls. It was, according to one prominent economist, “the greatest failure of American macroeconomic policy in the postwar period” (Siegel 1994).

It would be catastrophic to endure another two decade period of mismanagement to the degree we saw during The Great Inflation. While I don’t think our future is that bleak, it wouldn’t be surprising to see inflation continue to return with a vengeance.

Ben Hunt posted this chart and said, “Friends, every month I make the same post. Inflation stopped going down 8 months ago. Wage and price inflation is embedded well above target. I don't know why this is so hard to understand.”

Again, not exactly what you want to see if the Fed has been telling you that inflation should continue to come down and will be under control shortly. This chart seems to show a new average inflation number post-pandemic that is noticeably higher than pre-pandemic levels.

As Lisa Abramowicz from Bloomberg explains, “the Atlanta Fed's gauge of sticky inflation has risen to about 5% on a 3-month annualized basis. Inflation is moving in the wrong direction for the Fed, so it's interesting that the market's base case is still that the Fed is going to cut rates by about 100bp by January 2025.”

So rather than scratch your head asking yourself why bitcoin and the stock market are at all-time highs when interest rates are over 5%, you should probably ask yourself why these assets aren’t higher given how crazy things could get if inflation mounts a comeback.

Let’s hope for everyone’s sake that inflation will be slayed, but don’t hold your breath for it to happen.

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

-Anthony Pompliano

Darius Dale is the Founder & CEO of 42Macro.

In this conversation, we talk about inflation, small business optimism, bitcoin, stocks, energy, global liquidity, and macro environment.

Listen on iTunes: Click here

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Bitcoin and Stocks at All-Time Highs - But Things Are Still Bullish?

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

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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.

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