The Pomp Letter

Today’s letter is brought to you by Cal.com!

What do I have in common with Chad Hurley (YouTube), Tobi Lütke (Shopify), and Alexis (776/Reddit)? We are all early investors in Cal.com and we use it instead of Calendly. 

Cal.com is the leading open-source scheduling platform, which gives you the same superpowers of efficiency previously reserved for elite corporations & tech gurus. 

Top performing teams choose Cal.com to increase business productivity, get insights on their team, and their automated workflows. 

Stop wasting your time with scheduling software that doesn’t work. Use technology to make your life easier. The best part?  Set up is quick, easy, and you will never go back to your boring calendar tool. 

Exclusive for Pomp Letter subscribers/Pomp Podcast listeners, use code “POMP” for $500 off when you set your team up with Cal.com. Save time. Save money. Use Cal.com.

To investors,

The bitcoin spot ETF approvals will be announced this week. The final decisions will likely come on Wednesday with trading to commence before the end of the week.

In preparation for that event, each ETF administrator must reveal what their management fee for the respective funds will be. Those numbers have started to come in this morning and there is only one way to describe what is happening — the fee war has begun.

Grayscale’s GBTC has been the goliath in the room for years. They managed tens of billions of dollars in the largest bitcoin fund in the world. That trust structure had a 2% management fee, which is more than double the average ETF fee. The argument was that bitcoin was more expensive to manage, so the fee was justified.

In reality, Grayscale had a monopoly in the US on the publicly traded bitcoin funds. They could charge whatever they wanted. This was an amazing business for them and they likely will never get the credit they deserve for the incredible work they did to educate, and onboard, so many investors to the digital currency.

Competition is coming fast and furious though.

Grayscale revealed this morning that their management fee will drop to 1.5% once they convert the trust structure to an ETF. While a 25% reduction in their management fee may sound large, this will leave Grayscale significantly higher than almost all of their competition.

Here are some of the other management fees that ETF providers have revealed, according to James Seyffart from Bloomberg:

These numbers are coming out very quickly this morning, so any changes or updates will not be included in my analysis.

Another area of “fees” is the bid/ask spread for these ETFs. According to Bloomberg’s Eric Balchunas, the expectation is that any ETF with healthy volume the spread will only be 1-2 basis points. That won’t be a big deal for almost all investors in these ETFs.

But something more interesting is happening with these fee wars on the ETF.

Van Eck advisor Gabor Gurbacs points out that it will “cost less to hold a Bitcoin ETF for a year than a single trade on Coinbase.” So the ETFs may actually create a drop in transaction fees for the crypto exchanges as well, not just the crypto-native asset management firms.

He goes on to highlight a potential downside to these low fees on the ETF applications:

“Bitcoin ETFs are coming in with pricing structures in the low double digit range and many with waivers and discounts. This clearly benefits the holders. However, it scares me when little to no money is made. Issuers will look elsewhere to make money (securities lending, trading, etc) I personally just like an upfront higher fees with clear and sustainable incentives. If possible a deep look into total cost of ownership. But that’s not how the ETF pricing battles go. People like to see low numbers.”

These are important points to keep in mind as the ETFs are approved and scaled.

Now many of you have emailed me questions about what I expect to happen with the bitcoin ETF, so here are a few simple predictions:

* The spot bitcoin ETF is approved this Wednesday and starts trading on Thursday

* The ETFs receive at least $2 billion in AUM within 48 hours

* The ETFs receive at least $5 billion in AUM in the first 30 days

* Blackrock emerges with the highest AUM outside Grayscale after the first 90 days

* The marketing spend to promote bitcoin spot ETFs is more than $100 million cumulatively

* There are at least one bitcoin spot ETF ad played in the Super Bowl

* Financial advisors around the country begin allocating 1-3% of client assets to bitcoin

* At least one sovereign wealth fund announces they bought the spot bitcoin ETF within the first 12 months

* Speculation around an ETH spot ETF will intensify by end of Q1

* Non-bitcoin ETF issuers begin allocating some of their AUM into the bitcoin spot ETF

* Bitcoin’s volatility drastically reduces in the next 3 years

* Bitcoin’s compound annual growth rate falls to ~20% within 5 years

It will be interesting to see what I get right and where I am wrong. Predicting the future is hard. Regardless of what happens, the long-term outlook of bitcoin remains a positive one.

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

-Anthony Pompliano

Darius Dale is the Founder & CEO of 42Macro.

In this conversation, we talk about global liquidity, Wall Street investors on bitcoin ETF, Macro Weather Model on asset prices in 2024, and more.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

My CNBC Appearance From Yesterday - Bitcoin Welcomes Wall Street To The Party

Podcast Sponsors

* Frec.com - Use tax-loss harvesting to save on your tax bill, while keeping the same investment exposure you already have.

* Cal.com - Changing the calendar management game. Use code “POMP” for $500 off when you sign up.

* Trust & Will - Estate planning made easy. They are fast, secure, and simple to use. Get your will or trust created today.

* Auradine - A new bitcoin miner powered by the world’s first 4 nanometer silicon chip technology.

* 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

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To investors,

The speculation around spot bitcoin ETF approvals is intensifying. Market participants are preparing for the applications to get a green light from regulators. At the same time, the mainstream media is interested in predicting whether the digital currency price will go up or down upon approval.

I shared my thoughts on CNBC’s Squawk Box this morning but figured it would be valuable to expand those thoughts here for all of you.

First, the short term price action of bitcoin is a non-story in the grand scheme of things. I explained to Becky Quick that I anticipate the same thing happening whether the applications are approved or denied — there will be severe short-term volatility and then bitcoin will get back on track with the current medium-to-long term trajectory.

Regardless of whether the price goes up or down thousands of dollars on decision day, the movement will look like a small blip on the chart after a year or two has passed. Keeping this in context of the broader picture is important.

Second, it is important to warn Wall Street investors of the volatility bitcoin presents to the market. The great team over at Reflexivity Research explained what happened yesterday when more than $1 billion of open interest was wiped from the market, leverage was flushed out, and bitcoin went down thousands of dollars in mere minutes. (Highly recommend subscribing to Reflexivity by clicking here)

All of the investors who thought it would be as easy as “go long with leverage into the ETF approval” started Wednesday morning with a surprise. Remember, bitcoin was $1,000 in 2017 and it has experienced a 45x increase since then. Along the way, there were two different drawdowns of about 80%, multiple 50% drawdowns, and five separate 30% drawdowns in 2021 alone. Bitcoin’s volatility is unlike anything else in traditional finance — that is attractive to some investors, but will ruin others.

Third, most of the public conversation is focused on the primary flows from retail and institutions into the bitcoin ETF. Those flows will be measured in tens of billions of dollars in the coming years. But another area of fresh demand will be what I call “secondary flows.” These are inflows to the ETF that will come from other publicly traded funds.

Earlier this week we saw one of these funds amend their prospectus so they can allocate up to 15% of their AUM to the bitcoin spot ETF when it is approved. Given that bitcoin is the best performing asset over the last 15 years, there are likely a lot of existing funds that would love to add a small exposure into their fund to juice returns.

Fourth, Wall Street sales teams and meme accounts on Twitter/X are going to be reading from the same script for years to come. The talking points have become clear over the last few years, but the messenger is going to change once the ETFs are approved.

We have never had large financial institutions spending hundreds of millions of dollars to market bitcoin to their clients. That effort is going to lead to capital inflow, but it is also going to do quite a bit to drive investor education as well.

Lastly, bitcoin has had an impressive financial performance without the persistent bid of large financial institutions allocating to the asset. That is going to change with endowments, pension funds, insurance companies, sovereign wealth funds, and other large organizations buying the spot ETF.

The benefit from this will be that bitcoin’s unlikely to continue to see large 80% drawdowns in the future. The downside is that some of the volatility of bitcoin will be taken away, which means it is unlikely to be as asymmetric to the upside as well.

Bitcoin will continue to do very well, but as I explained on television this morning, don’t anticipate the asset to go to $1 million over night. Thankfully, it probably gets there over time though because the government won’t stop printing money.

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

-Anthony Pompliano

Darius Dale is the Founder & CEO of 42Macro.

In this conversation, we talk about global liquidity, Wall Street investors on bitcoin ETF, Macro Weather Model on asset prices in 2024, and more.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

My CNBC Appearance From This Morning - Bitcoin Welcomes Wall Street To The Party

Podcast Sponsors

* Cal.com - Changing the calendar management game. Use code “POMP” for $500 off when you sign up.

* Trust & Will - Estate planning made easy. They are fast, secure, and simple to use. Get your will or trust created today.

* Auradine - A new bitcoin miner powered by the world’s first 4 nanometer silicon chip technology.

* 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 US national debt crossed over $34 trillion yesterday, which is the highest it has been in history. This all-time high milestone is not one to celebrate.

Charlie Bilello points out that the $12 trillion increase in the debt over the last 5 years signals a 55% increase during that time. The growth is hard to comprehend. Potentially more concerning, the US national debt as a percent of GDP has been increasing an alarming rate as well:

* 1980: 31%

* 1985: 40%

* 1990: 52%

* 1995: 65%

* 2000: 58%

* 2005: 61%

* 2010: 87%

* 2015: 101%

* Today: 123%

There has been a 50% increase since 2010, which highlights how much faster debt is growing than the economy. Simply, we are a nation addicted to printing money and there is no end in sight.

This has caused catastrophic issues with interest rates high. The US is now spending materially more money on the national interest payment compared to our defense budget.

That is quite a feat considering we are handing out weapons and equipment around the world like it is candy, so our allies can fight our proxy wars.

The three data points — the national debt, debt-to-GDP ratio, and the US interest payment — highlight the need for the United States to continue debasing the currency. They literally have no other choice. There will be short periods of time where the government and the Fed can slow the rate of debasement, but the macro tailwind is for an accelerated debasement over the long run.

Why is this important?

The trade of our generation is to be long assets that benefit from currency debasement.

Thankfully, most investment assets priced in US dollars will benefit from this trend. One of the biggest winners will naturally be bitcoin, specifically because of the finite supply and sound money principles. Gold will do well also, yet I believe that most of the asymmetric upside in the asset was captured by previous generations.

Stocks are a forgotten asset class when it comes to currency debasement. Let’s use the MSCI World Equity Index as an example. Since the Global Financial Crisis, the index appeared to have gone on an epic run of appreciation.

When you evaluate the same index priced in units of gold, instead of US dollars, you can clearly see that most, if not all, of the growth that was experienced in the 2010s was from currency debasement.

Another asset class that will always do well in currency debasement periods is real estate. There is a reason why it is estimated that the industry produces 90% of millionaires in the United States. These investors have simply bought properties and had the patience to let the government debase the currency.

It is not rocket science.

So the trade of our generation is to simply get long investment assets that benefit from debasement and avoid cash and cash-like equivalents such as bonds. I truly believe it is that simple.

Here is how that has played out in the last 15 years:

And the compound annual growth rates are even more impressive:

There is a lot of over intellectualization of investing in financial markets. If you try to optimize for the absolute best return, it can be very difficult. If you want to merely do well, then you can buy various investment assets and chill. Time in the market is more valuable than timing the market.

It is almost like the boring, timeless investing advice is timeless for a reason :)

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

-Anthony Pompliano

Dave Collum is a Professor of Chemistry at Cornell University.

In this conversation we discuss his year in review of 2023, which includes financial markets, bitcoin, digital totalitarianism, political landscape, climate change, biological males, and more.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

Disaster Is Coming In 2024 Says Dave Collum

Podcast Sponsors

* Cal.com - Changing the calendar management game. Use code “POMP” for $500 off when you sign up.

* Trust & Will - Estate planning made easy. They are fast, secure, and simple to use. Get your will or trust created today.

* Auradine - A new bitcoin miner powered by the world’s first 4 nanometer silicon chip technology.

* 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 Cal.com!

What do I have in common with Chad Hurley (YouTube), Tobi Lütke (Shopify), and Alexis (776/Reddit)? We are all early investors in Cal.com and we use it instead of Calendly. 

Cal.com is the leading open-source scheduling platform, which gives you the same superpowers of efficiency previously reserved for elite corporations & tech gurus. 

Top performing teams choose Cal.com to increase business productivity, get insights on their team, and their automated workflows. 

Stop wasting your time with scheduling software that doesn’t work. Use technology to make your life easier. The best part?  Set up is quick, easy, and you will never go back to your boring calendar tool. 

Exclusive for Pomp Letter subscribers/Pomp Podcast listeners, use code “POMP” for $500 off when you set your team up with Cal.com. Save time. Save money. Use Cal.com.

To investors,

Financial markets are showing excitement for the potential spot bitcoin ETF. The digital currency is trading up approximately 8% after the first day of 2024.

My advice is to go into the spot bitcoin ETF approval with low expectations. If things go well and bitcoin's price rises, you will be pleasantly surprised. If things don't go well and bitcoin's price goes down, you will have expected it. Life is all about closing the gap between expectations and reality.

As we head into this milestone, I wanted to do an evaluation of where we sit with the asset, the network, and the current holder base. It is important to have a baseline understanding of the fundamentals, especially since many people are predicting such a large shift in the coming months.

First, we can see that bitcoin’s price has had a strong recovery from the sub-$17,000 mark just a year ago. The appreciation of 173% felt rather quiet throughout 2023, but it is hard to ignore now.

Second, retail investors spent much of the bear market buying more bitcoin. We can see the number of unique addresses holding at least 0.01 bitcoin (~ $450) has hit a new all-time high.

We can see that the number of unique addresses holding one full bitcoin has also hit a new all-time high as well.

Next, we see hash rate from bitcoin miners has continued to go parabolic and is now sitting at fresh highs.

These miners are quite happy right now because they have seen multiple spikes in transaction fees throughout 2023, which can be attributed to a rise in Ordinals/Inscriptions.

As revenue has been rising, miners spent much of November and December as net sellers of the bitcoin on their balance sheet.

Exchanges were very similar. They spent most of the year as net sellers from their balance sheet too.

Speaking of exchanges, Binance remains the dominant player in the futures market even though they went through the recent legal issues.

Another interesting data point is that the number of successful transactions on the bitcoin network more than doubled in 2023 to approximately 650,000 per day.

Another positive point is that more bitcoin being moved in the last quarter of the year has been in a realized profit state. This means that people who have participated in these transactions are no longer under water.

Lastly, bitcoin’s market cap dominance was over 50% until the end of Q1 2021. It had been sub-50% since, but that changed a few months ago in Q4 2023. Seeing 50%+ market dominance for the oldest asset in the space speaks to the importance of first mover advantage, superior technical structure, and the initial capture of mindshare.

There is a lot of speculation around the spot bitcoin ETF going into the next 9 days. The SEC has been feverishly working on the various applications and the consensus view in the market is that we will see an approval during this window.

What happens once the applications are approved is anyone’s guess. Remember, low expectations should rule the day. Either way though, bitcoin — both as an asset and as a network — is in a very strong position. The decentralized digital currency continues to gain adoption globally, while also lengthening it’s lead as the strongest computer network in the world.

Given the backdrop of a guaranteed monetary debasement in the fiat world, bitcoin’s best days are likely ahead of it.

Hope you all have a great start to the year. I’ll talk to you tomorrow.

-Anthony Pompliano

Joe McCann is the Founder, CEO, & CIO of Asymmetric Financial.

In this conversation, we discuss meme coins & internet culture, bitcoin vs BONK, macro environment, portfolio construction, and meaning behind “full blown depression, or dog coins to a trillion.”

Listen on iTunes: Click here

Listen on Spotify: Click here

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,

This is my last letter to you of 2023. I figured I would leave you all with some alpha on how to put yourself in a better financial position during the new year. Below is a simple idea that will require no changes to your current investment exposure, yet can help you capture significant benefit thanks to new technology and innovation.

Before I explain what you can do, we must first understand how innovation works.

The promise of technology innovation is that costs come down causing a deflationary tailwind in society, while simultaneously democratizing access to products and services that were historically reserved for the wealthy. 

You can see how innovation, particularly from the private sector, leads to cost decreases over time. Bureaucracy and the public sector have the opposite effect (red lines).

This phenomenon is worth paying attention to because I believe it is coming to financial markets in a big way over the next decade. We have already seen fractionalized shares, ETFs, and other innovations lead to more capital invested in markets, but there is an even more powerful trend on the way in my opinion.

Let’s use direct indexing and tax-loss harvesting as an example.

I previously invested in a company called Frec that allows investors to invest in the S&P 500 stocks and leverage technology to automate tax-loss harvesting throughout the year. Some people will call it artificial intelligence. Others will call it automation. The nomenclature doesn’t matter nearly as much as the benefit it provides to the average investor.

Here is how it works:

A key difference between buying the traditional S&P 500 index vs the same individual stocks via direct indexing is that an investor can now use tax-loss harvesting to significantly decrease their capital gains tax when they ultimately sell the exposure.

So why is this important?

Tax-loss harvesting previously required a sophisticated team to execute and could be extremely expensive. Essentially the wealthy were the only people able to access and afford this nuanced strategy.

The innovation that has occurred over the last few years is changing that. Frec and others can introduce new investment opportunities, bring costs down, and democratize access to tools and strategies.

If you want Frec to help you with tax-loss harvesting, check them out here:

Financial markets are riddled with data, so the explosion of technology related to artificial intelligence and automation is likely only beginning. We know that large financial firms such as Citadel and others have been making billions of dollars using some of these technologies for years, so imagine what happens when mass access is created for the average investor.

My expectation is that the Robinhood effect of fractional shares and low dollar amounts was only the beginning of a financial technology revolution. As the more sophisticated technology is brought down market, not only will it lead to more interest in investing, but the financial returns that the average investor can capture will be materially increased.

With Frec, they estimate a tax-loss harvesting amount equivalent to 40% of your invested capital over a few years. So if you invest $10,000, then Frec could generate a $4,000 tax savings bill. That sounds cool, right?

Imagine when the technology is not only focused on helping reduce taxes — eventually the technology will help to generate outperformance as well.

Remember, humans are arrogant enough to believe that we can outperform machines. The machines have proven us wrong in almost all aspects of our life so far. Finance will be no different. The costs will come down, the access to tools will go up.

Technology innovation is a net positive for the world. Frec is a great example. There will be many more over time. I hope each of you has a great end to the year. My wish for everyone is that 2024 will bring abundance and happiness to your lives.

Talk to everyone on Tuesday.

-Anthony Pompliano

Joe McCann is the Founder, CEO, & CIO of Asymmetric Financial.

In this conversation, we discuss meme coins & internet culture, bitcoin vs BONK, macro environment, portfolio construction, and meaning behind “full blown depression, or dog coins to a trillion.”

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

Macro Trader Explains Bitcoin, BONK, Meme Coins, and Internet Culture

Podcast Sponsors

* Cal.com - Changing the calendar management game. Use code “POMP” for $500 off when you sign up.

* Trust & Will - Estate planning made easy. They are fast, secure, and simple to use. Get your will or trust created today.

* Auradine - A new bitcoin miner powered by the world’s first 4 nanometer silicon chip technology.

* 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 Cal.com!

What do I have in common with Chad Hurley (YouTube), Tobi Lütke (Shopify), and Alexis (776/Reddit)? We are all early investors in Cal.com and we use it instead of Calendly. 

Cal.com is the leading open-source scheduling platform, which gives you the same superpowers of efficiency previously reserved for elite corporations & tech gurus. 

Top performing teams choose Cal.com to increase business productivity, get insights on their team, and their automated workflows. 

Stop wasting your time with scheduling software that doesn’t work. Use technology to make your life easier. The best part?  Set up is quick, easy, and you will never go back to your boring calendar tool. 

Exclusive for Pomp Letter subscribers/Pomp Podcast listeners, use code “POMP” for $500 off when you set your team up with Cal.com. Save time. Save money. Use Cal.com.

To investors,

A lion stalks its prey by racing to find an area with high opportunity of finding food. The lion slows down as it arrives in the area and starts to sneak closer and closer. During this process, the lion will crouch down and continue inching forward at an undetectable pace to remain out of sight.

Once the lion believes the risk-reward is in their favor, they explode out of the crouched position and run full speed to secure their prey.

We can learn a lot from nature when trying to understand financial markets. I believe assets have been following this exact lion approach over the last four years.

Let me explain.

The asset price boom we saw in 2020 and 2021 was akin to the lion running fast from some far-away land to get close to the prey. During 2022 and 2023, asset prices then crouched down and started to inch closer to the intended target.

While most people thought there was a significant asset crash, we have had the exact opposite. Single family home prices in the US have been increasing every month for the last 9 months even though interest rates are at 5%+ and the 30-year fixed mortgage crossed over 8% during that time period.

Home prices were crouched down and inching forward without being noticed.

Stocks followed a similar pattern. Both the S&P 500 and the Nasdaq 100 are sitting at, or near, all-time highs right now.

Remember, high interest rates are supposed to destroy demand, but these stock indexes simply crouched down and inched closer while staying out of sight.

If real estate and stocks are following a lion’s lead on their crouched approach, then it is safe to assume that bitcoin and cryptocurrencies are doing the exact same. Different assets but same story. You can see that although bitcoin has not returned to the previous all-time high, the digital currency has been sneaking up on people too.

So what does this mean for 2024 and beyond?

My expectation is for the Fed to cut interest rates in the first half of the year, followed by a full return to quantitative easing by year end. The impact of interest rate cuts will heavily depend on the severity of the cuts, but it wouldn’t surprise me to see rates back in the 2-3.5% range within the next 12-18 months.

That type of tailwind should get investors even more excited about pouring capital into financial markets. As the United States returns to printing money, we are all likely underestimating how much they will need to print — there are proxy wars to fund, local governments begging the national government for financial support, a southern border that has become invisible, and national debt interest payments that have eclipsed the national defense budget.

The government needs more money, so there will be more money in the system. This is an unwritten rule of the game. When more money is chasing the same amount of financial assets, the asset prices have to explode higher.

Just as the lion pounces on their prey at the perfect moment, asset prices are poised to do the same thing in 2024.

This leads me to areas that I anticipate the highest returns to be captured. Here is a list in no particular order:

* Bitcoin should appreciate hundreds of percent from here, but I would be cautious about the 10x predictions that some are making.

* Altcoins should be the biggest winner across all financial markets — the further out you go on the risk curve of the “riskiest” asset class (crypto), the more you should be paid for the risk you take.

* Proxy bitcoin exposure, like bitcoin mining stocks and Microstrategy, will continue to perform well and likely outperform pure bitcoin exposure on the way up. You will need to be careful on the other side of this bull market because the opposite is true too on the drawdown.

* The major tech stocks will do well during this period, but the real area of opportunity is found in companies that have confused the market. Take Tesla as an example, the market believes they are a car manufacturer but they are more akin to the most advanced artificial intelligence and robotics company in the world.

* While it is not my game, there will be big money made by people betting against the weakest fiat currencies globally. The dollar milkshake theory is real and probably has only just begun.

* If you’re looking for a random opportunity to evaluate, I would point you to Brad Jacob’s new company that is going to roll up companies in the home manufacturing products industry. Jacobs’ track record is one of the best in the world and the market he is going after is very large, so with some good execution and fortune there is a solid chance he can build another multi-billion dollar company.

* I believe the mid-sized media companies, such as Buzzfeed and VICE, are going to continue to struggle over the next 1-2 years and their financial performance will reflect it.

* Lastly, bonds are going to continue to be your favorite intellectual’s choice for “safe investing” but they will ultimately be big money losers. Buying bonds over the long term usually means you failed the intelligence test.

It is important that I remind each of you that investing is hard and I am often wrong. I spend hours a day trying to understand financial markets, so I can better allocate my capital into various opportunities. You shouldn’t take any of this as financial advice, but rather thought starters to go off and do your own research.

The mainstream narrative over the last 24 months has been about a big market crash that was induced by the Fed. But just as the lion’s prey is distracted and doesn’t see the crouching lion inching closer, many market participants are picking their heads up now and realized that the lion is upon them.

The next 24 months should be fun. I wish all of you the best and hope you each accomplish whatever your goals are. Have a strong end to the year and I’ll talk to everyone tomorrow.

-Anthony Pompliano

Eric Jorgenson is the author of, “Almanack of Naval Ravikant” and “Anthology of Balaji.” He also serves as CEO of Scribe Media, and General Partner at Rolling Fund writing checks to high-tech startups.

In this conversation, we talk about his books, the process, Scribe Media, and then we dig deep into the ideas and takeaways of Balaji Srinivasan.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

Bitcoin ETF Will Usher In The Largest Marketing Blitz In Finance History

Podcast Sponsors

* Cal.com - Changing the calendar management game. Use code “POMP” for $500 off when you sign up.

* Trust & Will - Estate planning made easy. They are fast, secure, and simple to use. Get your will or trust created today.

* Auradine - A new bitcoin miner powered by the world’s first 4 nanometer silicon chip technology.

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To investors,

The citizens of America are being forced to become market speculators. Historically, some portion of the population was drawn to the idea of wagering capital to drive a return on their investment, yet a majority of individuals chose to refrain from this activity and merely save their money.

To understand the phenomenon, we must first identify a key structural change that happened in the 1970s — the United States went off the gold standard, the government became addicted to running an ever-increasing deficit, and the national debt has ballooned to $33+ trillion. This chart from Pantera’s Dan Morehead is eye-opening.

As the national debt became larger, the US government realized they had a more robust ability to devalue the currency so we theoretically could pay off a fixed debt amount with future devalued dollars. You can see a rapid decline in the purchasing power that began at the start of the 1970s.

While the devaluation of the dollar allows for debt to be paid off at advantageous terms later, even though it is unlikely that the US will ever pay off their debt, the largest negative repercussion from this decision is the erosion of citizens’ savings value. The majority of citizens were holding cash in the bank account trying to save their way to wealth, yet the government was destroying that value simultaneously.

This devaluation forced more citizens to seek paths to protect their wealth. Investment assets like stocks became a popular option because the belief has been that the stock market will outgrow any inflation implemented by the government.

So how significant was this trend?

Within 30 years, more than 50% of all US citizens owned stocks directly or indirectly. Last year the percentage of US citizens holding stocks hit an all-time high just under 60%.

The rise from 53% stock ownership in 2019 to 58% stock ownership in 2022 is largely driven by the mania ushered in from zero-interest rates and trillions of dollars in quantitative easing.

This problem is not going away.

The national debt chart looks like an exponential growth chart a Series A startup would show investors to elicit their next mega-round of funding. Up and to the right. No end in sight.

This runaway debt means the United States has no choice but to continue devaluing the US dollar. As they devalue the dollar, more citizens will seek investment assets like stocks, real estate, gold, or bitcoin to protect their wealth. We should see ownership of each of these assets, especially stocks, hit new all-time highs over and over again throughout the next decade.

At the same time more capital and investors has flooded into the public stock market, the number of public companies has been declining at an alarming rate. The folks at BlueTrust write “In 1996 the number of listed companies in the U.S. peaked at 8,090, but as of Q1 2023, it had fallen to 4,572, a drop of 43%. The chart below highlights this dramatic decrease in public companies, which occurred in spite of growth in the economy, global market expansion, and new industries and technologies.”

More capital chasing fewer companies. All this happening while the dollar, which stock prices are denominated in, continues to become less value over the long term.

This is what drives the stock market up forever. There is immense wealth to be built by simply buying stocks and letting the market structure take over from there.

If you take this analysis to the extreme, there is also more capital chasing a finite amount of bitcoin, so the same macro tailwind should work in the digital currency’s favor as well.

Investors win, savers lose. That is the story in America for the foreseeable future. Don’t get caught on the wrong side of the equation.

Hope everyone has a great day. I’ll talk to each of you tomorrow.

-Anthony Pompliano

If you enjoyed this letter, you should consider subscribing to the Pomp Letter. I write 3-5x per week and explain in simple language what is happening in the economy, financial markets, and bitcoin.

Bill Miller IV serves as CIO and Chairman at Miller Value Partners, he also serves as a Portfolio Manager.

In this conversation, we talk about the bitcoin market, ETF’s, miners, regulation, halving, stablecoins, artificial intelligence, and a non-bitcoin yield focus fund that Bill also manages.

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Bill Miller IV Explains Why He Is So Bullish On Bitcoin

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* 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.

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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,

The boom in artificial intelligence hype has created a few unlikely winners. One of the least likely is the government of Anguilla, which happens to have the country code top-level domain of “.ai” — in layman’s terms, if you want to buy any .ai domain, you have to buy it from the Anguilla government.

So how much money is this worth for Anguilla?

Amy Thorpe writes for Restofworld.org:

“The rewards from selling web addresses are considerable: Cate estimates the revenue generated by Anguilla’s .ai domain — around $3 million per month — currently accounts for around a third of the government’s monthly budget.”

The islands in the Caribbean are not the only British territory to benefit from this phenomenon. Thorpe writes:

“Following a deal with GoDaddy in 2022, some reports said Tuvalu could make $10 million per year from the .tv domain — one-sixth of its GDP. That revenue has allowed Tuvalu to pave its roads, expand electricity access for its residents, and even pay its first annual United Nations membership in 2000.”

Domain sales are equating to approximately 33% of one government’s budget and about 16% of another government’s GDP output. Wild.

This recent development is going to become more important in the coming years. Remember, many governments around the world are broke.

Some governments will try to rectify the issue by printing money until they fail. Other countries will continue hiking taxes until all the wealthy people leave. Neither of these strategies are long-term sustainable, but they are so simple that the short-term oriented politicians will pursue them with energy and passion.

A bad solution is better than doing nothing in their eyes.

I disagree. Don’t believe me they will do this? The state of California has floated the idea of raising state taxes for the highest tax bracket by up to 5%, which would push the total taxes paid by the wealthiest individuals to almost 60% if ever approved (I highly doubt they can rally support for this extreme measure). That means you don’t start working for yourself until August each year!

But even if California can’t get the egregious tax proposal passed, they are already quite onerous in their tax treatment of citizens. Tanza Loudenback writes for Business Insider:

“California has the highest marginal tax bracket for individuals at 12.3%. It also assesses an additional 1% tax on income exceeding $1 million. California also one of the highest-tax states for corporations, which pay a flat 8.84% tax on net taxable income.”

Add in the fact that a mansion tax that charges an extra 4% - 5.5% for homes sold above certain price points went into effect in Q2 2023 and it becomes obvious that California is looking under every couch cushion for more revenue.

They are not alone as a state though.

New York is also trying new things to drive additional tax revenue. The craziest one is a “congestion tax” in Manhattan, which is the first congestion tax introduced in the United States. How does it work? If you drive into the main business area during work hours on weekdays you are hit with a brand new tax ($15 for passenger cars and up to $36 for trucks). The goal is to raise billions of dollars in revenue with this measure.

California and New York may be on the tip of the spear for new tax revenue opportunities, but they both have also seen a major exodus of wealthy residents in the last three years. Not a good situation. The more people that leave, the more ridiculous the taxes need to become, which drives even more people out in a crazy feedback loop.

If we take a look at governments printing their way out of the problem, we don’t have to look any further than the US government. Our national leaders have helped 10x the Federal Reserve’s balance sheet since the Global Financial Crisis.

Think about that for a second — we have increased the balance sheet ten-fold in about 15 years. That seems unsustainable.

This brings me to what I believe governments should be doing: creating products and services that people are willing to pay for. Does this sound unrealistic? We have examples where it is working.

Florida’s Brightline, which is privately owned but could easily have been built and operated by the government, is growing 50% year-over-year and has reportedly achieved profitability. The MTA in New York was generating over $9 billion in revenue before the pandemic.

Why are these services generating so much revenue? Because they solve a problem for the citizens of that geography.

Singapore and Dubai have both become international economic hubs by embracing the ideals of capitalism, free markets, and low taxes. These governments understand that product that people want and worked diligently to provide it.

This is what governments should be spending more time on. We don’t need them trying to compete with private companies, but rather finding the things that governments are uniquely positioned to do and then doing those things at a world-class level.

The governments who found themselves holding TLDs for “.ai” or “.tv” domains may not have planned their good fortune, but they are definitely taking advantage of it.

Hopefully other governments figure out how to do the same. If not, math will win and governments will end up needing to be bailed out. That is a bad situation for everyone.

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

-Anthony Pompliano

If you enjoyed this letter, you should consider subscribing to the Pomp Letter. I write 3-5x per week and explain in simple language what is happening in the economy, financial markets, and bitcoin.

Danny Masters is a bitcoin pioneer and the Executive Chairman at CoinShares, a European leading alternative asset manager specializing in digital assets.

In this conversation we talk about prior bull markets, bitcoin outlook for 2024, bitcoin ETF, regulation, macro economy, CoinShares, and Danny reveals a surprise at the end.

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Danny Masters Outlines His Bitcoin Strategy

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* 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 Cal.com!

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To investors,

Markets like certainty. This has been a major takeaway from the last few years of investing. A great example is what happened in the bitcoin and cryptocurrency industry after major events with cryptocurrency exchange CEOs.

David Pakman, Managing Partner of Coinfund, shared this chart with me recently:

It is the price of bitcoin, with each blue vertical line representing when a major crypto exchange CEO was ousted from their role — from left to right: Arthur Hayes of BitMEX, Sam Bankman-Fried of FTX, and CZ of Binance.

Shortly after each of these CEOs departed, markets rallied aggressively.

This chart shows that capital had been sitting on the sidelines, but once there was clarity in the market, investors deployed the capital and drove the price of bitcoin higher.

This phenomenon is not exclusive to crypto markets though.

Federal Reserve Chairman Jerome Powell gave a speech revealing the central bank’s plan to cut interest rates in 2024. The market has long been speculating on when these interest rate cuts would take place, but the Fed had remained committed to higher interest rates for a longer period of time in all of their communication until yesterday.

So what happened?

The market got certainty and investors deployed capital into the market. We saw the Nasdaq-100 hit an all-time high in after-hours trading. The S&P 500 is sitting near the all-time high level as well. Bitcoin jumped 3% on the news. Apple hit a new all-time high. The list goes on-and-on.

If I had told you that the Fed would crank interest rates at the fastest pace in history, yet the S&P 500 would be up 23% for the year, you wouldn’t have believed me.

If that wasn’t crazy enough, the S&P is on track this year to outperform the S&P in 2020. Interest rates are over 5% today, but they were dropped to 0% in 2020. That shouldn’t happen in financial markets, but here we are.

Investors hate chaos, uncertainty, and a lack of predictability. This is why the Fed spends so much time thinking about what words are used in a press conference or what information they are leaking to the press.

Plenty of uncertainty remains going into 2024 — will we have a recession? Will the Fed follow through on their plan to return to loose monetary policy? How will the geopolitical conflicts in Ukraine and Israel impact US monetary and fiscal policy? Will China make a move on Taiwan? Can consumers continue to spend at record levels without wages materially increasing? What happens to the housing market, which has reached the most unaffordable level in 40 years?

I don’t have answers to these questions. Investors have to consider each of them carefully. But fortunately, the Fed is still the big dog in financial markets. If the Fed cuts interest rates, and likely returns to quantitative easing as well, then asset prices are going to rip higher.

And if our current starting point is at, or near, all-time high levels, then we are going to see some fairly ridiculous return percentages posted in the next 24 - 36 months.

Hopefully this letter serves as a warning for you to consider the phase change we are undergoing right now and how it will impact your portfolio. The decisions you make today will likely determine your returns for the coming years.

Hope everyone has a great day. Talk to you soon.

-Anthony Pompliano

If you enjoyed this letter, you should consider subscribing to the Pomp Letter. I write 3-5x per week and explain in simple language what is happening in the economy, financial markets, and bitcoin.

Kevin Erdmann is one of the most interesting analysts when it comes to the US housing market. He writes on Substack at kevinerdmann.substack.com. He also has 2 books, called “Shut Out” and “Building from the Ground Up: Reclaiming the American Housing Boom.”

In this conversation, we go through ideas on how to make housing more affordable, how we get here, Federal Reserve, who is responsible, and solutions.

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Kevin Erdmann Explains Why Housing Is So Unaffordable

Podcast Sponsors

* Cal.com - Changing the calendar management game. Use code “POMP” for $500 off when you sign up.

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* Auradine - A new bitcoin miner powered by the world’s first 4 nanometer silicon chip technology.

* 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

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To investors,

We are on the precipice of one of the largest marketing blitzes in the history of financial markets. The bitcoin spot ETF is rumored to gain approval in early January 2024, which will kick off a global competition between financial heavyweights for billions of dollars in assets under management.

Let’s dive into some of the numbers.

When the ETF is approved, it is likely that $50 billion - $100 billion will flow into the various funds within the first 12 - 24 months. The approval of a futures bitcoin ETF was the fastest growing ETF in history, with approximately $1 billion invested into the fund in the first 48 hours, so we should see quite a bit of exuberance around the spot bitcoin ETF.

Additionally, Grayscale’s GBTC had about $40 billion market cap in the 2021 bull market. Even though it was a less ideal trust structure, this signified how much investors wanted bitcoin exposure via public markets.

Given these prior data points, we can assume the $50 billion - $100 billion number for ETF inflows. GBTC currently charges a 2% management fee. ProShares charges 0.95%. Let’s handicap the probable fee structure at a 1% management fee for easy numbers. This means $500 million to $1 billion is up for grabs in annual revenue to the winners of the ETF asset race.

What would you do if you were the ETF issuers that get approved?

Spend an insane amount of money to capture as much market share as you possibly can. We know from previous ETFs and markets that ETF AUM tends to be fairly sticky. Once a clear winner has been established, it tends to keep the dominant position.

Liquidity begets liquidity. Assets attract assets.

This is why I believe we will see the most insane marketing blitz in the history of financial markets in 2024. In my estimation, asset managers will collectively spend $100 million or more trying to woo investors and capital to their respective ETFs.

There will be PR wars waged on the front pages of financial media. CEOs will be paraded around television news outlets as much as possible. There will be TV commercials. Super Bowl ads. Full page takeovers of newspapers. A flood of content on every social media platform. And billboards everywhere.

Finance has never seen what is about to happen.

But the reward is not only $500 million to $1 billion. The reward is that amount of money EVERY YEAR for the foreseeable future. Sure, there will be fee pressure over time, but for the next 5+ years, the ETF winner is going to capture billions of dollars in revenue.

How much would you spend on marketing to capture $1 billion in annual revenue?

A lot.

We are about to find out the exact answer for BlackRock, ARK, Fidelity, Bitwise, and many others. The blitz is coming. It will be so epic that you will be tired of the ads. Everywhere you turn, someone will be asking you to invest in the bitcoin ETF.

This is what bull markets are made of. And bitcoin is poised to benefit.

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

-Anthony Pompliano

If you enjoyed this letter, you should consider subscribing to the Pomp Letter. I write 3-5x per week and explain in simple language what is happening in the economy, financial markets, and bitcoin.

Anthony Pompliano sat down with CNBC's Talia Kaplan.

Topics include Federal Reserve, financial markets, interest rates, bitcoin, why he expects capital to flow into the asset class, and why he believes bitcoin bull market has begun.

Listen on iTunes: Click here

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Anthony Pompliano’s Full Interview with CNBC

Podcast Sponsors

* Cal.com - Changing the calendar management game. Use code “POMP” for $500 off when you sign up.

* Trust & Will - Estate planning made easy. They are fast, secure, and simple to use. Get your will or trust created today.

* Auradine - A new bitcoin miner powered by the world’s first 4 nanometer silicon chip technology.

* 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