The Pomp Letter

To investors,

The Grayscale Bitcoin Trust (GBTC) is the single largest bitcoin fund in the world. With more than $19.25 billion in AUM, they hold over 640,000 bitcoin inside the fund. The fund’s AUM was over $40 billion before bitcoin’s recent 2022 price drawdown.

Many people may not realize though — GBTC was a major driver in bitcoin’s increase in price from ~ $10,000 in October 2020 to $64,000 in March 2021. Without getting too deep into the details, GBTC does not have a redemption functionality.

This means that you could go to Grayscale and give them money in the private market. They would take your money to go purchase bitcoin for the fund. In return for your money, Grayscale would give you shares in GBTC under one condition — you were not allowed to trade those shares for 6 months.

So a bunch of very smart investors started giving Grayscale millions of dollars in the private market. But why would they do that? Well, at the time, if you gave Grayscale $1 in the private market, then waited for 6 months and 1 day, you would be able to sell that sale at a premium in the stock market for approximately $1.20. This means that the GBTC shares were trading at ~ 20% premium to the value of bitcoin in the fund (NAV).

You can easily understand why so many people were giving them money to exploit this detail. Here is Grayscale’s bitcoin holdings over the years and the ramp up in 2020-2021 is very obvious.

The premium percentage went up and down, including reaching as high as 40% at one point, but it was always positive. It doesn’t take a genius to understand that giving someone $1 and being able to sell it for $1.20 about 6 months later is a good investment. This wasn’t risk-free though, so what was the risk?

What happens if so many people realize that you could do this that the premium went away and eventually became a discount? That couldn’t happen, right? You guessed it — it happened.

Grayscale’s Bitcoin Trust now trades at a 30% discount to the value of the fund. No one wants to give Grayscale $1 and get $0.70 for it 6 months later, so the fund has stopped taking inflows at the moment.

Now here is where things get a little weird. Grayscale has about $20 billion of assets (at current BTC price) sitting in a fund, but the shares are trading at 30% less than that value. So if you’re holding the shares, which have gone done significantly, you would just want to tell Grayscale “hey, I’ll give you my shares and you give me back the equivalent bitcoin.”

That sounds like a good idea but Grayscale doesn’t have a redemption feature. This is one of the big reasons why the company has been spending so much time trying to get the SEC to approve a conversion from the trust structure to a bitcoin spot ETF structure. If they are successful, investors will rush to buy the shares at a discount so they can redeem the bitcoin, which is worth more, driving a profit. As more investors buy the shares, the price will go back up towards the value of the fund and everything in the world will be good again.

The problem is that the SEC hasn’t been too interested in this idea. SEC Chairman Gary Gensler and his team have approved bitcoin futures ETFs in the United States, but there is no bitcoin spot ETF yet. Other countries have them. The United States does not though.

So this brings me to a development yesterday that is very interesting. There is a man named Robert Whaley who wrote a letter to the SEC about the Grayscale ETF conversion issue. He isn’t just a random guy, but rather Whaley created the Cboe Volatility Index (VIX) in the early 1990’s. It would be an understatement to say that Robert Whaley understands financial markets, indexes, and trading products or structures.

He highlighted the main reason for his letter when he wrote:

“Bitcoin is a new asset class. Its usefulness arises from the fact that its returns are relatively uncorrelated with traditional asset classes like stocks and bonds, thereby providing more efficient return-risk opportunity. Bitcoin ETPs are an effective mechanism for investing in bitcoin. Public demand for such investment tools is evidenced by the launch of ProShares bitcoin futures-based ETF (BITO) in October 2021. In its first 1 day of trading, its assets under management (AUM) reached more than $1B, one of the most successful product launches in the 30-year ETP history. However, as further described below, futures-based bitcoin ETFs like BITO are a much more costly and inefficient way for investors to access bitcoin compared to what would be a more transparent and well-designed spot-based bitcoin ETP like GBTC. And because the Commission has already approved futures-based bitcoin ETFs, it must implicitly be comfortable with a spot-based bitcoin ETP like GBTC.”

Robert’s argument breaks down into three distinct categories:

* Index construction

* Market depth and liquidity

* Product design

The first argument on index construction is quite simple. “Two bitcoin indexes are relevant to this discussion: the CME CF Bitcoin Reference Rate (BRR) that underlies the CME’s bitcoin futures contract and the CoinDesk Bitcoin Price Index (XBX) that underlies GBTC described in the NYSE application.” In his analysis, Whaley shows that there is no difference between the two indexes in regards to the index construction.

Next up was market depth and liquidity. Here Whaley shows that the bitcoin spot market is drastically more liquid than the futures market. Not really a surprise to anyone, but these two sentences stuck out to me: “In terms of USD value, the market cap in the CME’s bitcoin futures market averages less than one-quarter of one percent of the bitcoin spot market. The dollar trading volume of bitcoin futures averages about 5.5%.”

On product design, Whaley makes it very clear that his analysis concludes the bitcoin spot ETF would do a better job of giving investors the exposure they are seeking: “The GBTC ETP price is inextricably linked to the price of bitcoin because it holds actual bitcoin. The conversion/redemption arbitrage process will ensure it. There is no equivalent claim that can be made for the futures-based bitcoin ETFs, however.”

Makes sense, right? Robert Whaley ends his letter with a synopsis of why Grayscale’s Bitcoin Trust should be approved in his opinion:

“The three key elements that cause me to strongly endorse the NYSE Arca application to list and trade shares of GBTC under NYSE Arca Rule 8.201-E as a spot bitcoin ETP are: (a) the XBX bitcoin index that GBTC is priced on is virtually a perfect substitute for the BRR index that underlies the return-risk exposure for the futures-based ETFs that the Commission has already approved, (b) the bitcoin spot market is vastly deeper and more liquid that the bitcoin futures market, and (c) the product structure is much more transparent and well-designed.”

I have no clue what is going to happen with the Grayscale conversion to an ETF. I hold bitcoin personally and I hold GBTC in a retirement account. From an uneducated viewpoint, the exposure to bitcoin has been superior to the exposure to GBTC. According to a number of studies, if the SEC was to approve Grayscale’s conversion, they could unlock approximately $8 billion of economic value for Grayscale investors. It will be fascinating to watch this play out.

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

-Pomp

If you are not a subscriber of The Pomp Letter, join 220,000 other investors who read my personal opinion on finance, technology, and bitcoin each morning.

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In this conversation my brother, John Pompliano, breaks down the business of Walmart and their recent earnings report. Is Walmart in trouble with their sales? John explains Walmart's history, why the founders who aren't involved anymore so wealthy, and the future prospects for this behemoth retail business.

Listen on iTunes: Click here

Listen on Spotify: Click here

How To Get A Job During A Recession

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These companies make the podcast possible, so go check them out and thank them for their support!

* Fundrise is largest direct-to-investor real estate investment platform. Go to Fundrise.com/Pomp today and get $10 when you place your first investment. 

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* Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. Download the Brave privacy browser at brave.com/Pomp today.

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* FTX US is the safe, regulated way to buy digital assets. Trade crypto with up to 85% lower fees than top competitors by signing up at FTX.US today.

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in digital assets inside your IRA. Visit choiceapp.io/pomp 

* BlockFi provides financial products for crypto investors. Those products include BlockFi Wallet, no fee Trading, crypto collateralized Loans and the World's First Crypto Rewards Credit Card. To get $75 back on the first swipe of your BlockFi Rewards Credit Card, sign up today at http://www.blockfi.com/Pompcc 

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

* Okcoin is the first licensed exchange to bring new cryptos to market. To get started, and go to okcoin.com/pomp 

* Exodus is the world’s leading desktop, mobile, and hardware crypto wallets, with over 150 assets. Founded in 2015 to empower people to control their wealth. Visit http://exodus.com/pomp today.

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

If you are not a subscriber of The Pomp Letter, join 220,000 other investors who read my personal opinion on finance, technology, and bitcoin each morning.

To investors,

President Joe Biden is hosting Federal Reserve Chairman Jerome Powell at the White House for a meeting on inflation. Alister Bull of Bloomberg reported the gravity of the situation by writing:

“President Joe Biden will hold a rare Oval office meeting on Tuesday with Federal Reserve Chair Jerome Powell amid the highest inflation in decades, which has angered Americans and hurt his standing with voters.

The two will discuss the state of the American and global economy, according to a White House statement. It’s the first meeting between the two since Biden in November announced his intention to nominate Powell for a second term at the helm of the US central bank, according to a record of the Fed chief’s public schedule which is available through March.”

The idea of high inflation is hard to comprehend until you start looking at the data through the lens of an average American family. First, gasoline prices are at all-time high price levels.

Asking people to pay nearly $4.50 per gallon is crazy, but that is just the national average. Some folks in California are paying more than $7 per gallon currently.

Eating food at home is not doing much better. According to the US Department of Agriculture and CPI data, food prices are up 10.8% and they are expected to continue to rise through the rest of 2022.

The level of food price inflation varies depending on whether the food was purchased for consumption away from home or at home:

The food-away-from-home (restaurant purchases) CPI increased 0.6 percent in April 2022 and was 7.2 percent higher than April 2021; and

The food-at-home (grocery store or supermarket food purchases) CPI increased 1.3 percent from March 2022 to April 2022 and was 10.8 percent higher than April 2021.

Food price increases are expected to be above the increases observed in 2020 and 2021. In 2022, food-at-home prices are predicted to increase between 7.0 and 8.0 percent, and food-away-from-home prices are predicted to increase between 6.0 and 7.0 percent. Price increases for food away from home are expected to exceed historical averages and the inflation rate in 2021.

The average American worker already received a 2.4% pay cut in 2021 due to high inflation and wage growth that couldn’t keep up. Now add in accelerating costs of gasoline and food to get a really dire financial situation.

This brings me to the meeting today between President Biden and Fed Chairman Powell. It is no secret that high inflation is a problem for a sitting US President, especially during a year of midterm elections. The looming risk of a recession driven by the Fed’s increasing interest rates can’t make the President comfortable either. Usually economies have to choose between inflation or recession in these scenarios, but the consensus is that we are going to get both in a bout of stagflation.

So why is this meeting noteworthy?

A central bank must be both (a) independent and (b) predictable in order to be effective. We already know that the Federal Reserve is unpredictable — you just have to look at the billions of dollars that are wagered on every FOMC press conference results. It is wild that in the 21st century we are all watching a human speak at a podium in order to figure out a big reveal with our monetary policy. That isn’t exactly predictable in advance.

But the Federal Reserve has always claimed to be independent. When President Trump was aggressively tweeting at the Fed to devalue the dollar, the Fed claimed to be independent of political pressures. Now we have President Biden holding a rare Oval Office meeting with the Fed Chairman. No one believes they are simply going to have tea, chit-chat, and catch up on their weekend plans. President Biden is likely to deliver a message to Powell that he has to get inflation and economic growth in the right place.

So much for the central bank being independent.

This is equivalent to a teacher being called to the principal’s office. The teacher has all the control and leadership in their classroom, but that disappears in the principal’s office. Chairman Powell….welcome to Principal Biden’s office.

We are watching a perfect example of why I personally choose to store majority of my wealth in bitcoin as a savings technology. The digital currency’s monetary policy is programmatic. It is written into code, can be audited by anyone at any time, and is not controlled by any one person or group. Bitcoin is an automated central bank with a programmatic monetary policy. It is completely insulated from any political pressure. No change of demand, in either direction, affects the supply. Bitcoin is the most independent central bank in the world.

That detail doesn’t sound important when things are going well. But when you compare bitcoin to the current chaos of human-led monetary policy, bitcoin’s monetary policy looks incredibly attractive. Plenty of critics will point to the recent decline in bitcoin’s USD exchange price (~ 60%), but they will forget to mention that bitcoin is up almost 400% since the start of the pandemic and the US dollar is down double digit percent in purchasing power terms.

Bitcoin has outperformed stocks, bonds, currencies, and commodities during the most insane monetary and fiscal policy situation of our lifetime. There is no single perfect asset. Everything is relative. And if you could rewind history two years, you would dump every other asset in your portfolio and move into bitcoin, both for safety and for asymmetry. Bitcoin is the apex predator asset of the financial markets.

Short term price movements will distract many people from the true innovation — digital sound money. There are more than 150 million people around the world that have adopted bitcoin and the key underlying fundamental data continues to move up and to the right. Slowly, but surely, we will watch as the rest of the world begins to realize the signal among the noise. Bitcoin is doing exactly what it was designed to do. The legacy system and its players are just highlighting bitcoin’s superiority by absolutely losing their minds.

Stay safe out there my friends. No one wants to be called into the principal’s office. Talk to you tomorrow.

-Pomp

If you are not a subscriber of The Pomp Letter, join 220,000 other investors who read my personal opinion on finance, technology, and bitcoin each morning.

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Alex Kruger is an Economist and Trader.

In this conversation, we discuss the macro environment, how the Feds actions are deciding the market, how Alex trades in this economic environment, converting to trading 100% Crypto, and what may happen to Bitcoin & Crypto in the coming months.

Listen on iTunes: Click here

Listen on Spotify: Click here

ECB Will Drop Their Negative Interest Rate Strategy

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Fundrise is largest direct-to-investor real estate investment platform. Go to Fundrise.com/Pomp today and get $10 when you place your first investment. 

* Unstoppable Domains’ 10 NFT domain endings are now fully integrated with Trust Wallet. Claim your Unstoppable Domain here today.

* Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. Download the Brave privacy browser at brave.com/Pomp today.

* BetOnline allows you to use Bitcoin and other altcoins to bet on sports, casino games, horse racing, poker and more. Click here and use PROMO CODE: POMP100 to receive a 100% matching bonus on your first crypto deposit. 

* Abra lets you trade, borrow, and earn interest on crypto. Earn up to 13% interest on USD stablecoins or crypto, borrow USD stablecoins, and trade in 110+ cryptocurrencies in a simple, secure app. Download Abra and get $15 in free crypto when you fund your account.

* FTX US is the safe, regulated way to buy digital assets. Trade crypto with up to 85% lower fees than top competitors by signing up at FTX.US today.

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in digital assets inside your IRA. Visit choiceapp.io/pomp 

* BlockFi provides financial products for crypto investors. Those products include BlockFi Wallet, no fee Trading, crypto collateralized Loans and the World's First Crypto Rewards Credit Card. To get $75 back on the first swipe of your BlockFi Rewards Credit Card, sign up today at http://www.blockfi.com/Pompcc 

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

* Okcoin is the first licensed exchange to bring new cryptos to market. To get started, and go to okcoin.com/pomp 

* Exodus is the world’s leading desktop, mobile, and hardware crypto wallets, with over 150 assets. Founded in 2015 to empower people to control their wealth. Visit http://exodus.com/pomp today.

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.

*See important disclaimer 

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,

Asset prices have been drawing down in every market over the last few months. You can see it in stocks, bonds, real estate, commodities, and crypto. There have been numerous people warning business owners and founders of technology startups to prepare for a tough economic environment.

This usually entails cutting costs, taking on outside investment, and focusing on profitability. The average small business is well prepared for these situations because profitability is the name of the game in good times or bad times. Technology startups have a different approach, which usually allows them to lose money for a period of time before they find product-market fit and profitability.

So the technology companies are the ones who will have a tough time over the next few months if they can’t get access to new investment. But as the saying goes, beggars can’t be choosers. Raising new capital during a market downturn can be excruciatingly painful. There is heavy dilution and unfavorable terms. Venture capitalists are price makers and founders are price takers.

This isn’t the only path though.

With the recent rise in subscription revenue products, both consumer and enterprise, there has been the creation of a new financing option for founders as well. Pipe, and other companies like them, allow founders to access non-dilutive capital by using their recurring revenue as an asset. I am not an investor in the company, but I am friends with the founder Harry Hurst and have been working with Pipe on the podcast for awhile now.

I asked the company to put together an overview of how founders can access this non-dilutive funding during these severe market downturns. Here is that overview:

2022 has started out to be a wild year for founders and business owners. From the Fed raising interest rates and possibly planning to raise them again, to economists talking about impending recession, to valuations shrinking and VCs cutting back on deployment, the funding environment is very different than where we were just a year ago. But even with all that change taking place, there are some great opportunities for companies to grow if they can access the financing they need to make it happen. Alternative finance may just have the answer for that. 

What you can’t control

When the growth of your company depends on external financing, all the above factors can be massively disruptive. They can lead to paying a much higher interest rate than you otherwise would, raising a down round where you give up too much equity for too little capital, or even putting growth on hold because you’re not able to access capital at all.  

All those environmental factors are outside your control. For example, while you can work harder to convince VCs of your company's value, you can’t change the overall climate of valuations in your industry or the wariness of VCs to part with cash right now. It’s an uphill battle at best. But there is one factor you can control—and one which you work to control each and every day as part of running a company—your revenue.  

What you can control

If your business is healthy and generating predictable revenue, you’re in a very good position to grow, especially if that revenue is recurring. Recurring revenue models like subscriptions and memberships are becoming more popular across almost every industry because they give customers convenience and they give companies predictable revenue streams. In fact, these streams are so reliable that they’ve become an asset class in their own right. And that asset class is the foundation of a new financing model—recurring revenue financing. 

What is recurring revenue financing 

Recurring revenue financing (RRF) capitalizes on the health of your business and the predictability of your recurring revenue assets. It allows you to trade your revenue streams for up-front capital so you can grow faster. To see how this works, let's talk about what recurring revenue financing is NOT. 

It’s not a loan. Loans involve borrowing money and repaying with interest, often using your assets as collateral. Instead of borrowing, recurring revenue financing (like what we offer on the Pipe platform) is actually the sale of future revenue for cash up front (at a slight discount). Investors love the steady, fixed-income-like returns, which helps keep the discounts low. Pipe uses a two-sided trading platform, so institutional investors actually bid on your anonymized revenue, which keeps the costs even lower. 

It’s not dilutive equity financing. When you trade your revenue streams, you’re trading just that—the revenue. You maintain complete control of your company and never dilute your equity. This also means the amount of financing you can access isn’t limited by valuations because investors aren’t buying a piece of the company. Your trading limits are based on the health of your business and the amount of recurring revenue you have, so you can trade more as your business continues to grow. And if you are looking to raise an equity round in the future, you can use recurring revenue financing to grow your business and your valuation and extend your runway until conditions are right for you to raise the round you really want.     

When is recurring revenue financing right for you?

Equity and debt financing both have their place. Banks and VCs are all focused on making the kinds of investments that are right for them, which may not always be right for you. If you’re pre-revenue and trying to turn a great idea into a viable business, a VC who focuses on your industry and believes in your vision is probably going to be the best fit. If you have good revenue and cash flow but don’t have recurring revenue, some sort of loan product might be the right fit. 

While equity and debt financing can work at the right time, they’re not always a good idea. Many VCs and lenders work only with specific industries, and both are tied directly to the current market conditions, as we’ve already discussed. For healthy businesses with recurring revenue—and I mean any type of recurring revenue, not just SaaS (D2C, service businesses, real estate, insurance, etc.—trading that revenue can be the perfect hedge against an unpredictable market. Regardless of what central banks do, you can finance your growth based solely on your business’s health. And regardless of what valuations look like or how VCs are deploying capital, you can access the cash you need to keep growing and investing in hiring, marketing, geo expansion, or whatever path you see fit to scale your business. 

And right now Pomp readers can get trade fees waived for 12 months via pipe.com/pomp 

Every company is going to have to prepare for the market downturn. Maybe it comes or maybe it doesn’t. Maybe it as severe as some are predicting or maybe it isn’t. Either way, you need to understand the options available. Hopefully this is helpful to a few of you who are spending your time, money, and energy trying to build solutions to our hardest problems. Keep going. We all need you to succeed.

Talk to everyone tomorrow.

-Pomp

THE RUNDOWN:

A16z Addresses Downturn in Inaugural State of Crypto Report: Noted venture capital firm Andreessen Horowitz has released its inaugural State of Crypto report that includes cyclical information relevant to the current downturn, according to draft materials provided to CoinDesk. Other key takeaways were related to Web 3 benefits and Ethereum’s continued blockchain dominance. Read more.

Coinbase Pares Back Hiring Plans Amid Weak Earnings, Poor Market Condition: Crypto exchange Coinbase (COIN) will slow down hiring and reassess headcount needs as the broader crypto market sees a downturn, the firm said in a note to employees. “We’re slowing hiring so we can reprioritize our hiring needs against our highest-priority business goals,” said Emilie Choi, president and chief operating officer at Coinbase, in the note. Read more.

Elon Musk Says Twitter Deal ‘Cannot Move Forward’ Until He Has Clarity on Bot Numbers: Elon Musk said his $44 billion purchase of Twitter will not move ahead until he has more clarity on how many accounts are fake. Twitter estimated in a filing earlier this month that fewer than 5% of its monetizable daily active users — known as mDAUs — during the first quarter were bots or spam accounts. But Musk estimates that around 20% of the accounts on Twitter are fake or spam accounts and he’s concerned that the number could be even higher. Read more.

S&P Global Ratings Forms DeFi Group to Build Out Crypto Framework: S&P Global’s ratings division has created a Decentralized Finance strategy group to help build the company’s decentralized market framework for investors. Chuck Mounts will lead the group as chief DeFi officer, and will work closely with the newly-appointed head of DeFi transformation, Charles Jansen, according to a statement Monday. The team seeks to build out S&P’s analytics and risk assessment capabilities for both traditional finance and DeFi clients. Read more.

Ric Edelman is the author of the new book "The Truth About Crypto" and is the #1 Independent Financial Advisor in the country.

In this conversation, we talk about the macro environment, Bitcoin, why Ric pivoted to focus on Crypto, the role of Cryptocurrencies in an individual's portfolio, and why the invention of the Blockchain is one of the greatest human inventions of all time.

Listen on iTunes: Click here

Listen on Spotify: Click here

Bitcoin On-Chain Breakdown From This Past Week:

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Fundrise is largest direct-to-investor real estate investment platform. Go to Fundrise.com/Pomp today and get $10 when you place your first investment. 

* Unstoppable Domains’ 10 NFT domain endings are now fully integrated with Trust Wallet. Claim your Unstoppable Domain here today.

* Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. Download the Brave privacy browser at brave.com/Pomp today.

* BetOnline allows you to use Bitcoin and other altcoins to bet on sports, casino games, horse racing, poker and more. Click here and use PROMO CODE: POMP100 to receive a 100% matching bonus on your first crypto deposit. 

* Abra lets you trade, borrow, and earn interest on crypto. Earn up to 13% interest on USD stablecoins or crypto, borrow USD stablecoins, and trade in 110+ cryptocurrencies in a simple, secure app. Download Abra and get $15 in free crypto when you fund your account.

* FTX US is the safe, regulated way to buy digital assets. Trade crypto with up to 85% lower fees than top competitors by signing up at FTX.US today.

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in digital assets inside your IRA. Visit choiceapp.io/pomp 

* BlockFi provides financial products for crypto investors. Those products include BlockFi Wallet, no fee Trading, crypto collateralized Loans and the World's First Crypto Rewards Credit Card. To get $75 back on the first swipe of your BlockFi Rewards Credit Card, sign up today at http://www.blockfi.com/Pompcc 

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

* Okcoin is the first licensed exchange to bring new cryptos to market. To get started, and go to okcoin.com/pomp 

* Exodus is the world’s leading desktop, mobile, and hardware crypto wallets, with over 150 assets. Founded in 2015 to empower people to control their wealth. Visit http://exodus.com/pomp today.

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 was a very large crypto conference hosted by FTX and SALT in the Bahamas last week. I thought it would be interesting to have a conference attendee share their perspective from the ground — here are Sherjan Husainie’s notes from the conference:

Summary

Crypto Bahamas was a high-filter and high-ROI event in the Web3 space. Given the partnership of FTX and SALT (Anthony Scaramucci), it attracted all the tier-1 players in the space: including investors, projects, researchers, and talent.

Key themes coming out of the event were as follows:

* Momentum: Web3 is not the future, it has already arrived. Leading brands are not just leaning in, they are doubling down.

* Talent: there is a one-way street for talent from traditional industries such as finance, consulting, and mature tech heading into Web3.

* Regulation: policy-makers have taken notice, are peeling the onion, and getting smarter about the space. Many geographies are competing to take the crown of being “Web3-friendly.”

* Investment: top Web3 funds are deploying capital fast, and non-Web3 funds, hedge-funds, and family offices, are carving out allocations to invest in the space.

* Velocity: the space is moving at light-speed, staying out-of-sight means being out-of-mind. Having a presence digitally and physically builds relationships.

Momentum

Web3 is not the future, it has already arrived. Leading brands are not just leaning in, they are doubling down.

Web3, only a few months ago, was a space most tier-1 brands and celebrities were hesitant to partner with. Now, that mindset has flipped and brands are doubling down to partner with leading Web3 projects. Companies like Mercedes-AMG Petronas Formula 1 team, Miami Heat, Major League Baseball, Tom Brady, and Bill Clinton, who historically have been very protective of their brand, are now wearing the Web3 badge on their chest.

They are not simply sponsors taking the money, they are joining boards, being part of strategy, leading the conversation, and opening doors. This is bringing in a lot of consumer and enterprise interest into the space, giving it the momentum it needs. From a traditional enterprise perspective, brands such as Mercedes-AMG Petronas Formula 1 mentioned that when so much capital was flowing from the Web3 space towards traditional companies, it was hard to say no. But, as they dug in more, they realized the opportunity is much larger in the innovation, technology, and the experiences that can be offered to their millions of fans through Web3. The Washington Nationals, for example, used a DAO to get their fans’ approval on a recent contract. As the space grows, all brands will unlock new and unique experiences through Web3 platforms. The question is not of if, it is of when.

Talent

There is a one-way street for talent from traditional industries such as finance, consulting, and mature tech heading into Web3.

Almost every person at the Crypto Bahamas conference came from a tier-1 traditional industry background. This was apparent across all sectors. Young and experienced professionals from leading tech companies to private equity and hedge funds, are all pouring into Web3 and not leaving. The mindset at the conference of joining Web3 wasn’t that of getting a better pay package, but leaned more towards the fact that this industry offered a better experience, a greater opportunity, unlimited growth, is borderless, and simply is just more fun to be in. During the 2000’s, the best places for people to work were firms like Goldman Sachs and McKinsey & Co., then, in the 2010’s it changed to companies like Google and Facebook. Now, in the 2020’s there is a new movement and it is all about joining Web3. We expect this flow of talent towards Web3 to grow faster than before, making it much harder for traditional tier-1 firms to attract and retain talent.

Regulation

Policy-makers have taken notice, are peeling the onion, and getting smarter about the space. Many geographies are competing to take the crown of being “Web3-friendly.”

The government of Bahamas made it very clear that they are primed to be the most Web3-friendly country in the world. Under the leadership of Philip Davis, the nation of Bahamas is ready today for the Web3 community and is already seeing large and small Web3 companies relocate their headquarters and majority of their teams to the island nation. Companies like FTX are investing in a small campus on the island and plan to move 200 of their main employees locally. Other leading projects, such as LayerZero, have already moved their teams there, and we forecast many more would follow. From a policy-makers perspective, Tony Blair, Bill Clinton, and Andrew Yang, are well-versed in the space and found the environment similar to when the world was getting introduced to eCommerce in the early 1990’s. There were a lot of unknowns and uncertainties about the new “internet,” but policy-makers leaned in with an open mindset and let the builders build. That mindset brought in favorable regulations that helped the industry move forward. Similarly, key players like Anthony Scaramucci and Kevin O’Leary are helping push the right people on Capitol Hill and helping them pass smaller, more focused, bills to help push the industry in the right direction.

Investment

Top Web3 funds are deploying capital fast, and non-Web3 funds, hedge-funds, and family offices, are carving out allocations to invest in the space.

All top venture firms in the space attended the event with their senior leadership on site. Leading investors like Su Zhu of Three Arrows Capital, Kyle Samani of Multicoin, and Katie Haun from Haun Ventures, were all in attendance. In addition, many traditional finance hedge-funds were present and in search of alpha, some who are deeply focused on the space, such as Cathy Wood from ARK Invest, and Ryan Barney from Pantera, while others who are transitioning traditional quantitative trading strategies to be applied to Web3, such as Mitchell Dong’s Pythagoras. These funds are not just taking a look at space, but deploying capital, coming up with creative no-loss strategies, and finding unique opportunities to partner with the top projects and also the “shitcoins.”

Katie Haun, who has raised one of the largest VC funds focused on crypto, and who was one of the pioneers in going after criminals in this space, mentioned that “criminals are the best beta testers for any new technology.” She and her team are focusing their efforts on digitally-scarce assets and the innovation happening in the NFT space. She believes in the technology and less in the current iteration of it. Another key investor viewpoint mentioned at the conference was that most people when they think of Bitcoin, they think of regions like Europe and the West, but the truth is “Bitcoin is for all the countries you cannot name.” From a fund allocation perspective, investors also believed that larger institutions such as Fidelity, family offices, and even enterprise treasuries, will first flow into Bitcoin, then into other digital assets. A strong, less-volatile, Bitcoin is a must-have to strengthen confidence in the space.

Velocity

Web3 is moving at light-speed, staying out-of-sight means being out-of-mind. Having a presence digitally and physically builds relationships.

Compared to Web2 and traditional tech conferences, Web3 conferences are unique and have a life of their own. Ideas are being generated consistently and there are no bad ideas, no small ideas, no ideas worth not discussing. Everyone at the conference is open-minded, leaning in to build, and thinking about problems at scale. Even though there are some gate-keepers and shillers roaming the floors, majority of the people interacted with were thoughtful and leaning in to do more for the greater good. There is an openness to meeting new people at a Web3 conference, and having a regular presence, both digitally and physically, matters. Given the high velocity of the space and how quickly new talent is coming in, consistently being present gives you an edge. Furthermore, even though companies like FTX are considered “mature” in the space, there is enough low-hanging fruit to be picked. Many of these companies are still figuring out their own core product and there is a ton of innovation, partnerships, or value-add services that can be provided to help propel them forward.

Pomp’s note: Hopefully this review from Crypto Bahamas was valuable for each of you. Please follow the guest post author Sherjan Husainie or follow Definitive on Twitter here.

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THE RUNDOWN:

Coinbase Opens NFT Marketplace to All: Crypto exchange Coinbase (COIN) said Wednesday it has opened the beta version of its non-fungible token (NFT) marketplace to the public. The exchange unveiled the marketplace to a small group of invited users at the end of April, nearly seven months after announcing its launch in October 2021. Read more.

Bitcoin Jumps to $40,000 After Fed Chair Powell Rules Out Bigger Rate Hikes: The price of bitcoin climbed about 6% Wednesday after the Federal Reserve raised rates by half a point —the biggest hike in about 20 years — as expected. Bitcoin began climbing ahead of the end of the Federal Open Market Committee’s meeting. The half-point hike was widely expected by many. Its surge accelerated after Fed Chair Jerome Powell ruled out the possibility of a 75-basis-point increase. Read more.

Sports NFT Platform Stakes Raises $5.3M for ‘Digital Bragging Rights:’ Stakes, a non-fungible token (NFT) startup that puts a Web 3 spin on the traditional sports betting format, has raised a $5.3 million seed round led by Digital Currency Group (DCG), FBG Capital and CMS Holdings, the company announced Wednesday. (DCG is the parent company of an editorially independent CoinDesk.) The free-to-play platform is based around “social wagering,” where users can make sports predictions that are publicly available for friends and other users to wager against. Read more.

Fed Hikes Rate at Fastest Pace in 22 Years, Will Start Shrinking Balance Sheet: In a widely anticipated move, the Federal Reserve raised the official U.S. interest rate by half a percentage point, while saying it will reduce the size of its balance sheet by $47.5 billion a month for three months and going up to $95 billion a month starting in September, according to a statement Wednesday from the Federal Open Market Committee. During a press conference following the decision, Fed chair Jerome Powell also said that "50 basis points should be on the table for the next couple meetings,” and that a 75 basis-point rate hike is not something the committee is considering right now. Read more.

Nic Carter is a Co-Founder at Coin Metrics and is a Partner at Castle Island Ventures.

In this conversation we talk about all the misinformation around Bitcoin mining and present the true story around energy consumption. We also discuss the recent letter to the EPA and the what the champions of ESG get wrong in their argument.

Listen on iTunes: Click here

Listen on Spotify: Click here

Pomp Reacts: Joe Rogan Understands Bitcoin Now?

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* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in digital assets inside your IRA. Visit choiceapp.io/pomp 

* BlockFi provides financial products for crypto investors. Those products include BlockFi Wallet, no fee Trading, crypto collateralized Loans and the World's First Crypto Rewards Credit Card. To get $75 back on the first swipe of your BlockFi Rewards Credit Card, sign up today at http://www.blockfi.com/Pompcc 

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

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* Exodus is the world’s leading desktop, mobile, and hardware crypto wallets, with over 150 assets. Founded in 2015 to empower people to control their wealth. Visit http://exodus.com/pomp today.

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 retirement situation in America is dismal. According to a recent Bankrate survey, more than 50% of US workers say that they are behind on their retirement savings. At least 1 in every 3 people report that they don’t even have a retirement account.

To make the situation worse, 51% of Americans say that they have previously taken an early withdrawal from their retirement savings and the economic chaos caused by COVID-19 hasn’t helped either.

One strategy to help lessen the blow of financial duress later in life led to the creation of pension plans. The idea was that employees and employers would put money in, the investment teams would grow the money over time, and the employees would get paid out a portion of the proceeds in retirement. This is a great idea on the surface, but the main problem is that most pension plans have been drastically underperforming their target investment returns, which means that they won’t have enough money to pay retirees when the bill comes due.

According to Richard M. Ennis, a prominent institutional investment consultant who was previously CEO of the respected consulting firm EnnisKnupp and edited the prestigious Financial Analysts Journal, said in an interview with Marketwatch:

“The bottom line on public fund performance is that underperformance of 152 bps [1.52%] per year on $4.5 trillion in assets [for the 12 years ending June 30, 2020] translates to an outright waste of stakeholder value of $68 billion annually, a figure I find astonishing.”

If the public pension funds have a tough time underperforming standard benchmarks, while simultaneously missing their actuary rate of returns, there is a risk that the 25+ million Americans counting on their pension fund for retirement will get an unwelcome surprise.

So what exactly is the solution to the retirement problem in America?

I wrote a letter to each of you in December of 2018 titled “Every pension fund should buy bitcoin.” In the letter, I argued the following:

The retirement of hundreds of millions of corporate and government employees around the world depends on these pension funds’ ability to pay the individual a set amount of money post-retirement. Unfortunately, many pension funds are facing a significant crisis — it does not look like they will be able to pay their future obligations.

The difference between the obligations and the resources allocated to pay them is actually widening. This is driven by a decreasing worker to retiree ratio. Workers pay into the pension fund (think of this as revenue for the pension fund) under the promise that the fund managers will grow the capital and be able to pay the employee’s pension post-retirement. Once an employee retires, they begin to draw their pension (think of this as expenses for the pension fund) and will continue to do so until they die.

The gap between revenue and expenses is getting worse because of lower birth rates (fewer people entering the workforce) and longer life expectancy (the retirement age stays fixed so people are entitled to their pension for longer). Each of these trends is expected to continue, and possibly even accelerate, which will put additional pressure on pension funds to come up with the capital needed to fulfill their obligations.

I then went on to discuss a potential solution being the purchase of bitcoin:

If the thesis plays out how I anticipate though, an investment of 100 basis points or less would materially change the performance of each pension fund, which ultimately changes the future viability of retiring for hundreds of millions of people. These institutions have permanent, long-term capital which allows them to stomach more volatility than most investors.

For example, an investment of 1% of assets at $4,000 BTC price would yield a 25% increase in the pension’s total assets if Bitcoin reached $100,000. If a fund decided to invest 0.1% of assets, the same price appreciation would increase total assets by 2.5%.

Obviously bitcoin’s price has not yet reached $100,000, but the rise to $40,000 means that a 1% allocation would have increased a pension fund’s assets by 10% so far. This would close the underfunding gap for a large portion of pensions in the United States.

While we wait on more pensions to purchase bitcoin, there is a light at the end of the tunnel for individuals. Fidelity announced this morning that they will be the first major retirement plan to allow investors to put bitcoin in their 401k plans. According to the Wall Street Journal coverage, “Employees won’t be able to start adding cryptocurrencies to their nest eggs right away, but later this year, the 23,000 companies that use Fidelity to administer their retirement plans will have the option to put bitcoin on the menu. The endorsement of the nation’s largest retirement-plan provider suggests crypto investing is moving further into the mainstream, but it remains to be seen whether employers will embrace it for their workers.”

A quote in the article stuck out to me as well. It came from Dave Gray, head of workplace retirement offerings and platforms at Fidelity, saying:

“There is a need for a diverse set of products and investment solutions for our investors. We fully expect that cryptocurrency is going to shape the way future generations think about investing for the near term and long term.”

Whether you think bitcoin is a great investment or not, it is interesting to see that Fidelity wants to increase the optionality for clients. They realize that there is a significant problem around retirement preparation and bitcoin could provide a solution.

My guess is that we will see every retirement platform follow suit and start offering bitcoin to their clients. The older clients may refrain, but this will likely be adopted in mass by the younger generations. For better or worse, this younger generation doesn’t want to hold gold, bonds, or cash. They treat bitcoin like a reserve asset and ultimately see a big reason (inflation) to be invested fully in the market. There are few better ways to gain investment exposure than through a tax-advantaged account.

Now Fidelity may be the first large retirement plan to offer this solution, but they aren’t the first. There are options like Choice by Kingdom Trust, BitcoinIRA, and many others who pioneered this idea. This combination of incumbents and startups bringing this opportunity to market signals that the trend is only beginning.

Bitcoin is not the solution to everything and it may not be the complete solution to the retirement crisis in America, but it can definitely have a positive impact. It is encouraging to see Fidelity creating solutions to help investors pursue this path if they desire.

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

-Pomp

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THE RUNDOWN:

NFL Draft Goes NFT: Football League Releases New Collection on Polygon: The National Football League is once again dabbling with non-fungible tokens (NFT), launching a series of card-themed collectibles tied to its upcoming player draft on Thursday. The collection is live on the league’s Polygon-based marketplace, which it unveiled in November 2021 and has since been used for various playoff game ticketing promotions. The NFTs will also be given out to members of this year’s “Inner Circle” club, which includes fans selected to represent each team on draft night. Read more.

New York Lawmakers Advance Mining Moratorium Bill to Full Assembly: New York lawmakers have advanced a controversial bill that aims to put a two-year moratorium on select proof-of-work crypto mining operations in the Empire State. Members of the New York Assembly’s Ways and Means Committee considered the bill at a meeting on Monday afternoon, ultimately voting to send the bill to the floor for a vote by the full Assembly. Read more.

Twitter Accepts Elon Musk’s Buyout Deal: Twitter’s board has accepted an offer from billionaire Elon Musk to buy the social media company and take it private, the company announced Monday. The stock closed up 5.64% for the day after it was halted for the news. “Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said in a statement included in the press release announcing the $44 billion deal. Read more.

Moonbirds COO Leaves Project for New Fund – With $1M in NFTs in Tow: Ryan Carson, the chief operating officer of the popular non-fungible token collection Moonbirds, announced on Twitter on Monday that he has left the project to start his own NFT venture fund. The news garnered an immediate and negative reaction from the broader NFT community, with many voicing frustrations that Carson purchased hundreds of thousands of dollars worth of Moonbirds before his exit, possibly using insider knowledge to poach undervalued editions. Read more.

Chris Power is the Co-Founder & CEO of Hadrian, a brand new 21st Century software enabled, manufacturing facility focused on the aerospace industry.

In this conversation. we discuss building this new manufacturing model, space travel, going to Mars, Elon Musk, advancements in the aerospace industry, and the current macro economic climate.

Listen on iTunes: Click here

Listen on Spotify: Click here

My Thoughts On Elon Musk Purchasing Twitter:

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* FTX US is the safe, regulated way to buy digital assets. Trade crypto with up to 85% lower fees than top competitors by signing up at FTX.US today.

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in digital assets inside your IRA. Visit choiceapp.io/pomp 

* BlockFi provides financial products for crypto investors. Those products include BlockFi Wallet, no fee Trading, crypto collateralized Loans and the World's First Crypto Rewards Credit Card. To get $75 back on the first swipe of your BlockFi Rewards Credit Card, sign up today at http://www.blockfi.com/Pompcc 

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

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* Exodus is the world’s leading desktop, mobile, and hardware crypto wallets, with over 150 assets. Founded in 2015 to empower people to control their wealth. Visithttp://exodus.com/pomp today.

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

If you are not a subscriber of The Pomp Letter, join 215,000 other investors who read my personal opinion on finance, technology, and bitcoin each morning.

To investors,

Electric vehicle company Tesla has been the source of insane controversy for years. The critics believed the company would fail and file for bankruptcy and the proponents thought that Tesla would be the most valuable company in the world. This type of polarization is exactly what you would expect from a company that is trying to change the world with disruptive technology.

As many of you already know, Tesla reported their Q1 earnings yesterday and they drastically outperformed Wall Street’s expectations.

Any time a company can produce $5 billion in adjusted EBITDA and more than $3 billion in GAAP net income, the are likely to be quite valuable. The most shocking statistic isn’t about their financial performance exclusively though. Tesla has done all of this without any money devoted to marketing.

Elon Musk and the Tesla team have built a $1 trillion company, yet they spend no money on marketing. Even better, Tesla’s sales jump significantly when their competitors run television ads or marketing campaigns for electric vehicles. Pretty wild.

But while all eyes were on Tesla yesterday, there was another announcement that is worth paying attention to — The Boring Company, a technology company quickly building tunnels underneath cities, announced a $675 million Series C fundraise at a $5.675 billion valuation.

The company’s press release states “TBC creates safe, fast-to-dig, and low-cost transportation, utility, and freight tunnels.” The description of their technology is also fairly interesting as well.

As I was reading the press release, it reminded me of this amazing story about the sense of urgency that Elon and his team operates with.

So this brings us to the ultimate question — is Elon Musk the greatest entrepreneur of all time?

That may sound bombastic or a statement of hyperbole, but think about this for a second. Elon Musk is the wealthiest man in the world. He has built four multi-billion dollar companies and a fifth company worth more than $1 trillion dollars. We don’t know the exact valuation of a sixth company, Neuralink, but they have raised over $200 million so it is likely worth at least $1 billion as well. These companies include:

* Tesla: $1+ trillion valuation

* SpaceX: $100+ billion valuation

* PayPal: $100+ billion valuation

* The Boring Company: $5.6 billion valuation

* Solar City: $2.6 billion valuation

* Neuralink: ~ $1 billion valuation

This type of economic value creation is insane. Basically video game numbers. And you can trace it all back to one man — Elon Musk. So does this mean he is the greatest entrepreneur of all time? Probably. Does it really matter? Probably not.

The most impressive part of the whole thing is that the best investment strategy of the last two decades was to simply bet on Elon. It isn’t every day that an entrepreneur with this type of skill, persistence, and success comes along. Investing can be hard as hell sometimes. And other times you just have to find the right person and keep doubling and tripling down on them.

While a good portion of the world keeps hating on Elon Musk, I’ll continue to cheer him on. We need as many entrepreneurs and problem solvers in our society as we can get. Elon is a shining example of how private enterprise can help solve some of society’s greatest issues.

Plus, we shouldn’t think Elon Musk is done yet. He may actually just be getting started.

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

-Pomp

If you are not a subscriber of The Pomp Letter, join 215,000 other investors who read my personal opinion on finance, technology, and bitcoin each morning.

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THE RUNDOWN:

Bitcoin Miner Bit Digital Files to Raise Up to $500M in Equity: Bitcoin miner Bit Digital filed a prospectus with the U.S. Securities and Exchange Commission (SEC) for the sale of up to $500 million in equity from time to time, also known as an “at-the-market” (ATM) offering. The equity offerings may include ordinary shares, preferred shares (including convertible preferred shares), warrants and units comprised of any combination thereof, according to the filing. Read more.

Tesla’s Bitcoin Holdings Unchanged in Q1: The value of Tesla’s bitcoin holdings remained unchanged at $1.26 billion for the second straight quarter, the electric car maker said in its quarterly earnings report on Wednesday. In both the first quarter and last year’s fourth quarter, Tesla did not buy or sell any bitcoin, nor did it record any impairments to the value of its holdings because the price of bitcoin was essentially flat from the end of the previous quarter to the subsequent one. Read more.

Simplify Files for Bitcoin ETF Mixing Treasurys and Options Strategies: Simplify Asset Management has submitted paperwork to the U.S. Securities and Exchange Commission for its Simplify Bitcoin Strategy Risk-Managed Income ETF under the ticker symbol, MAXI. As with other SEC-approved bitcoin exchange-traded funds, this fund will hold bitcoin futures, rather than the crypto itself. In addition, Simplify intends to layer on an income strategy and an options overlay strategy. Read more.

BlueYard, Sequoia Invest in Privy to Bring Secure Data to Web 3: Data startup Privy hopes to bridge the gap between a smooth user experience and the importance of secure data and user consent. The company announced a $8.3 million seed funding round on Wednesday co-led by Sequoia Capital and BlueYard Capital. Read more.

Paul DeJoe is the Co-Founder & COO of MUD\WTR, a subscription-based alternative to drinking coffee.

In this conversation, we discuss their integration with Pipe by using their recurring revenue to finance the future growth of their business in a non-dilutive way. We also talk about holding Bitcoin on their balance sheet and why Paul hopes to change peoples morning coffee routine through their market-disrupting product.

Listen on iTunes: Click here

Listen on Spotify: Click here

Homes Are Becoming Unaffordable:

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Fundrise is largest direct-to-investor real estate investment platform. Go to Fundrise.com/Pomp today and get $10 when you place your first investment. 

* Unstoppable Domains’ 10 NFT domain endings are now fully integrated with Trust Wallet. Claim your Unstoppable Domain here today.

* Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. Download the Brave privacy browser at brave.com/Pomp today.

* BetOnline allows you to use Bitcoin and other altcoins to bet on sports, casino games, horse racing, poker and more. Click here and use PROMO CODE: POMP100 to receive a 100% matching bonus on your first crypto deposit.  

* Abra lets you trade, borrow, and earn interest on crypto. Earn up to 13% interest on USD stablecoins or crypto, borrow USD stablecoins, and trade in 110+ cryptocurrencies in a simple, secure app. Download Abra and get $15 in free crypto when you fund your account.

* FTX US is the safe, regulated way to buy digital assets. Trade crypto with up to 85% lower fees than top competitors by signing up at FTX.US today.

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in digital assets inside your IRA. Visit choiceapp.io/pomp 

* BlockFi provides financial products for crypto investors. Those products include BlockFi Wallet, no fee Trading, crypto collateralized Loans and the World's First Crypto Rewards Credit Card. To get $75 back on the first swipe of your BlockFi Rewards Credit Card, sign up today at http://www.blockfi.com/Pompcc 

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

* Okcoin is the first licensed exchange to bring new cryptos to market. To get started, and go to okcoin.com/pomp 

* Exodus is the world’s leading desktop, mobile, and hardware crypto wallets, with over 150 assets. Founded in 2015 to empower people to control their wealth. Visithttp://exodus.com/pomp today.

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

If you are not a subscriber of The Pomp Letter, join 215,000 other investors who read my personal opinion on finance, technology, and bitcoin each morning.

To investors,

There has been significant scrutiny of the US monetary and fiscal policy decisions over the last decade. The proponents believe that the various activities have helped mitigate severe short-term pain during the Global Financial Crisis and COVID-19 pandemic. The critics believe that market intervention has continued to kick the can down the road and created a larger problem that will only lead to more pain in the future.

Maybe one side of the debate is right, but more likely, each argument has an element of truth to them. It is possible for people in positions of leadership to mitigate short-term pain at the expense of long-term crisis. In fact, I would argue this is the most accurate analysis of the past decade or so.

A key driver of these monetary and fiscal policy drivers is inflation targeting. Sarwat Jahan writes for the IMF:

“In recent years, many central banks, the makers of monetary policy, have adopted a technique called inflation targeting to control the general rise in the price level. In this framework, a central bank estimates and makes public a projected, or “target,” inflation rate and then attempts to steer actual inflation toward that target, using such tools as interest rate changes. Because interest rates and inflation rates tend to move in opposite directions, the likely actions a central bank will take to raise or lower interest rates become more transparent under an inflation targeting policy. Advocates of inflation targeting think this leads to increased economic stability.”

When describing why inflation targeting is so effective, Jahan writes:

“In general, a monetary policy framework provides a nominal anchor to the economy. A nominal anchor is a variable policymakers can use to tie down the price level.”

To better understand how inflation targeting works, Sarwat Jahan highlighted:

“Inflation targeting is straightforward, at least in theory. The central bank forecasts the future path of inflation and compares it with the target inflation rate (the rate the government believes is appropriate for the economy). The difference between the forecast and the target determines how much monetary policy has to be adjusted. Some countries have chosen inflation targets with symmetrical ranges around a midpoint, while others have identified only a target rate or an upper limit to inflation. Most countries have set their inflation targets in the low single digits. A major advantage of inflation targeting is that it combines elements of both “rules” and “discretion” in monetary policy. This “constrained discretion” framework combines two distinct elements: a precise numerical target for inflation in the medium term and a response to economic shocks in the short term.”

Lastly, Jahan explains what is required for inflation targeting to be effective:

“Inflation targeting requires two things. The first is a central bank able to conduct monetary policy with some degree of independence. No central bank can be entirely independent of government influence, but it must be free in choosing the instruments to achieve the rate of inflation that the government deems appropriate. Fiscal policy considerations cannot dictate monetary policy. The second requirement is the willingness and ability of the monetary authorities not to target other indicators, such as wages, the level of employment, or the exchange rate.”

Alright, so now that we understand how inflation targeting works, why it is important, and what is required, you are probably wondering why I am spending so much time on a nuanced aspect of the financial market.

The answer is that I have an intuition that the Federal Reserve is preparing to significantly increase the target inflation rate.

This decision will not be taken lightly by the central bank and their leadership, but it ultimately signals that inflation has escaped their control and rather than pull it back in with aggressive monetary policy decisions, the next best option is to simply manipulate the benchmark to make the situation appear less bad.

This isn’t a random conspiracy theory, nor is it an uniquely original idea. Yesterday CNBC had a conversation with Mohamed El-Erian, the Chief Economic Adviser of Allianz and former CEO of PIMCO, where they discussed this very topic of inflation target increases.

The idea of increasing the inflation target by 50% is fairly extreme, but humans like round numbers and this would be a full-on capitulation by the Federal Reserve. They may not have many other options. Before the inflation target is increased though, it will be important to pay attention to the mainstream media conversation.

My expectation is that there will be a flurry of expert guests who start to float this idea, which will then normalize it in the eyes of the market. Once the market has begun to digest the change and potential impact, the Federal Reserve will have the ability to make the change without as much pushback or negative impact.

There is no guarantee that the inflation target is going to be increased. This is just a hunch at the moment. After I watched El-Erian discuss the prospects of a change so openly though, it became more obvious to me that this is a very real option on the table now. I’ll do my best to unpack the ramifications of a decision like this in a future letter. For now, it is important to keep your eyes open and your head on a swivel.

50% increases in the inflation target by the world’s most established economy, and most trusted central bank, don’t exactly happen all the time. The impact will be interesting to watch. Hope you all have a great day. I’ll talk to everyone tomorrow.

-Pomp

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Codie Sanchez is an entrepreneur, investor and the founder of the "Contrarian Thinking" Newsletter. She focuses on acquiring small businesses with hopes of turning them into immediate cashflow.

In this conversation, we talk about all the "boring" businesses that will give you cashflow and help build an incredible portfolio. We cover everything from ice machines, ATMS, and renting out your pool and car. Codie and I also talk about new sectors in tech that she's excited about and how you can make $1000 a week if you're just starting out.

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Americans Will Not Be Able To Live With These Food Prices — Darius Dale:

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To investors,

People around the world are watching in awe as the world’s richest man, Elon Musk, engages in a hostile takeover attempt of Twitter. While the mainstream media is distracted by the business details and day-to-day drama, there is something much bigger, and much more important, playing out in the shadows.

We are watching the 21st century war over free speech.

Historically the battle for free speech has boiled down to individuals vs the government. We saw John Peter Zenger tried in court for criticizing the Royal Governor of New York in 1735. Then we had The Federalist Papers where Alexander Hamilton argued “the liberty of the press shall be inviolably preserved.” This was followed up with the Sedition Act of 1918, which forbid any individual or organization from criticizing the US government. Finally, we got the Scopes Monkey Trial in 1925 where Tennessee school teacher John Thomas Scopes was “found guilty of violating a Tennessee law which prohibits teaching the theory of evolution in public schools.”

In each of these instances, the US government was trying to stifle the free speech of their citizens. A key long-term trend in American society was the constant self-correction to preserve the citizens’ right to free speech, regardless of how many short-term missteps the country took along the way.

But each of these important milestones had the same structure — US citizen vs US government. The nuances were different, including debates around evolution, religion, war, and much more, but the battle had always been between state and citizen.

Publisher vs Platform

The dynamics of the free speech debate changed in the 21st century. The first evolution was related to the difference between a platform and a publisher. It used to be clear that a media company was a publisher, which had to adhere to certain rules, and the phone company was a platform that facilitated communication, which ensured they adhered to a different set of rules.

No one expected The New York Times to allow everyone and anyone to publish within their widely distributed newspaper, but the default expectation was that the phone company would allow anyone and everyone to make a phone call, regardless of the quality or accuracy of ideas and conversation. This distinct line between publisher and platform allowed for clear rules, but the lines got blurred with the advent of social media firms.

Is Twitter a publisher or a platform? Well, the answer is “both.” Regardless of how you believe they should fit into the current discourse, Twitter has been providing a platform for user-generated content with an overlay of publisher-like decisions around content moderation and amplification.

For example, what is the difference between The New York Times selecting what to put on the front page of the newspaper and Twitter deciding what gets put at the top of your newsfeed? The answers aren’t as cut and dry as they used to be.

Platform vs User

This leads us to the second evolution of the free speech debate. Not only is the line between publisher and platform blurred, but the battle is no longer between US government and US citizen. The modern battle is between social media platform and social media user. The social platforms have replaced the US government as the most powerful force in the free speech arena.

Don’t believe me?

If social media platforms can deplatform the sitting President of the United States, who has the ultimate power?

If you can silence a king, you are the king.

Once the platforms realized they had the power to censor alternative viewpoints, while simultaneously hiding behind the fact that they are a private business and reserve the right to make their own rules, it became apparent that the frequency of these decisions was only going to accelerate.

The problem with this situation is that there is no clear response from users to push back. When the government was the censoring organization, citizens could take the fight to a court of law. When social networks dominate the censorship game, users are left powerless and voiceless. There is no day in court. There is no need for the platforms to prove their case. Censorship as a means of stifling dissent is now merely based on the whims of people we don’t know, based on standards we don’t understand, conducted with a lack of transparency only rivaled by authoritarian dictators across the world.

Centralization vs Decentralization

This brings us to our third transition in the free speech debate. The elites historically aspired to own the publications, but now it is clear that owning the platforms will be the superior position in the 21st century. Every existing platform at scale has been controlled and operated by the founders, which is a key reason why we haven’t dealt with transition periods before.

Elon Musk is the world’s richest man and he is taking a run at controlling the world’s most powerful media entity. Think that sounds like hyperbole? More than 75% of people on Twitter that follow me (sample bias issue!) believe that Twitter is more powerful than The New York Times.

The problem is that Musk is using 20th century tools, such as money and popularity, in his attempt to gain control. These tools will ultimately be insufficient in the 21st century because those in positions of power and influence are well versed in how to negate them. You see this with the overwhelming character assassination of Musk in the media and the invoking of the “poison pill” by the Twitter board of directors.

If the elites can employ sophisticated capital market tools, along with chisel away at Elon Musk’s reputation, they believe they will be successful in thwarting his attempt to enter the free speech war. Unfortunately, they are probably right.

But just because that is what the elites aspire to accomplish, it doesn’t mean that we can’t think through what Elon Musk should ultimately do — he should leverage the 21st century tools to ensure that free speech is forever preserved.

We know that Musk has publicly stated that the acquisition of Twitter is not driven by a desire for economic gain. So it would be a legendary move to take Twitter private, fire majority of the team, open-source the technology, and use the remaining revenue to fund open-source development of a free speech platform with hundreds of millions of users.

You can think of Satoshi Nakamoto, the creator of bitcoin, as the initial 21st century technologist that understood how to employ 21st century tools to solve 21st century problems. We also know that Jack Dorsey, a co-founder and former CEO of Twitter, had a similar idea when he helped launch Blue Sky, an exploratory project on decentralized social media protocols. The idea of open-sourcing, and simultaneously decentralizing Twitter, is not new, but Elon Musk is the first person to have an actual shot at doing it.

Yes, he has to successfully acquire the company. Yes, the deck of cards is stacked against him. Yes, the elites are doing whatever they can to stop him. Yes, Elon has a million other things going on. Yes, Elon would essentially be flushing $43 billion down the toilet. Yes, this sounds insane. Yes, it sounds nearly impossible.

But Elon also created reusable rockets that land themselves on drone ships in the ocean. Literally anything is possible when Elon is involved.

As the lines between platforms and publishers is blurred, and platforms continue to wage war against their users without accountability, there will be a big opportunity for someone to create the first open-source, decentralized social media platform. I don’t believe it will come with native tokens and crypto-specific bells and whistles. The fastest, most efficient path is to get one of the existing systems to change ownership and then pull the trigger on the transition. Twitter is ripe for this to happen because of the current focus on free speech or the lack thereof on the platform.

Elon Musk is just crazy and wealthy enough to pull it off. We should all be cheering for him because the fate of free speech, and the sanity of our society, is potentially hanging in the balance.

Hope you all have a great day. Talk tomorrow.

-Pomp

If you are not a subscriber of The Pomp Letter, join 215,000 other investors who read my personal opinion on finance, technology, and bitcoin each morning.

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THE RUNDOWN:

Biden Nominates Former Ripple Adviser Barr as Top US Fed Regulator: President Joe Biden named former crypto industry adviser Michael Barr as his latest pick for a Federal Reserve post that's arguably the most powerful financial regulator job in the U.S. Michael Barr, who is now the public policy school dean at the University of Michigan Law School, was a senior official in former President Barack Obama's Treasury and occupied a key role in the government's rescue of the financial system from the ruins of the 2008 financial crisis. But the most important aspect of his background for the digital-assets industry could potentially be his tenure on the board of advisers at Ripple, giving him an insider's knowledge of crypto. Read more.

Twitter Closes Down on Session as Musk Calls for Shareholder Vote: Twitter lost ground today, closing at $45.08 versus Elon Musk's cash offer of $54.20, as speculation grew about whether the board would approve of a sale to the Tesla CEO. Saudi Arabian Prince and major Twitter shareholder Alwaheed bin Talad voiced his opposition to Musk’s offer in a tweet, to which Musk responded in-kind by asking exactly how much Twitter the Saudis own and questioning the Kingdom's views on freedom of speech. Read more.

Central Bank of Portugal Grants Country’s First Crypto License to a Bank: Bison Bank, a Portugal-based financial institution, has received a license from the Portuguese central bank (Banco de Portugal) to operate as a virtual asset service provider (VASP), Banco de Portugal announced Thursday. Bison Bank will create a special business division, Bison Digital Assets, to operate as a virtual asset exchange, according to Portuguese media outlet Sapo. Read more.

Owner of Brazil’s Largest Crypto Exchange Plans to Launch Quantitative Trading Service: 2TM, the holding company for Mercado Bitcoin, Brazil's largest crypto exchange by market valuation, plans to launch a crypto asset manager focused on quantitative trading, the company confirmed to Brazilian financial media outlet InfoMoney on Thursday. Read more.

Alexander Leishman is the Co-Founder & CEO of River, a Bitcoin-only company that allows you to buy Bitcoin as well as mine Bitcoin

In this conversation, we discuss building a Bitcoin-first company, updates on the regulatory space, Bitcoin maximalism, and why this is the year that Bitcoin is establishing itself as a major pillar in our political system.

Listen on iTunes: Click here

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My full interview with Jeff Booth:

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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,

We have been discussing the financial situation in Lebanon for the last two years. It started with the street protests in April 2020, continued with more severe social unrest as their currency devalued in June 2021, and finally culminated in a pseudo-bankruptcy by the government of Lebanon earlier this month.

This has been an unfortunate situation to watch as it unfolds, but the outcome was obvious as the problems got larger and the central bank was unable to properly address the issues.

This begs the question — is Lebanon a unique situation or does it signal a bigger problem in the system?

The short answer is that no one knows for sure yet, but we just got another worrisome data point yesterday. The government of Sri Lanka announced that they will be unable to service their debt obligations, which essentially renders the country bankrupt.

In the announcement, the Ministry of Finance stated:

“Sri Lanka has had an unblemished record of external debt service since independence in 1948. Recent events, however, including the effects of the COVID-19 pandemic and the fallout from the hostilities in Ukraine, have so eroded Sri Lanka's fiscal position that continued normal servicing of external public debt obligations has become impossible.”

The situation in Sri Lanka is a good example of what countries are facing at the moment. They had already pushed themselves to the limit of risk through past monetary and fiscal policy decisions, which left them unprepared for the events that would transpire from 2020 to 2022.

First, the COVID-19 pandemic raged globally and locked-up citizens in their homes per government mandates. This drastically hampered the economic growth of a tourism-dependent country like Sri Lanka. Next, the undisciplined monetary and fiscal policy response to the pandemic led to drastic devaluation of various currencies, including a race between central banks to devalue on a relative basis as well. Lastly, the Russian invasion of Ukraine was the last straw once various commodities, from oil to natural gas to wheat to fertilizer, skyrocketed in price.

For two years, governments and central banks have been thrown curveball after curveball. Those in the strongest economic positions have been able to weather the storm, but the countries in a weak economic position are being exposed.

My friend Marty Bent put it eloquently when he wrote:

“What we're seeing play out now is something we've discussed many times in this rag; the weakest free float fiat currencies in the world are failing first. Many may sit there and think, "Who cares if the Sri Lankan rupee fails? It's the Sri Lakan rupee." However, this is how the end game plays out. The weakest die first. And every weak currency that dies leaves behind a smaller pool of currencies that are doomed to the same fate. The Sri Lakan rupee may have been the weakest currency today, but at some point in the future we'll wake up to discover that the euro was the weakest currency to fail on a particular day. We'll wake up to find that the dollar found itself alone in the ring against something like bitcoin and ultimately faltered because it was the weakest currency at that particular point in time.

It may be able to dismiss the Sri Lakan and Lebanese governments defaulting on their debt as nothing more than a nothingburger. But I urge you to recognize it as a leading indicator of things to come for the rest of the fiat currencies on the planet. Lebanon and Sri Lanka were two of the first to fall. Failure is climbling up the ladder and it will reach your fiat currency in due time. When that eventually happens, you better have a contingency plan.”

There are many bitcoin critics who will roll their eyes and claim that bitcoin enthusiasts are cheering on the failure of these currencies, central banks, or governments. This is not accurate in my opinion. Bitcoiners have been warning about these issues for years and now the issues are playing out.

Everyone understands that the failure of a currency or the bankruptcy of a government means significant pain for the average citizen. No one wants to see that happen. Most bitcoiners wish that bitcoin wasn’t necessary. Ideally, the legacy system could self-correct and prevent the potential pain that lays ahead. It doesn’t appear that is going to happen though, so bitcoin becomes a unique solution that provides an escape path for billions of people.

We have seen Lebanon and Sri Lanka declare bankruptcy in the last two weeks. Hopefully they are the outliers and no other countries will follow. But I’m not counting on it. Many countries are buckling under the stress created by COVID, undisciplined monetary and fiscal policy, supply chain disruptions, and the commodities boom post-Russian invasion of Ukraine.

Stay alert out there. The world is changing and it is important to remain educated. Hope everyone has a great start to their day. Talk to everyone tomorrow.

-Pomp

If you are not a subscriber of The Pomp Letter, join 215,000 other investors who read my personal opinion on finance, technology, and bitcoin each morning.

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Dylan LeClair is the Senior Market Analyst at UTXO Management, a digital asset fund investing in the analog to digital transformation of money and the emergent financial system.

This week, my brothers Joe & John helped fill in to speak Dylan for our weekly podcast. In this conversation, they discuss the Bitcoin Conference, the most important chart in finance right now, Bitcoin's correlation to the Stock Market, and Inflation.

Listen on iTunes: Click here

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"Putin’s Price Hike" Is Fake News:

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These companies make the podcast possible, so go check them out and thank them for their support!

* Fundrise is largest direct-to-investor real estate investment platform. Go to Fundrise.com/Pomp today and get $10 when you place your first investment. 

* Unstoppable Domains’ 10 NFT domain endings are now fully integrated with Trust Wallet. Claim your Unstoppable Domain here today.

* Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. Download the Brave privacy browser at brave.com/Pomp today.

* BetOnline allows you to use Bitcoin and other altcoins to bet on sports, casino games, horse racing, poker and more. Click here and use PROMO CODE: POMP100 to receive a 100% matching bonus on your first crypto deposit.  

* Abra lets you trade, borrow, and earn interest on crypto. Earn up to 13% interest on USD stablecoins or crypto, borrow USD stablecoins, and trade in 110+ cryptocurrencies in a simple, secure app. Download Abra and get $15 in free crypto when you fund your account.

* FTX US is the safe, regulated way to buy digital assets. Trade crypto with up to 85% lower fees than top competitors by signing up at FTX.US today.

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in digital assets inside your IRA. Visit choiceapp.io/pomp 

* BlockFi provides financial products for crypto investors. Those products include BlockFi Wallet, no fee Trading, crypto collateralized Loans and the World's First Crypto Rewards Credit Card. To get $75 back on the first swipe of your BlockFi Rewards Credit Card, sign up today at http://www.blockfi.com/Pompcc 

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

* Okcoin is the first licensed exchange to bring new cryptos to market. To get started, and go to okcoin.com/pomp 

* Exodus is the world’s leading desktop, mobile, and hardware crypto wallets, with over 150 assets. Founded in 2015 to empower people to control their wealth. Visithttp://exodus.com/pomp today.

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

If you are not a subscriber of The Pomp Letter, join 215,000 other investors who read my personal opinion on finance, technology, and bitcoin each morning.

To investors,

Inflation was reported at 8.5% this morning, which is the highest inflation reading in 40 years. Core inflation was also high at 6.5%. These are obviously astronomical numbers and highlight a dire financial situation for hundreds of millions of Americans.

Here are the drivers of these alarming numbers:

Given that the Russia-Ukraine conflict has had a material impact on oil and natural gas prices, it is not shocking to see gasoline prices up nearly 50% in the last year. The price of gasoline had already been elevated so the conflict only exacerbated the situation.

The most shocking number to me is the food at home. This 10% increase means that the average American family is paying materially more just to eat, which is obviously unsustainable for long periods of time. The current number is bad and the concern is that the increased prices in fertilizer, lack of high quality wheat exports from Russia/Ukraine region, and supply chain disruptions are only going to drive food prices even higher in the coming months.

We can analyze the official inflation numbers until our eyes bleed, but there is no way that the majority of Americans are living with 8.5% inflation. Most of the population is likely experiencing double-digit inflation.

For example, a new decentralized inflation dashboard (Truflation) measures the current situation at 13.5%. Is this a perfect measurement? No, it is nearly impossible to be perfect when measuring something as complex as inflation, especially when it is accelerating so rapidly. But 13.5% is likely closer to reality than 8.5% based on what the average citizen is experiencing on a day-to-day basis.

This brings me to another point — the talking points around this inflation signal that politicians think the American public is stupid.

The White House is now claiming that inflation is the result of a “Putin price hike” and they are refusing to claim responsibility, either directly or indirectly, for the current economic crisis.

The use of Vladimir Putin as a scapegoat is as lame as it sounds. It is absurd to argue that the highest inflation in the last 40 years was caused by actions that are less than 6 weeks old. The administration knows this, the public knows this, and the media knows this. But everyone keeps playing this game of charades hoping that no one will call anyone else on it.

This is ultimately the problem with politicians in the current environment. They aren’t incentivized to solve the problem, but rather they spend their time trying to figure out the right messaging. If wealthy people and politicians were suffering from high inflation, this nonsense would be over tomorrow.

A concerning aspect of the current economic environment is that the Federal Reserve, our elected officials, and business leaders globally have no ammunition left to curb inflation without forcing the United States and other global economies into recession. Every tool that can be used to address the high inflation will only accelerate slowdowns in the economy. That is normally a good option when these inflation-fighting tools are used early on in an inflationary situation, but the tools are too little and too late now.

So the only thing that the average American can do now is survive. Ask their boss for a raise. Try to move their assets into inflation hedge allocations. Prepare to weather the storm ahead, including potential stock market crashes, devaluation of the dollar, and crypto volatility. No one has a crystal ball. No one can predict the future. But we do know that our leadership is in an impossible situation — they are faced with a lose-lose decision.

Double-digit real inflation was previously reserved for third world countries and dictatorships who lost monetary discipline, but now it has invaded the United States. We are at war with an invisible enemy and we have no line of sight to material solutions. While politicians and central bankers kept telling us not to worry about inflation, that it was transitory, or that it was even good for us, bitcoiners were yelling from the rooftop about what was likely to occur.

The Jack Dorsey hyperinflation tweet was mocked endlessly.

Time will tell if we ever meet the true definition of hyperinflation, but it is obvious that “high and accelerating” inflation is here to stay for the short term. I highly suggest you read Ray Dalio’s new book Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail. The more things change, the more they stay the same.

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

-Pomp

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THE RUNDOWN:

New York Senate Authorizes NYDFS to 'Assess' Crypto Companies: The New York State Senate is boosting the state’s Department of Financial Services (NYDFS) efforts to oversee the cryptocurrency sector. The Senate passed its fiscal year 2023 budget early Saturday, which included a provision tasking NYDFS with developing a new “assessment” or charge for the cryptocurrency companies it oversees to bring its oversight mandate in virtual currencies in line with how the regulator oversees more traditional banks and financial services firms. Read more.

New York Senate Authorizes NYDFS to 'Assess' Crypto Companies: The New York State Senate is boosting the state’s Department of Financial Services (NYDFS) efforts to oversee the cryptocurrency sector. The Senate passed its fiscal year 2023 budget early Saturday, which included a provision tasking NYDFS with developing a new “assessment” or charge for the cryptocurrency companies it oversees to bring its oversight mandate in virtual currencies in line with how the regulator oversees more traditional banks and financial services firms. The assessments are meant to “defray operating expenses,” according to the text of the budget reviewed by CoinDesk, and are only meant to cover expenses tied directly to the oversight of crypto companies. Read more.

GOP Policy Arm Releases Paper Exploring Benefits, Risks of Crypto: The policy arm of U.S. Senate Republicans has issued a policy paper on crypto, signaling the GOP is making its way toward a more unified approach to crypto regulation. The Senate Republican Policy Committee (RPC), chaired by U.S. Sen. Roy Blunt (R-MO), works to form legislative policy goals for the party, as well as provide research and analysis on a variety of subjects. Read more.

Russians’ EU Crypto Investments Capped at 10K Euros: Russian payments to EU crypto wallets will be capped at €10,000 ($10,900) under sanctions measures published in the European Union's official journal Friday. The limit is intended to stop wealthy Russians from circumventing a cap on investing in the EU introduced in the wake of the Ukraine invasion. Read more.

Peter McCormack is the host of the "What Bitcoin Did" podcast and is the new owner of the Real Bedford Football Club.

In this conversation, we discuss the Bitcoin Conference, Peter's thoughts on toxic Bitcoin maximalism, concerns with El Salvador, and the progress on Real Bedford F.C. since acquiring the team.

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