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Bitcoin Is Surging And Holders Refuse To Sell
Today’s letter is brought to you by Cal.com!What do I have in common with Chad Hurley (YouTube), Tobi Lütke (Shopify), and Alexis (776/Reddit)? We are all early investors in Cal.com and we use it instead of Calendly. Cal.com is the leading open-source scheduling platform, which gives you the same superpowers of efficiency previously reserved for elite corporations and tech gurus. Stop wasting your time with scheduling software that doesn’t work. Use technology to make your life easier. Cal.com is transforming sophisticated calendar management into an accessible tool for all via a user-friendly interface. Set up is quick, easy, and you will never go back to your boring calendar tool. Exclusive for Pomp Letter subscribers, use code “POMP” for $500 off when you set your team up with Cal.com. Save time. Save money. Use Cal.com. To investors, Gold and bitcoin surged in price over the weekend. Gold hit an all-time high crossing over $2,130. Bitcoin touched $42,000 early this morning. These meaningful movements in price say more about the state of fiat currencies than it does about hard assets. Both communities of hardcore believers want to believe their asset is special, but ultimately global liquidity & currency debasement tell the story. The market is continues to accelerate their expectation of a return to loose monetary policy, including quantitative easing and interest rate cuts. It is notable that gold’s all-time high coincides with bitcoin still being approximately 40% below it’s 2021 high of $69,000. Gold bugs will argue this is bearish, while bitcoiners will claim it is bullish. Frankly, I don’t think it is either. The comparison of these two assets may be intellectually stimulating, but it is not productive. As bitcoin rises, there are some significant data points worth paying attention to. First, bitcoin’s market cap is now higher than Berkshire Hathaway’s market cap. This is a completely worthless point, except that it reinforces to the bitcoin community “we are right!” in the face of critique from Warren Buffett, one of the best investors in the world. Second, Nvidia was outperforming bitcoin over the last 5 years until the digital currency’s price appreciation over the last 24 hours. While that may not be what you expected, it speaks to the severity of bitcoin’s bear market drawdown and the rotation of capital to artificial intelligence. Now that bitcoin is once again prevailing in this comparison, we should start to see more bitcoin/crypto-centric media headlines. Historically this has led to additional capital flows and higher prices. Speaking of prices, bitcoin holders don’t appear to have any interest in selling into the strength of bitcoin’s price. Although the price is up almost 150% year-to-date, the amount of bitcoin in circulation that hasn’t moved in 1+ year hit a new all-time high over the weekend of 70.5%. This increasing lack of liquidity in the circulating supply creates a positive feedback loop on an increasing asset price because it takes less net new dollars to move the price upwards in the future. I don’t think I’ve ever seen an asset this large (~$800 billion) have such high illiquidity at the same time that the price is aggressively moving higher. So what does this mean for bitcoin holders? Let’s take a look at nation states first. El Salvador’s President took to Twitter/X this morning to highlight that the country’s bitcoin holdings are now profitable again. He said “Of course, we have no intention of selling; that has never been our objective. We are fully aware that the price will continue to fluctuate in the future, this doesn’t affect our long-term strategy.” El Salvador is not alone. Michael Saylor’s Microstrategy was underwater on their bitcoin holdings for almost a year, but now they have returned to an unrealized profit as well. The company now holds 174,530 bitcoin on their balance sheet. The nation states and corporations are not the only beneficiaries of the recent bitcoin price increase though. As Dylan LeClair pointed out, bitcoin is the significant winner if you had dollar cost averaged with $10 into various assets every day since 1/1/2020. Bitcoin: +106% Nasdaq: +28% S&P 500: +18% Gold: +16% U.S. Treasury Bonds: -20% This is an important point because it shows that an investor, regardless of sophistication, would have been able to drive a material return by dollar cost averaging through the boom and bust of the pandemic era. Lastly, there is quite a bit of excitement about the incoming bitcoin spot ETF. I want to issue a word of caution about its potential ramifications. Here is some quick math — bitcoin is ~ $800 billion asset. Only 30% of that supply has moved in the last year, so that is $240 billion. If the spot bitcoin ETF gathered $50 billion overnight, which would be more than Grayscale’s GBTC had in assets at the 2021 peak, then we would only see an approximately 20% increase in capital compared to the liquid circulating supply. That would 100% lead to a material increase in price, but it won’t triple the value of bitcoin overnight as some are predicting. What would the exact price impact be? It is nearly impossible to predict because there are numerous factors that we can’t know the answer to (for example - how many people will sell on ETF news?). It is fun to get excited about major milestone events like the ETF approval, but just do your best to refrain from being sucked into the crazy price predictions from anonymous people online. Trust me, I’ve had my fair share of fun trying to predict the future. Even when you are directionally correct, you can never get it perfectly right. As the old saying goes, time in the market is more important than timing the market. Bitcoin has proven that statement true over and over again. Think long-term. Enjoy the fun on the internet. And don’t try to outsmart the market. Hope you all have a great start to your week. I will talk to each of you tomorrow. -Anthony Pompliano If you enjoyed this letter, you should consider subscribing to the Pomp Letter. I write 3-5x per week and explain in simple language what is happening in the economy, financial markets, and bitcoin. Bradley Tusk is a venture capitalist, political strategist, writer, and owner of P&T Knitwear bookstore. In this conversation, we talk about his brand new book, called “Obvious in Hindsight.” It is all about a fictional story of innovative technology, flying cars, and what they have to go through with politicians, mafia members, etc. This is a great conversation about how technology meets politics, and the reality on the ground. Listen on iTunes: Click here Listen on Spotify: Click here Earn Bitcoin by listening on Fountain: Click here Bradley Tusk On How Startups Can Beat Politicians & RegulationsPodcast SponsorsCal.com - Changing the calendar management game. Use code “POMP” for $500 off when you sign up. Trust & Will - Estate planning made easy. They are fast, secure, and simple to use. Get your will or trust created today. Auradine - A new bitcoin miner powered by the world’s first 4 nanometer silicon chip technology. Base: Base is shaping the future of the on-chain world with near-zero gas fees and rapid transaction speeds. ResiClub: Your data-driven gateway to the US housing market. Bay Area Times: A visual newsletter explaining the latest tech & business news. You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. 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