#1295 Raoul Pal on Bitcoin, Ethereum, Solana & Macro Environment

Raoul Pal is the Co-Founder & CEO of Real Vision. He also writes ‘Global Macro Investor” and he has a brand new asset management firm (EXPAAM), with a mission to deliver leading returns on invested capital and serve as catalysts of crypto adoption. In this conversation, we talk about the bitcoin ETF, who is going to win the Cointucky Derby, Ethereum, Solana, his “Everything Code” thesis, macro environment, and more. NFT + Real Vision for free – realvision.com/pomp Twitter @RaoulGMI GMI – app.globalmacroinvestor.com Exponential Age Asset Management - EXPAAM (Fund of Hedge Funds) – expaam.com ======================= Base is making it their mission to bring a billion people onchain. But what exactly is Base? It's an Ethereum L2 offering a seamless experience for both builders and users. With near-zero gas fees and rapid transaction speeds, Base is shaping the future of the onchain world. Base is a canvas for everyone, with hundreds of apps in the Base ecosystem, whether you're an emerging creator, a seasoned developer, or someone exploring the onchain space for the first time, Base is designed to bring your ideas to life. So, if you're looking for a platform where the future of onchain is being built daily, Base is your destination. Join in and make onchain the next online. Learn more at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠base.org⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and follow along on Twitter at @BuildOnBase to see cool things to do onchain, everyday. ======================= BetOnline.ag is a proud sponsor of the the Pomp Podcast. Use crypto to bet on sports, play poker and enjoy casino games at BetOnline. Visit https://promotions.betonline.ag/pomp and use promo code POMP100 to receive a 100% matching bonus on any crypto deposit. BetOnline boasts no crypto transaction fees, and processing is anonymous, instantaneous and secure. ======================= Pomp writes a daily letter to over 250,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode.

• 0:31Anthony Pompliano?

  Today's conversation is with Raul Paul, co-founder and CEO of Real Vision. He also writes Global Macro Investor, and he has a brand new asset management firm, which is a fund of funds for crypto hedge funds. In this conversation, we talk about the Bitcoin ETF, Grayscale's GBTC, who's going to win the CoinTucky Derby, and what exactly is his everything code thesis? Why the greatest meme is number go up? How exactly you can get through this market cycle and don't fuck this up? And then we get into all kinds of macro things around interest rates, global liquidity, where he sees Bitcoin, Ethereum, Solana, NFTs, and much, much more. I always enjoy talking to Raul, and this conversation is no different. It is packed with insights and unique thoughts that you won't get anywhere else. Here is

• 1:16Anthony Pompliano?

  my conversation with Raul Paul.

• 1:19Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:43Anthony Pompliano?

  Today's episode is brought to you by Base. Base is making it their mission to bring a billion people on-chain. What exactly is Base? It's a layer-two offering, a seamless experience for both builders and users. With near-zero gas fees and rapid transaction speeds, Base is shaping the future of the on-chain world. Base is a canvas for everyone with hundreds of apps in the ecosystem, whether you're an emerging creator, a seasoned developer, or someone exploring the on-chain space for the first time. Base is designed to bring your ideas to life. So if you're looking for a platform where the future of on-chain is being built daily, Base is your destination. Join in and make on-chain the next online. Learn more at base.org or follow along on Twitter at BuildOnBase.

• 2:26Anthony Pompliano?

  Again, that's at BuildOnBase to see cool things to do on-chain every single day. This episode is brought to you by BetOnline. Do you like making a profit from sports betting? Well, set yourself up to take home the most profit possible using crypto to fund your sports betting, casino and poker account at betonline.ag. You can avoid costly transaction fees, get your payouts lightning fast, and do it all securely and anonymously with the highest deposit and withdrawal limits in the industry. If you want to get in on the action, do it the smart way with crypto at betonline.ag. Head to the website, sign up with promo code POMP100 to get 100% bonus on your crypto deposit today.

• 3:07Anthony Pompliano?

  If you go and you deposit, they'll give you 100% bonus if you use promo code POMP100. BetOnline, go where the game starts. BetOnline.ag, go check them out today. All right, guys. Bang, bang, I've got a rule here. I thought a great place to start is the Bitcoin ETF. We got the approvals, everyone's all excited, and the price goes down. That's not supposed to happen. Why is the price going down? And what is your reaction to the first two or three days of trading of the Bitcoin ETF?

• 3:37Speaker 02

  Look, always the most ridiculous thing happens in crypto. I mean, even the run-up was the best, right? That total goat rodeo of that tweet that was hacked. You know, it's brilliant and it going down is befitting. Basically, it's the overhang from GBTC. So there's a lot of activity, a lot of repositioning. Net flows have been offset really by GBTC as people are unwinding the arbitrage and stuff like that. So I don't think you need to read much into it. It probably has to digest. Don't forget, you've brought forward a lot of demand. Net-net, what have we brought forward? Two, three billion dollars of demand? Okay, so that takes time for the market to digest.

• 4:18Speaker 02

  And then you've got to think through who the R A As are, who these people are. And if you put me in your head, these are not New York dealing rooms who are getting on the phone and say, buy this now. They're people who are wearing slacks, who read Barron's on the weekend, read about the ETF, aren't sure, go on the golf course, see their best client, he asks them a question, the whole process is slow, you know, they've got to go and have steak dinners and all of that stuff. So the whole process of bringing people in is going to take a while longer, but it's there now. You know, I just think of the CTF as a trade deal between the world and crypto land. And so now capital can flow in much easier than it used to.

• 5:01Speaker 02

  I kind of think of this as a mental model as like China entering the WTO. When everybody could invest in China, that's what this is. Now, these aren't permanent residents in crypto land. You know, this is more hot money flows, you know, tourism flows, hot money flows, you know, direct investment, foreign direct investment, that's V C flows. And then we've got a bunch of residents there, people who have wallets and all of that. So I do think of it as an economy and this just allows trade.

• 5:33Anthony Pompliano?

  Now, the capital that's going into these ETFs, there's two ways to look at it. It's, hey, these are the people who they've heard about Bitcoin, they don't really want to go set up a coin based account and go buy it. Now their financial advisor is saying, yeah, let's allocate a little bit to it. But the first second that we get a 25, 50% drawdown, they're out of there. They're like, I knew I shouldn't have bought that and they're gone. The other argument is that a lot of ETF capital is very sticky and it's kind of like a set it, forget it. And, you know, once that money goes in, it's likely to sit there. Which one do you think is kind of a more accurate representation of how this capital will behave as we get the volatility of Bitcoin?

• 6:10Speaker 02

  So if you think about the biggest buyers of this stuff, it's actually the millennial cohort. What the millennials do really well is they, they invest in their 401ks every month.

• 6:23Speaker 02

  And they can put this in their 401ks. So that's sticky. That's why ARC didn't get all the redemptions when it went down 75%. It's because its millennials are on it and they put it in their 401k and they're in it for the long ride. So I think it's the the boomer crowd who'll be more concerned about the volatility, I think. But that's, I think that's a very good thing. It's gonna be a lot of people putting it as a long-term asset, buy and hold, and that should give it the stability that you need, that you don't just get massive washouts from people panicking the moment it goes down. And I think most of the ETF providers have made it pretty clear that it's a volatile asset and it's a buy and hold asset.

• 7:03Anthony Pompliano?

  So in the Christian religion, there's kind of like before Jesus, after Jesus, right? In terms of measuring time, my thought process is that we're going to have a before ETF, after ETF kind of epochs of Bitcoin, and specifically talking about the volatility. We had massive asymmetry and lots of volatility, 80% drawdowns, et cetera, leading up to this. But if we get, as you said, stability, that also is a pro and a con, right? There, if there's less volatility on the downside, I think people say, oh, that's great. But then should we also expect less volatility to the upside as well?

• 7:37Speaker 02

  I think as assets mature, they become less volatile. So I think we need to expect that. And particularly from passive flows of 401k investors putting it in every two weeks, every month, that'll keep a bid that didn't exist before. So I think, yes, we'll probably see lower volatility, but we'll also be feeding capital into cryptoland and cryptoland's not just the state of Bitcoin, it's a whole bunch of other places that are going to see capital flows. So the Wild West will still exist, but the big daddy becomes less volatile, which it...

• 8:13Speaker 02

  Yes, it's a shame because we can't make as much money out of each cycle. But if our underlying philosophy is we want the adoption of this technology to be broad and deep, it has to go that way. So it's kind of good from that philosophical angle of trying to change the world, bad from the ridiculousness of the cycles and how profitable they can be if you get them right.

• 8:36Anthony Pompliano?

  So we're sitting around forty thousand, forty two thousand dollars today. It was at fifteen, sixteen thousand, kind of at the bottom of the bear market. What is your expectation in this bull market? Will we see a hundred thousand, a hundred fifty, two hundred thousand? Like, maybe one of the things I've taken away is people are still looking at these cycles as like, you know, it's going to a million dollars, it's going to five hundred, like these crazy price predictions. And I actually maybe, maybe somehow I'm getting more realistic and saying like, I don't know if we see two hundred thousand dollars in the bull market. Where are you?

• 9:07Speaker 02

  I don't know is the answer for the same reason. Also, everybody's got PTSD because of last time. Right? That second run up after the big correction, the second run up, everybody thought it was going to extend further. And it didn't. And so everyone's got PTSD. So how I'm thinking about it, I'm giving a sixty percent probability this is a relatively normal cycle, in which case it would get to hundred and fifty thousand, let's say. I'm giving a twenty percent chance that it's actually a front loaded cycle because of the ETF and other stuff that maybe it gets to that hundred and fifty faster and then fades, which will be kind of pain for a lot of people who expected to go into twenty twenty five, right?

• 9:50Speaker 02

  And then the other twenty percent chance, I think, is that this ends up being a bubble cycle. And so it looks more like two thousand eleven, twelve, thirteen than it does the previous one. And in which case, if you remember that cycle, it had a interim top correction, everyone thought it was over and then it just exploded again. I think there's a decent chance of that, but we need to see the

• 10:13Speaker 02

  contextualization of how the ETF flows impact. You know, what's happening with monetary policy, what's going on in the economy, how the, how the election is going to play into this. So that's how I'm thinking of it. That upside crazy bubble target, you know, using that kind of everything code structure that, you know, I've talked about in the past, you know, we get price targets of half a million plus. So even if I discount me For being a moron by 50%, you still get 250 grand. So that's kind of the the the the spread to me, 150, 250. But obviously, who the hell knows? And as you know, the worst thing for any of us is, everybody wants price targets. And then a year and a half's time, they hate you for it because you weren't exactly right.

• 10:58Anthony Pompliano?

  Yeah, well, I think I think it's also just like, hey, does this replicate past, you know, cycles? And I think that's what everyone is thinking, right? Um, but also maybe that is a signal that uh that's not going to happen. One, but two, also the holder base has changed again, right? So kind of pre 2020, there was, you know, the very hardcore believers. Then in 2020, we started to get a little bit more of the finance crowd. Now, I mean, this is RIAs, this is, you know, as finance as it gets. And so I wonder, as the price goes up, do they actually sell? Are they rebalancing on the way up? And so it kind of takes a little bit of the edge off on the upside.

• 11:33Speaker 02

  I think that's possible, but also think about the crowd that got um financialized in 2020. Again, mainly the millennial crowd, right? There's 110 million Coinbase accounts. And when I checked six months ago, only nine million were active. So speaking to the guys at Coinbase, they're like, yeah, you know, in normal activity, it'll get to 35, 40 million and the top will grow as well. So there's a lot of money still to come in of people who participated last time around, have that interest, still have PTSD, will come back in. So maybe that offsets it. I don't know.

• 12:11Speaker 02

  Um, I also have a feeling the applications layer of blockchain is going to bring in a lot more use case. So I'm thinking of this cycle as maybe the everything everywhere all at one cycle, when people have different unlocks for NFTs or inscriptions or different unlocks for um smart contracts and some of the other things, and they can use it for everything from whether it's ticketing to real world assets. So it it just depends how far the applications layer goes. If the applications layer doesn't make much progress this cycle, then you're dead right. You know, we'll see rebalancing. Don't forget, they're also going to be issuing. Options on the ETF and that changes the structure of markets as well.

• 12:55Anthony Pompliano?

  Explain that more because I don't think a lot of people understand maybe the blessing and the curse of this ETF approval.

• 13:02Speaker 02

  Yeah, so what you've done, and it was always gonna happen, is Bitcoins now become financialized. When it wasn't really, it was still had purity to it. Now, it doesn't mean it's impure because of this, but you've allowed a financialization layer. And what that's going to mean is that they are going to offer leveraged products on it. Now, options are are kind of defined risk products, but what you end up with is in a very high volatility product, we get a lot of volatility sellers. And it dampens the market because they're always hedging and that hedging structure

• 13:43Speaker 02

  can really change the nature of markets. Sometimes it creates acceleration points. Because everybody's short and suddenly the price goes through and everyone has to buy everything back. Other times, just by the ongoing selling of yields, you know, selling a premium for yields. It slows down the whole market itself. So I do think that's a bigger deal than people expect. But the casino for options on ETFs is going to be quite amusing for a while as well. Because, you know, if you think about how many, how much the Robin Hood crowd use options on tech stocks. I think they go wild on this stuff and they've not been able to, you know, for Americans, it was really hard, you know, Deribit was not accessible to Americans.

• 14:28Speaker 02

  They're now going to start using options. What, I don't know when that launches, but it'll happen at some point. And that brings in all the market making firms and the investment banks and all of these other financial players.

• 14:40Anthony Pompliano?

  One of the other aspects that obviously drives price of not only Bitcoin, but most assets around the world is liquidity and interest rates. And maybe a shocking thing, if I had said to you in the beginning of 2020, hey, they're going to cut interest rates and asset prices are going to rise. You'd say, okay, that makes sense. But then if I told you at the end of 2021, they're going to raise the interest rates to, you know, five and a half percent and the stock market is still going to go to an all time high. Bitcoin is going to go up, you know, hundreds of percent off the bottom. I think a lot of people would be like, that doesn't make any sense. Like, how can interest rates be higher, but also asset prices are still continuing to grow? What's happening there?

• 15:14Speaker 02

  So this is the difficulty people have with different time horizons. So interest rates are set by the Federal Reserve. The Federal Reserve operates in core inflation land, which is driven by, core inflation unemployment, which is driven by stuff like owner equivalent rents and stuff. All of this stuff is lagged. So the Fed operate in that that lags. Stuff like crypto and tech stocks are trading on liquidity and future liquidity. So financial conditions, they eased a long time ago. So people looking at the Fed saying, well, when the Fed raise or when the Fed cut, that's not relevant.

• 15:56Speaker 02

  What's actually relevant is what the kind of financial conditions are doing, which have been loosening massively and liquidity has been rising. Whether you use Fed net liquidity or broader measures or M2, they're all rising on a global basis. And the global basis is another key thing most people miss because they kind of look at the US only. But, you know, if we look at this cycle, who's got the biggest economic problems right now is China. So they probably have the biggest bazooka to fire to try and get their economy going. Then it's probably the Europeans, then the US. You know, it feels that way, but we've seen liquidity. You know, I managed to catch the bottom in crypto and tech last year because of liquidity had bottomed.

• 16:39Speaker 02

  And the moment it bottomed, ETH bottomed first, and then the whole space bottomed, including tech in October.

• 16:47Speaker 02

  And it's just been following that liquidity cycle ever since. And using my forward looking projections based around this everything code thesis, you know, it should continue all the way into 2025 and crypto should continue to price that.

• 17:01Anthony Pompliano?

  What is the everything code?

• 17:03Speaker 02

  The everything code is a thesis that I put together after thirty years of work, where it came randomly. We kind of all know the world's broken. There's all the debt and the demographics and stuff you and I have talked about many times.

• 17:17Speaker 02

  I started looking at the ISM, the business cycle, so the Institute of Supply Managers Survey, and it was like fucking clockwork every four years. And that kind of stopped me in my tracks, like this didn't exist beforehand.

• 17:33Speaker 02

  And then I realized that what had happened in two thousand and eight was a debt jubilee where every central bank said, we'll cut rates to zero, so you don't need to pay the interest. Think of it in those terms, because there was too much debt. So every government around the world resets their debt to three to five year sector. And that leads to this four year cycle, which is the same as the presidential cycle. And it's the same as the halving cycle, because Bitcoin was born out of that, right? So everything is now perfectly cyclical. And that won't change until we solve the debt problem.

• 18:13Speaker 02

  And once you understand that, you can then forward look

• 18:18Speaker 02

  where liquidity is going to go, because if we're repeating the same cycle, you just use the old cycle, map it forwards for ISM, and it gives you a forward look on assets. And if that's the case, then it's a real code. Now, what I found within this was that the use of the balance sheet by all of the central banks was just for one thing, to pay the interest on the debt of the previous cycle.

• 18:45Speaker 02

  So they are just debasing the currency in the purest, simplest form, which is why we all make so much money out of crypto, because it does the best, because it's got technological adoption. And it's a scarce asset. So it does phenomenally well when they debase. So liquidity comes in, that's great. Debasing the currency is super great. And so we've now got, coming forwards, if we look forwards, we've now got all the Covid interest payments to make. You cannot do them at five and a half percent. We saw that before, the bond market freaked out. There's no way you can finance it without all the debt payments going exponential. So the Fed has to bring rates down and it's going to end up on the central bank balance sheet as it always does.

• 19:29Speaker 02

  Because there's no other way. Because if you think about how the world works is GDP growth, trend GDP growth in the US is 1.75 percent. The government's 100% of GDP in debt, it's actually more, but easy maths. If interest rates are 5%, that's 5% of GDP that needs to pay the interest.

• 19:52Speaker 02

  But growth is only growing at 1.75, so you'd have negative growth. Oh, but the private sector is another hundred and something percent of GDP in debt. So they're competing for the same GDP to pay the interest. So something has to give, and what gives is the government's side ends up on the balance sheet. So this was all this big thesis I found from the everything code that made everything explainable. Why asset prices rise? Why is it becoming predictable? Why have we got these cycles? And what's really going on, which is the debasement? And debasement, to think about, they're doing it about 15% a year on average. So they could have either raised taxes by 15%

• 20:36Speaker 02

  to get the payments, which is politically unacceptable in an age like now. So instead, they just flip the coins and debase the currency. And people don't really notice. They just notice that the rich get richer because they can afford scarce assets. And the poor get left behind, which is creating this huge political divide as well.

• 20:55Anthony Pompliano?

  How do you think measuring inflation is done best by the average person? Is it asset prices? Is it CPI? Is it something like a trueflation? Is it something else? Like, when you try to get at what is the actual inflation rate? What are you looking at?

• 21:10Speaker 02

  So I think there's, I think there's two inflations. And each person has a different inflation. Your inflation rate is different than mine. But I think there's two inflations. One is the inflation versus your income, which is what we saw last year. So the cost of goods rises faster than your income. So you have less discretionary spending power. Right? That's what caused the economic slowdown. That was the shit show that happened in 2021, 2022. Asset inflation is different. Your future self is poorer. What an asset is, is a way of tying up your capital in something with an expected return. So in a future date, you're hoping to be wealthier. The issue is there.

• 21:54Speaker 02

  So with this regular inflation, which I don't think is sticky. I think it falls back again. Doesn't mean that prices don't come down, the prices come down, but the rate of inflation comes down. This asset inflation is more pernicious. And it's the thing that people don't understand. You know, if you go and speak to your parents and say, yeah, how many times your income could, would it cost to buy a house when they were in their mid 30s? They would say three times, four times. You ask a 35 year old now, how many times your income would buy a house? It's like 10, 12, 14, 15 times. Right? So their future selves are poorer because they can't buy that house. I think that is more destructive over the long run.

• 22:37Speaker 02

  They're both destructive, but this is bad.

• 22:40Anthony Pompliano?

  Yeah, I completely agree. You also have this new motto, phrase, don't fuck this up. What is that? And what is that really? I think kind of reinforcing to people as we go into 2024 and 2025.

• 22:57Speaker 02

  Look, you've been around this for a long time. We've all made the mistakes and everybody makes mistakes. It's very hard dealing with an asset, let's say crypto, that is very volatile, but when it runs, it really runs and you become overwhelmed by emotion. FOMO, you see your friends bought that 100x dog coin and you're like, I want some of that. You want to look for 100x's as opposed to just own some Bitcoin and if you want to own some ETH and a few of the big projects and just buy and hold, but people don't do it. They want to start trading it because they think they can make more money.

• 23:36Speaker 02

  Also, they custody things wrong. People start thinking, I want the extra 5% yield by sticking it into some project of which they know nothing about the security of. And the don't fuck this up is don't let somebody take your tokens. Don't trade

• 23:53Speaker 02

  and hold quality assets. If you can do that with 90% of your portfolio, you will do well. Keep 10% to be a total filthy degen. Do what the hell you want, because that will go to zero. We've all got the wallet of shame, right? Every single one of us has a wallet of shame of shrapnel left for the previous cycle. They didn't do anything. So don't fuck it up is trying to protect people from themselves. And so we've actually even issued an NFT, which is free. So it's in your wallet and it's a video of me saying, don't fuck this up. So when people go in their wallets, there's me looking at them disapprovingly, trying to say, look, don't fuck this up. So if people want to do that, you also get the subscription to the free subscription to the Real Vision

• 24:38Speaker 02

  platform, but it's free. So go to realvision.com/pomp, get the do not fuck this up, don't fuck this up NFT. It's free, but it's the most valuable NFT you'll have because it'll stop you doing the stupid shit that you know you'll do when you lose your mind.

• 24:53Anthony Pompliano?

  I love it.

• 24:54Speaker 02

  I'm just trying to help people is really in the essence, I'm trying to help people because I think we maybe got two more cycles left at best. And this is a game changer. And as we talked about, most young people can't afford.

• 25:10Speaker 02

  You know, they've got, they're now starting to have kids. They've got a kid schooling, university. They can't afford a house. If they do, they have to move miles outside, uh, further away. They just, they can afford less of the S and P than their parents could. All of that stuff. So like, here is the chance to increase your probability of your future self, living up to that image you've got, which is people want a comfortable retirement. They want their kids to go through school. They want a house to live in. They want to be able to pay their medical bills. Well, if you just don't fuck this up, you can do that. It's not a guarantee, but it's a, but there's a high chance.

• 25:48Anthony Pompliano?

  So the message that you're sharing is shared in a very specific way. We also now are seeing, uh, other people can enter the space and share their message, their advertising, their marketing in a very specific way. Um, most notably BlackRock's new commercial is basically a guy who is standing there, no tie, but the blazer, the jacket, the nice, like almost like a elevator music playing in the background. And it literally, if you're, don't even listen to what he says, he's, you just know. It's okay. BlackRock's here. We got you. It is now okay to buy this ETF. Which is in direct opposition from pretty much every other issuer's ads, which have been all about innovation and disruption and, you know, Bitcoin ethos, et cetera. Do we need both?

• 26:33Anthony Pompliano?

  Or will the BlackRock style approach actually suck in a ton of capital that maybe the others couldn't actually reach?

• 26:42Speaker 02

  So I think it's a matter of demographics. Which demographic are you trying to reach? So if you're Van Eck, you're trying to reach young people. Right. Fidelity, Abigail Johnson's made it very clear in fidelity that she wants to um, attract young people and give them the products that they need for their financial success. So that, that's why those guys tend to skew younger. BlackRock is going for that classic R A A mutual fund from Ohio kind of products. And that's exactly the right messaging that they need. So I think it's, look, a- as you know, this product, Bitcoin itself is so disruptive and so broad-based.

• 27:22Speaker 02

  That it needs multi-messaging. It can't just be it's digital gold. It can't just be, you know, this is a new system. It has to be a number of different narratives. And actually, I know there's a big philosophical hand wringing about an ETF and is this really what we signed up for? I just think of it as the trade deal. We're bringing capital into the space to finance new projects. And that allows us to move the whole thing forwards. And when you hear Larry Fink talking about the tokenization of all assets, you know, it's moving forwards. And the more capital that comes into the space, the more people can build. So yes, it's it's suboptimal.

• 28:05Speaker 02

  But we need that capital from fiat world and get it into crypto land so we can create this new system we all want.

• 28:13Anthony Pompliano?

  So I want to push further into the industry. If you're a Bitcoin maximalist, you can shut off the episode now because we're going to talk about things you don't like. In terms of, you know, kind of pushing a little bit further out on the risk curve, I think that there is a debate between Ethereum, Solana, and a plethora of new challengers that are coming up. How do you think about technology? And is there going to be a kind of winner take all on the technology front? And then how do you think about capital allocation from an investor seat? And do you own, you know, both or more? Do you own one? Do you try to predict? How are you thinking about those two things?

• 28:48Speaker 02

  It's bloody hard, right? So it's fine when you get through the second cycle. That's why, you know, I was a very overweight Solana because I could see it survived the worst nuclear winter. And the developers were very active. The community was very active. And then they made some big tech breakthroughs with being able to mint a million NFTs for a hundred bucks. And then fire down, so which kind of changes the entire game again in terms of speed and cost. So I think so that, you know, that's why I backed that horse and still having Bitcoin and still having Ethereum. And then there's a bunch of new stuff, you know, how to sui and say and.

• 29:30Speaker 02

  Polygon and there's so many things and the answer is I don't know. It's difficult. You know, that's one of the reasons I set up the asset management business. I've got exponential age asset management was because this bit is difficult. It's easy to own the top three or four and not fuck it up. It's very difficult to choose the winners unless you're in it all day, understanding everything. And so the idea I had was to start an asset management business that just invests in crypto hedge funds. So it's a fun of fun. So they actually are doing the work to find that because it's otherwise it's actually really difficult to do. And again, we've all got proof in our wallets that we thought we were on to the next big thing and it wasn't.

• 30:12Speaker 02

  But in terms of is it a winner takes all, I just think we can't tell. I doubt it. I doubt it. I think different things will be, different chains will be used for different things, but it will probably end up being a total of five, take 80% of the market.

• 30:31Anthony Pompliano?

  So what's also interesting to me is if you go and you take a look at maybe tokens or chains that everyone, you know, has laughed at and thinks is somewhat stupid. You can see that over the last year, let's call it Tron is up 82%. All time it's up 5,400%. If you were to go talk to people in the crypto community, most of them for a very long time would be like, what? Nobody uses that, et cetera. The reason why it's interesting is because it's actually the most popular blockchain for stable coins.

• 31:03Speaker 02

  That's right.

• 31:04Anthony Pompliano?

  And so there is a very big divergence between the like data and like what is actually being adopted from a use case standpoint. And then what I would call the investment case. So this one seems to be dispelling the narrative of nobody uses that because obviously it's the most popular for stable coins. But it hasn't necessarily outperformed from a financial perspective, just owning Bitcoin or any of these other assets. And so to your point, there's a complexity of not only understanding where is usage happening, where developers, et cetera. But that doesn't always necessarily translate to the best returns either. So you have to really balance some of these things and kind of think through that complexity.

• 31:43Speaker 02

  I mean, XRP is another one. It has use. There's plenty of use, but it's not the best performing asset. It's just, it's a blockchain that gets used. There's a bunch of others with. With big market caps that aren't used at all, just for for fun. I mean, you can use Doge. I mean, it's just, I mean, Elon may use those for payment systems or whatever, some way, shape or form. But Doge's got huge market cap, just driven by retail investors. It's bananas. But you know, this is the space we're in.

• 32:18Anthony Pompliano?

  How do you think about investing in the memes? So I talked to Joe McCann and one of the big things he basically talks about is, you know, I mean, it's very kind of George Soros-esque, right? In the sense of like, when you see the bubble rush in and these memes take hold. In crypto, in some weird way, it feels like people not only are willing to share the meme, they're willing to kind of signal their part of a group, but also because they've seen hundred X, thousand X so many times. Then once they're in the meme, they almost become like the cult member. They really hold, right? Like they believe it is going, which has that reflexive kind of drive on the price. So how much of, you know, maybe the work that you all do in terms of investing is like, I'll call it quote unquote fundamentals,

• 33:00Anthony Pompliano?

  developers, chain activity, et cetera, versus understanding more of like the meme landscape and kind of where capital is going to flow based on the narratives?

• 33:08Speaker 02

  Listen, I think the whole space, the meme is really important. I mean, the best meme Bitcoin ever had was not digital gold, it's number go up. Right? I mean, that's such a powerful meme, right? And people get it. And so memes are really important because these are new things and people don't know how to really place them in the mental framework. But then it's kind of a child of the internet too. So, you know, dog with hat is like the big meme coin of the moment.

• 33:40Speaker 02

  And that's fine. It's kind of pure speculation and culture. It's the value of culture. And but the problem is, is it can die so quick, the culture of one thing and others are pervasive like Doge. So it is really hard to do, but my God, you can make a lot of money. And in my 10% DJM portfolio, I've got a couple of those that are just memes I think could work, but it actually takes a lot of work. So a few of my friends are really good at doing this. They really focus on the meme. I try and look at the meme that might. Run for a year or a year and a half as opposed to the mean because some of these will do fifty X in a month and then disappear.

• 34:24Speaker 02

  So it's again, it's hard and I don't like people to do it unless they really know what they're doing. Or if do, do it with the 10% because that's one way of fucking it up. You just think you're on to the next hundred X. You put all your cash in. You get rug pulled or whatever. And before you know it, you've lost all your money.

• 34:44Anthony Pompliano?

  Another maybe investment strategy or idea that I've been thinking a lot about is the public market obviously has now turned and realized, well, if these crypto assets are going to run, then companies in that industry probably are going to do pretty well as well. And we've seen the public miners outperform Bitcoin. We've seen Coinbase outperform Bitcoin over the last, you know, 12, 13 months. I don't know if that continues to happen or not. But if you dig into that a little bit further, it seems like the public market still does not quite yet understand crypto native revenue. And I'll give you maybe three examples. One being Coinbase, you understand the exchange revenue, you understand the custody revenue, but then they have the new blockchain base and there's a bunch of revenue that's coming from there.

• 35:26Anthony Pompliano?

  And if you don't quite understand that crypto native component, you may actually miss and under, you know, expect what Coinbase could do because of that revenue. Miners, if they're mining and the price of Bitcoin goes up 2X and nothing else changes, their revenue in dollars will go up 2X because the revenue is denominated in Bitcoin. So again, kind of a crypto native component. And then a lot of these asset management firms, they're not just making money on, let's call it, you know, 50 basis points or 100 basis points. If they have assets that are involved in staking or other types of activity, there's additional revenue that they're able to derive, which again, if you just use the legacy kind of traditional framework, you would miss in terms of underwriting this. And so how do you think about public market investing in crypto related equities,

• 36:11Anthony Pompliano?

  given kind of what we've seen so far?

• 36:14Speaker 02

  So firstly, now the ETF is out, maybe some of these things don't outperform, but some of them naturally do, miners do, like, because it's the same with gold miners. Once the gold price goes up and you cover the cost of electricity before you know they start compounding money. The ETF will mean some of those flows get taken away, so people don't use proxies. So stuff like Microstrategies might trade at a slight discount.

• 36:40Speaker 02

  But I think you're right, the market doesn't yet, because the investment banks didn't do the research on this stuff. So it all flows down from the authentication by the investment banks that flows down to the asset management firms, who then decide to allocate. And that's been thin on the ground, because they've not really touched crypto. So I do think there's a, as more companies come public, I know Circle's probably the next one, there'll be a bunch of these coming public. And I think that means that the investment banks will treat it as a full sector. And then they will start advising clients. And so we will understand these things better, maybe they all get repriced in this cycle to a better pricing strategy.

• 37:23Anthony Pompliano?

  What about NFTs? I know you've been pretty bullish on those over time. What do you think about that market and kind of where that's going?

• 37:30Speaker 02

  So NFTs are just assets that lag. If you think of art, NFTs, right, the expensive stuff, like, or the punk behind me.

• 37:41Speaker 02

  That stuff is a function of discretionary income. Much like Rolex watches have been going down,

• 37:50Speaker 02

  as have some fine wine, as have secondhand cars, as has NFTs, punks. And I chart all of this stuff and look at them, and they just lag the economy. Because right now, markets aren't at all time highs. People don't have, they don't want to start social signaling yet by buying the fancy Rolex or the punk or whatever. So it just lags. So I think we've been bottoming for a while in those assets. But I think NFTs this cycle, I think we will see, and you and I've talked about this before, uses stuff like ticketing. Just scale uses of smart contracts. Um, I think we will see that because the technology now enables it.

• 38:31Speaker 02

  So it doesn't have to be super expensive. We've also seen the rise of inscriptions and ordinals and that kind of stuff. Which is really interesting. And right now we're just in the experimentation phase. But people will figure out, okay, what really needs to be inscribed on the Bitcoin blockchain? Versus what doesn't need to be that kind of stuff. And I, I think it's really interesting.

• 38:55Anthony Pompliano?

  Now, when you look at these NFTs, what do you expect the use case to be? Like art obviously was the kind of first use case that really took off. Is it just pay art on a blockchain? Or do you think that it's more of kind of memberships and, and things like that? Or, or maybe something else?

• 39:11Speaker 02

  So with the new Solana compressed NFTs, and I know others have similar stuff. Basically, they're cheaper than printing a physical ticket.

• 39:21Speaker 02

  So now you're going to a baseball game. Your ticket's an NFT. You can't go to the event. You can sell it instantly. Okay, you're releasing trapped trapped capital.

• 39:33Speaker 02

  Hotel rooms. Another thing, you know, we all booked hotel rooms and suddenly we have to cancel the trip. The hotel won't give you your money back. They lose out because nobody's having a glass of wine and a steak in their restaurant. You've lost out because you've lost your entire money. If it's an NFT. You could have a marketplace and you could exchange the hotel rooms. So I think it's going to release a lot of trapped capital out of ticketing, stuff like that. Outside of just the cultural stuff we can use it for, you know, I don't see any reason why album covers. From, from music artists, because they're free of all the IP issues of music, which is a nightmare. But the album cover art.

• 40:12Speaker 02

  Why can't those be NFTs? So Taylor Swift can, can both monetize it or reward people for it. So, look, I think there's a lot of use cases and, and NFTs really. If they're just smart contracts, well, that means all OTC options should be. Um, NFTs.

• 40:32Speaker 02

  Insurance contracts, the NFTs.

• 40:34Anthony Pompliano?

  That's basically what Larry Fink is talking about and kind of tokenizing all these different assets. People have been around a while. Remember in 2017, I mean, and I was beating the drum like, look, all this stuff is going to get tokenized. And I think after meeting with tons and tons of institutions, I was like, oh, it's going to happen in 15 years. Right? Like, like there was no path in the short term.

• 40:54Anthony Pompliano?

  But what do you think? Like, do all of these assets get tokenized and we should expect, you know, stocks, bonds, currencies, commodities and everything in between that will eventually be tough.

• 41:04Speaker 02

  When I first got into Bitcoin 2013, this was my thesis. And here we are 10 years later. And it was the last thing to happen when I thought it was the most obvious first thing to happen. I thought the financial system is going to be first. But regulation inertia and fear has been the real thing. So they've waited for something bigger to be built. And now people are understanding it. And I think things like, I don't think people understand this Solana FireDancer. And again, not just picking on Solana. Because I'm long of it, but it's just like, they're thinking that Solana's theoretical TPS is 65,000. FireDancer takes it to 1 million.

• 41:49Speaker 02

  And it was built by Jump Trading. And the idea is you can therefore use blockchain for high frequency trading. So therefore it can be used for all exchanges. And if you think about the mess of FTX, we need exchanges on blockchain. We need the recorded ownership of assets. When Lehman Brothers went under, everybody's got a claim on the collateral. And there's 35 claims on the same piece of collateral. Right? This sorts it all out, automatic settlement of everything. We've seen that in DeFi. DeFi is a great experiment in showing that everything can automatically settle and contracts can resolve. So it is coming and it feels that once you speak to Franklin Templeton, Fidelity,

• 42:32Speaker 02

  the people at JP Morgan, BlackRock, that they are working towards it. Yeah, but there's been some setbacks as well. Australia tried to put their stock exchange on blockchain rails and gave up.

• 42:47Speaker 02

  Yeah, there's a bunch of people who've tried and given up.

• 42:50Anthony Pompliano?

  You um, sit inside of what I'll call the billionaire circle of all these great macro folks who grew up together. What are they talking about? We saw, you know, PTJ and Druck come out in 2020 and said they owned Bitcoin. We've seen the Alan Howards of the world, you know, multiple times and kind of the moves that their firm has made. We can go down the list of many, many others. Are they excited right now? Are they sitting on their hands?

• 43:17Speaker 02

  I'm starting to get phone calls.

• 43:19Anthony Pompliano?

  Okay.

• 43:20Speaker 02

  Which is interesting, right? Once you start to get the phone calls, because there's a bunch of them that deep in the space like Alan. He's deep in the space. A bunch of them have people who are already operating, you know, this bucket for them. So, you know, they're always around, you know, the Paul Joneses and the

• 43:40Speaker 02

  Stan Drucker Millers, they'll be periodically in and out, you know, they're they're agnostic, they they get it, but they they're traders. You've got the Lewis Bacon's of this world who have teams of doing people doing stuff, as do a bunch of them. But then there's the other kind of billionaire crowd, which is the other hedge fund managers or just the general billionaire crowd. And a lot of them came into it for the first time last cycle.

• 44:06Speaker 02

  Had been metal tested, were like, God, this is not easy, but I know they'll be back. So that's I'm getting quite a few phone calls from that crowd as well, which is like, hey, should we get back in and what should I be thinking and how should I be doing it? You know, what does this all mean? So I think that they'll all be back in. And I think this time around they'll stay. Because now they understand that you've got to go through a cycle to understand how this asset works. So I think they'll stay this time around and they'll figure out how to deal with it.

• 44:39Anthony Pompliano?

  And I think Alan Howard, maybe, or Brevin Howard in Alan, but they look at this as like the fifth sleeve of macro. If you go and you talk to a Druck or a PTJ, they also are not changing their framework of being a macro investor. This is now just getting plugged in to that framework. Is that kind of what you're seeing across the board as people are saying, look, I'm a macro investor? This is just now part of that, you know, playing field?

• 45:05Speaker 02

  Yeah, and I've done a lot of work from this from Global Macro Investor, which a lot of these guys are all subscribers to. And I've basically proven. That crypto is a macro asset. It's driven by the same forces of liquidity. And you relentlessly show that there's a narrative which is like, this is funny internet money, blah, blah, blah. And you show them it's exactly the same forces. So you can use global M2 or liquidity, whatever thing. And then you start proving, okay, how do you use the same macro tools?

• 45:40Speaker 02

  And chosen different assets, what are the outcome? And you find that even on a risk adjusted basis, crypto is like five or 10 or 20x better. It's like that, I think you tweeted it out as well. Fidelity put that hilarious scatter plot of risk rewards of all the assets, the little bottom left. And then you kind of don't realize, but you have another look and right up at the top right is Bitcoin. It's ridiculous.

• 46:07Anthony Pompliano?

  It looks like a pseudonymous account on Twitter made it as a joke, but it can't be real.

• 46:13Speaker 02

  I know, I know, it's crazy, but it's true. And I just, I wrote about it again in my Global Macro Investor this month, just showing using different measures of risk reward, how good it is. So I've banged that drum so people now realize, okay, I don't need to be scared of it because it's driven by the same macro cycle. If it's the same macro cycle, then anybody can trade it. And once you understand that, then it's just a matter of, okay, how much, how much allocation do I want to the volatility?

• 46:43Anthony Pompliano?

  Makes a, makes complete sense. My last question for you is outside of the billionaire class, what about the institutions themselves? What do you see there, whether it is kind of LP style, you know, type allocators? Or maybe even some of, you know, the very large hedge funds that we don't know about that are so far, you know, interested in this.

• 47:05Speaker 02

  I think the main driver of this whole space in terms of private capital has been family offices. Because they don't have a mandate, they can do what they want. So we've seen and continue to see the family offices drive the VC business and the hedge fund industry. The institutions are still few and far between. You know, the guys at Texas Teachers, there's only a few that have really allocated. Nobody's done a big allocation. There's a lot of noise that the Middle East is doing stuff, but I don't see many people actually coming back with tickets. So I think that's still to come.

• 47:46Speaker 02

  It feels that, you know, because if you think about how the world works, even when we look at from XPAM, the hedge fund side, none of the hedge funds are on like the Cambridge Associates platforms and the big platforms, they just haven't done crypto. So the traditional way of some giant pension fund going to Cambridge Associates, finding what the right hedge funds are, and Cambridge do the due diligence and then allocating doesn't exist right now. So they don't really have a way of doing it unless you've got some sort of pioneers within the shop itself. So it still feels like the major institutions of that type, we'll see more this time around. Yeah, we saw a reasonable amount last time. We'll see more this time around. It's probably

• 48:29Speaker 02

  the cycle after that. I think the ETF is a good thing because I know there's a lot of rogue fund managers who know that they can hoodwink the risk manager by saying, I've just got an equity, it's called, I bet it's an equity, you don't know what it is, and it's Bitcoin, right? They will do that. There'll be a bunch of people who do that and eventually they'll get the mandates to do it properly.

• 48:49Anthony Pompliano?

  I do think that a huge source of inflows for the Bitcoin ETF, SPOT ETF, is going to be other ETFs just putting the Bitcoin ETF in their portfolio. Like, I don't know what the numbers are, but if you're out there with a mutual fund or an ETF and it's been lagging, what better thing to do than put the best risk-adjusted asset possible into your portfolio, even if it's a 2%, 5% allocation, right? It doesn't have to be huge.

• 49:15Anthony Pompliano?

  But it'll juice your returns.

• 49:17Speaker 02

  I think that's what BlackRock and Fidelity will do because they run these broad portfolio mandates. And they will show the

• 49:26Speaker 02

  the accretive benefits of having Bitcoin in a portfolio. And so what they'll automatically start doing is adding 2% or whatever to client portfolios. So that's part of that ongoing bull flows analysis. And we saw this back in the late 90s when Goldman built these GSCI commodity products. Nobody had commodities in their portfolio. They were too volatile. Nobody wanted them. Cut a few years later, there's like 100 billion of them have been bought by institutions.

• 50:00Anthony Pompliano?

  Where can we send people to find you online or look at Global Macro Investor?

• 50:05Speaker 02

  Yeah, so you can find me on Twitter at RaulGMI.

• 50:11Speaker 02

  And then there's links there to all of the other stuff like Global Macro Investor. If your Real Vision is where you get yourself educated, you know, we've done a lot together. People should go there. It's free. We've built this incredible new platform with built in AI, automated transcripts, this whole chat tool with this globe spinning where you can meet members all around the world. All sorts of cool shit and it's free. So go to realvision.com/pomp and there you can get that Don't Fuck This Up NFT with me in your wallet trying to save you from yourself, which I think is priceless.

• 50:44Anthony Pompliano?

  Amazing. Thank you so much for doing this and we'll definitely do it again in the future.

• 50:47Speaker 02

  Absolutely, my friend. Good to see you.