#733 Bitcoin's Black Friday Sale w/ Dylan LeClair

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. In this conversation, we discuss Bitcoin's recent sideways trading through on-chain analytics and what macro-economic forces are causing BTC's price drop. ======================= With 10M+ users, Crypto.com is the easiest place to buy, and sell 100+ cryptocurrencies. The Crypto.com Visa Card gives you up to 8% back instantly, and 100% back on Spotify and Netflix. Also, Crypto.com lets you earn up to 8.5% p.a. on BTC, and 14% p.a. on stablecoins. Get $25 when you download the Crypto.com App with code "pomp". Download the App now: https://crypto.onelink.me/J9Lg/pomppodcast2021 ======================= Matrixport is Asia’s fastest-growing digital asset platform founded by crypto veterans Jihan Wu and John Ge. With $10 billion in assets under management and custody. Matrixport offers one-stop crypto-financial solutions including fixed income, Defi in 1-click, structured products, Cactus Custody™, spot OTC and lending. You can earn a high double-digit yield with the Dual Currency Product or opt for the lucrative potential of our new product, Range Sniper. If you hold crypto and are actively looking to do more with your precious asset, then this app is one you don’t want to miss. Download the Matrixport App and enjoy a welcome offer of 30% APY on Fixed Income for new users. Visit invest.matrixport.com/en today. ======================= MiamiCoin is the first token to be released by CityCoins, a community-driven project built on Bitcoin. CityCoins aims to give people around the world a new way to support their favourite cities. The protocol has already generated over $7 million dollars in donations to the city of Miami and continues to grow every day. If you want to get involved Follow @minecitycoins on Twitter to stay up to date with the project. Visit chat. CityCoins.co to join the community discord and contribute to the movement.

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. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Dylan Leclerc 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. In this conversation, we discuss Bitcoin, on-chain metrics, market structure, and what to expect from the rest of the Bitcoin bull market. I really enjoyed this conversation with Dylan, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Crypto.com. They're helping to mainstream the crypto industry, signing major global partnerships with multiple sports, including Serie A, the Italian Football League, the UFC, and my personal favorite, Formula One. With over 10 million users around the world, Crypto.com offers an easy way to

• 0:47Anthony Pompliano?

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• 1:30Anthony Pompliano?

  a great URL, that's the place where mass adoption is happening. Next up is Matrixport. Have you lost your way in this low-yield environment while searching for a better store of value to beat inflation? Look no further. Invest with Matrixport to get more from your crypto with the potential for up to very high yields on certain products. Matrixport is Asia's fastest-growing digital asset platform founded by crypto veterans Ji Han Wu and John G. With $10-plus billion in assets under management and custody, Matrixport offers one-stop crypto financial solutions, including fixed income, DeFi in one-click, structured products, Cactus Custody, Spot OTC, and lending. You can earn a high double-digit yield with the dual currency product, or opt for the lucrative potential of the new product range snipe. If you hold crypto and are actively looking to do more with your precious assets, then this app is one you don't want to miss.

• 2:15Anthony Pompliano?

  Download the Matrix Port app and enjoy a welcome offer of very high yield on fixed income for new users. You can also go to matrixport.com or download their app. Matrixport.com or go download the app to check out Matrix Port, the Asia's fastest growing digital asset platform. Last but not least are my friends over at City Coins. As you may have heard, when we had Miami Mayor Francis Suarez on the show to talk all things Miami, including his excitement for a project that's really caught my attention, Miami Coin. This is the first token to be released by City Coins, a community-driven initiative built on top of Bitcoin. Yes, it is built on top of Bitcoin using stacks and smart contracts. City Coins aims to give people around the world a new way to support their favorite cities.

• 2:56Anthony Pompliano?

  In short, the city of Miami was given $7 million and has now grown to over $20 million and counting by private citizens to improve the city with no strings attached. A city government embracing crypto instead of fighting it was a historic event. Do you want to get involved? Follow them on Twitter @MineCityCoins or go to citycoins.co to join the community Discord and contribute to the movement. Citycoins.co. All right, let's get into this episode. I hope you guys enjoy this one.

• 3:21Speaker 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.

• 3:44Anthony Pompliano?

  Dylan, talk us through the price is going down right now. What's up with Bitcoin's price? Why is it going down?

• 3:49Speaker 02

  Yeah, I think it's just some macroeconomic uncertainty, some of the stuff with the new variant, which is, you know, you can, I guess, assess the validity of that, you know, yourself. But I think that's, you know, you're seeing equity sell off. You're seeing, you know, like crude oils down like 13% today. Just various asset classes are selling off and Bitcoin just kind of reacting sort of as a risk on asset. But, you know, really it's just, I think investors are kind of searching for a little bit of protection, not in the way that we think of it, in the terms of like. They're going to print a lot of money, which I think that's the response that's going to come with any sort of, you know, macroeconomic shock. But just on a, you know, intraday timeframe, I think that's what's occurring.

• 4:29Anthony Pompliano?

  All right. And when you see that, are there specific metrics in the Bitcoin network that you look at when there's something that appears to be affecting it from outside? Like an external shock like this, is there things that you look at for either measuring health or things that you look at like if this happens, I'd be really worried?

• 4:45Speaker 02

  Yeah. So I think, um, you know, looking at something like long-term holders, uh, you know, coin days destroyed stuff like that, where you can see like day to day, what's happening, uh, with kind of old coins. I mean, seeing just like a little bit of elevated spikes on, on both of those things today. Um, and so I think that's just, you know, like with long-term holders that, you know, there was a, a decline of about 76,000 Bitcoin, uh, which sounds like a lot, but, um, it's, it's, you know, we're still far above the levels we were at this summer in terms of accumulation. So, um, not too worrisome, but just kind of, uh, I think it's investors are looking for a little bit of, uh, protection and maybe, maybe taking a small amount of chips off the table.

• 5:17Anthony Pompliano?

  Got it. And when we start to think about the numbers that I pulled up earlier in the show, so point oh, one Bitcoin balance on Bitcoin addresses, the number of Bitcoin addresses with point oh, one as the balance or more hit an all time high. We're now at almost 9.3 million. Also 89% of Bitcoin is in profit. Do you put any credence or value to like some of those underlying metrics that continue to hit all time highs or remain very, very attractive? Or is this simply a game of supply, demand, everything else is, uh, kind of a, a function or an outcome of the supply, demand? That's all you care about is looking at supply and demand?

• 5:53Speaker 02

  Yeah. So I mean, I think there's, there's a couple of different like cohorts of, of Bitcoin investors or kind of, you know, um, supply and demand. There's, there's the stackers and the, and the hodlers who, you know, strike just rolled out hourly DCA, right? So, so I set up an hourly DCA and every single, you know, every single hour I'm taking some satoshis off the market. And I know there are a ton of people that are also doing that and at a lot larger scale than I am, uh, all over the world. So, so that's kind of like that base level demand and you're seeing that, that's, that's occurred for the last 10 years and that will continue to occur. But you also see, you know, with the derivatives market and with the Bitcoin on exchanges, there's like a few million Bitcoin, about two, three million Bitcoin.

• 6:30Speaker 02

  That are basically just wash traded day to day. And you know, whether it's a headline, whether it's CPI or the coronavirus, you know, variant risk and all this stuff, it's just headline traders. And so, you know, they kind of whipsaw the price around over the short term, over the interim. But over the, you know, weeks, months, quarter, year timeframe, it's really the stackers, the hodlers that kind of set the floor and, and, and, you know, kind of create this reservation demand for Bitcoin.

• 6:54Anthony Pompliano?

  All right. And then when you start to look at things like DCA via that, is that where you see the world kind of moving to is just more of like this automatic DCA streaming payments? Like people just kind of set it and forget it? Or do you think that as Bitcoin's price goes up, people will still look at this as like a very much like macro investment thesis? Like, okay, here's my thesis. Here's what my allocation of my portfolio is. Here's what I'm willing to risk. Here's how much I'm looking for as an upside. Here's what I'm going to sell at if there's downside risk management. Like, how do you think this plays out? Is it more of an investment asset? Or people really do look at it at the savings account?

• 7:29Speaker 02

  I think it's both. And that's what's the fascinating thing about it is like, and I, and I kind of play both a little bit myself where I view it as my long-term savings account as my savings medium. You know, I have, I have a stash that I'm not going to touch for, for decades. I mean, hopefully, hopefully leave it to, you know, it's my, my kids that I don't even have yet. But also at the same time, it's treated as, as kind of this, this risk on, risk off asset day to day. And so, you know, and like with the derivatives, like we were talking about, you're going to see stuff on the shorter timeframes where, where it pumps like crazy or dumps. And, and a lot of people are just kind of confused by that volatility and saying, how is this possibly, you know, a safe haven, you know, medium for, for, for your long-term value?

• 8:11Speaker 02

  But, you know, the, there's kind of those, those two investor classes, like we talked about, or maybe not investors, but the savers, the hodlers, and then kind of the day traders. And so, you know, you can, you can be both, but I think for most people around the world, more and more people are kind of treating it as this savings medium. And I'm just going to passively allocate to this on a day-to-day basis or week-to-week or whatever it is. And, you know, whether that's corporations, whether that's Wall Street institutions, whether that's nation states or just individuals, I think, you know, broadly, more people are. Adopting this and with absolute scarcity, you know, the price can only go one way in the long term.

• 8:44Anthony Pompliano?

  Got it. When Joe and John's got questions, they're gonna ask you here in a second. But one other thing that I'm very interested in is we've now seen Bitcoin City and we talked a little bit about this earlier in the week, but it feels like this Bitcoin backed bond. We continue to see Samson Mao talk a ton about there's lots of interest, lots of interest. Do you still feel pretty strongly that this thing's gonna be like oversubscribed and lots of people are gonna want access to it like I do? Or after having some more time to think about it, like have your thoughts changed a little bit as to what the reception for that Bitcoin backed bond might be?

• 9:17Speaker 02

  I think it's pretty interesting, just in the sense that, you know, with fixed income, there's there's no upside. It's really only downside in the sense that you're getting paid a you know, a fixed amount of fiat currency traditionally with fixed income. And so any sort of inflation risk or, you know, usually it's not at a sovereign level, but any sort of default risk. There's really only downside. You know, if you're talking about other sorts of investments, whether it's equities, Bitcoin, you're thinking about how much can I make? But fixed income investors off, you know, they're thinking about how much can I lose? And with with yields around the world, basically at record lows, you're not even accounting for deflation or default risk. Fixed income investors really are in a tough spot. So when you have kind of this this call option upside with the Bitcoin exposure that the El Salvador Bitcoin bond comes with.

• 10:00Speaker 02

  I think a lot of, you know, maybe investors or fixed income investors that were skeptical of Bitcoin in the past are looking at this thing that's been the best performing asset. Probably, I think, eight years out of the last decade and say, hey, you know, this is this is pretty interesting.

• 10:13Anthony Pompliano?

  Got it. Joe, John, what questions you guys have for Dylan?

• 10:16Speaker 03

  Dylan, a lot of people joke about everyone talking to their grandparents and their parents and their siblings and everything like that and selling them on Bitcoin during the holidays. I'm curious, is there like actually anything on chain that we can look at to see if any of this is is happening on a substantial level or not?

• 10:32Speaker 02

  Uh, not that, not that I've seen. Um, I mean, anecdotally, um, I threw out some, some joke tweets yesterday. Um, no, my, my uncle Jim did not mortgage the house, uh, to buy Bitcoin on the spot, but, um, I, I mean, I have had all the conversations with all of them, uh, and Bitcoin did come up, you know, 10, 20 times throughout the last couple of days. And so I think that's happening around the world. I mean, uh, you know, there's, there's that, that Bitcoiner in the, in the friend group in the family that continues to talk about it year over year. And, you know, the results don't lie. So in terms of like, whether we can see that in the data in terms of yesterday, uh, I don't, I don't think so. At least not from what I've seen. Uh, but I think, you know, there's just that, that kind of that Lindy effect, uh, and you know, that, that crazy cousin, uh, you know, is continuing, continues to be right. And so, you know, there's something to say about that.

• 11:17Anthony Pompliano?

  John, what questions you have?

• 11:18Speaker 04

  What's up Dylan? Nice to see you in Florida. You look, uh, you look happy. I'm glad. Thanks everyone. Well for you. So my question is, what is your argument for people to say like, how do I convince people when I get together with the, for the holidays? How do I convince them that Bitcoin is a store value? Like what Bitcoin is? Like what is your easiest 30 second pitch for people to say?

• 11:36Speaker 02

  Yeah. Um, I think one of the things that's worked really well for me and it, it may not be like hold up true right now with the recent price dump, but, um, I checked as of like a week or two ago, it was, you took 10 bucks a day over the last four years and just passively allocated to it instead of going to the gas station or, you know, 10 bucks a day, right? It's, that's not too much. Um, 10 times 365 times four, that's about $14,000 passively put away. Uh, and that's of about a week ago, that was a hundred thousand dollars. And so obviously as Bitcoin grows, um, those returns are going to be diminished. Um, the upside isn't, isn't what it was four years ago or four years before that. Um, but just, you know, in terms of a lot of people get scared away by the volatility, but you know, from a compound annual growth rate perspective, not many asset classes are going to beat that

• 12:20Speaker 02

  sort of performance. And I think that's going to hold true going into the future. Um, and a lot of, you know, there's a lot of shock and awe when you kind of throw those numbers around saying, hey, you know, just 10 bucks a day. You know, a lot of, a lot of people that aren't investors or don't know where to even start hear that. And, uh, you know, their eyes kind of get a little wide. So that's what I've been using as my kind of 30 second pitch.

• 12:37Speaker 04

  Boomers at the table might, uh, their jaws might hit the floor if you talk about the amount that it's appreciated over the last decade compared to bonds or anything else.

• 12:45Speaker 02

  Exactly. I mean, those treasury bonds that, you know, whatever, 1.5% don't look too attractive.

• 12:50Anthony Pompliano?

  Dylan, another thing that we saw this morning is Singapore has approved two Bitcoin spot funds. How do you think about like geopolitical competition from other regulatory regimes with the United States? If the US doesn't approve Bitcoin spot ETF and kind of continues to drag its feet on some of that stuff, do you see investors wanting to just go get the exposure in these other markets? Or is still the US kind of the king? And once it gets approved, there'll still be massive capital inflows in your opinion?

• 13:19Speaker 02

  Yeah, I mean, I think US capital, public capital markets are the biggest in the world and will continue to, you know, there's just no kind of competition from just total size perspective. But in terms of like the Bitcoin geopolitical kind of game theory, or maybe jurisdictional arbitrage, it's really, really interesting. And seeing that, especially following the China ban earlier in the year, seeing some politicians say, you know, we have to capitalize, east versus west, and we want to come out ahead. This is a matter of national security. I mean, it's playing out how a lot of people said it would play out in theory, but it's not theory anymore. And I think that's one of the things that the biggest Bitcoin skeptics still are missing. It's like, you know, we're going to ban Bitcoin. And it's like, well, obviously, we're not because there's so much interest in this, there's so much vested interest in this asset class, whether that's from the political

• 14:04Speaker 02

  standpoint, or just in terms of the pure capital behind it, and all the lobbying efforts that are happening beneath the surface. So, you know, we still don't have a spot ETF, but there's just no way a ban will occur. And I think, you know, eventually, the pressure will mount so high that, you know, we have all these other countries that have it. Why don't our capital markets have one? And so we'll probably see that in 2022, but the timeline on that is still unknown.

• 14:26Anthony Pompliano?

  Got it. And then last question I have for you, and then we'll let you go and let you go back to your family and enjoy in Florida, is when you look out at the bull market, obviously, this price drawdown, there's a lot of people who are nervous, they're scared, they're fearful. Does anything change about your outlook? Or do you still see us kind of in a continuing bull market and have a pretty kind of deep conviction in that price will go much, much higher, you know, through the end of this year and potentially into Q1 of next year?

• 14:52Speaker 02

  Yeah, I mean, I think in terms of like the thesis is completely unchanged in terms of the recent events over the last week, over the last couple of weeks, we talked earlier this week about the dollar strengthening against other fiats. And even though, you know, inflation is running hot in the US, strengthening dollar in the global economic system is, is, is bad news for all asset classes. And so, you know, that's what we saw in, in 08, that's what we saw in 2020. But, but the good news is any sort of response to some sort of dollar shock and, and asset sell off is more of the same, right? So, you know, it's kind of heads, heads you win, tails, you also win, in the sense that they're gonna continue to have to print a lot of money. The response can be more of the same. And even if the, you know, the Fed or, you know, politicians jawbone, we know what's

• 15:35Speaker 02

  gonna happen. Money supply is gonna increase and, you know, basically equities in every sort of asset class, Bitcoin included, even if they don't admit it, keeping that price sustained is a matter of national security, just with, with, you know, how the, the financial system, economic system is currently, stocks, everything can't go down for a sustained period of time, just because with how the fiat system is built. And so, you know, we kind of know the long game is that, you know, if there's a shock to the downside, it's an opportunity, because, you know, the response will be more of the same and Bitcoin is the asset you want to hold in that scenario.

• 16:04Anthony Pompliano?

  Makes sense to me. Real quick follower check, Dylan's at 89,000, means by the end of the month, he'll be at 100. Keep tweeting, don't mess up, keep tweeting. Be at 100 by the end of the year. That means we gotta put one big 50K follower month together in December, and we're at 150K like I said he would be. You, you got it in you?

• 16:23Speaker 02

  Think so, hopefully.

• 16:24Anthony Pompliano?

  John, can you get to 100K by the end of the year?

• 16:27Speaker 04

  I'm trying.

• 16:30Speaker 04

  It won't be for lack of effort, I'll tell you that.

• 16:32Anthony Pompliano?

  All right, Dylan, I appreciate you taking a few minutes to, to jump on here. Obviously, you've been, been all over a lot of this stuff, and we appreciate all the, the data you've been sharing. Joe, John, you got any last comments, thoughts, statements?

• 16:47Speaker 04

  I'm trying to order a Chick-fil-A over here. I appreciate you joining us for Thanksgiving, Dylan. I hope you have a wonderful holiday season, and we'll talk soon. Good luck to the 150. Go follow Dylan. What is it, at Dylan Leclerc?

• 16:57Speaker 02

  Underscore, yep.

• 16:58Speaker 04

  Underscore, gotcha.

• 17:00Anthony Pompliano?

  All right, buddy. Thank you so much, appreciate you.

• 17:03Speaker 02

  Happy holidays.