On October 25, 2023, Anthony Pompliano, the renowned founder of Pomp Investments and co-founder of Morgan Creek Digital Assets, made a significant appearance on CNBC's "Squawk Box." In this candid conversation with co-anchor Joe Kernen, Pompliano touched on various facets of the world's most popular cryptocurrency, Bitcoin. The discussion encompassed Bitcoin's recent price surge, the state of Bitcoin exchange-traded funds (ETFs), and the broader economic factors influencing the dynamic cryptocurrency market.
Pompliano commenced the dialogue by highlighting the significance of reflecting on Bitcoin's performance during the years 2018 and 2019 as a foundation for understanding its current status. These were pivotal years that saw Bitcoin's resilience, even during challenging market conditions, which notably convinced a spectrum of investors, including the illustrious Stanley Druckenmiller, to take positions in the cryptocurrency.
One of the key statistics Pompliano shared was the fact that a substantial portion of Bitcoin remains dormant in the wallets of long-term holders. Specifically, he pointed out that 76% of Bitcoin hasn't been sold in the last year, and 56% hasn't changed hands in the past two years. This data underscores a strong holding pattern among Bitcoin investors, indicative of their unwavering faith in the cryptocurrency's long-term potential.
Pompliano asserted that the price of Bitcoin is largely driven by a persistent supply and demand imbalance. He attributed this to various factors, including the impact of monetary policies, such as low-interest rates and quantitative easing. Furthermore, he suggested that the current trend of high-interest rates and attempts to curtail monetary expansion is likely to be a transient phase. He predicted that governments around the world would eventually revert to looser monetary policies, a scenario that could be favorable for Bitcoin's value.
The conversation also delved into the eagerly awaited approval of spot Bitcoin ETFs by the United States Securities and Exchange Commission (SEC). On this matter, Pompliano expressed optimism, pointing out that BlackRock, one of the largest asset management companies globally, is taking steps to establish a fund. This, in his view, is a strong indicator of preparation for eventual ETF approval. While acknowledging that certainties are few in the world of finance, Pompliano argued that a reputable institution like BlackRock would not stake its reputation without good reason. He further noted that the political composition of the approval committee, consisting of three Democrats and two Republicans, is unlikely to have a significant impact on the inherent value or functionality of Bitcoin.
Pompliano continued to emphasize that Bitcoin, as a decentralized digital asset, remains largely indifferent to political and geopolitical events. He went on to describe Bitcoin as the "most disciplined central bank in the world," highlighting its unique characteristic of not reacting to news or geopolitical shifts. Nonetheless, he acknowledged that Bitcoin's price can be sensitive to such external factors.
In addressing Bitcoin's recent 100% increase in value since the beginning of the year, Pompliano suggested that the market is sending clear signals that deserve close attention. He also noted that, while general market sentiment might lean towards risk-aversion, astute investors are adopting a risk-on approach, particularly when it comes to assets like Bitcoin.
Pompliano made a significant point regarding the resilience of Bitcoin. While companies dealing with Bitcoin may be concerned about the stance of regulatory authorities like the U.S. government, Bitcoin itself, being a decentralized protocol, is fundamentally unaffected by these external forces. He argued that even in the scenario of a U.S. government ban on Bitcoin, it would not deter global interest in the cryptocurrency, given its borderless and decentralized nature.
When the conversation turned to future price predictions for Bitcoin, Pompliano remained optimistic. He alluded to Bitcoin's historical performance, wherein it has exhibited significant appreciation during bullish markets, often reaching gains of hundreds of percentage points. He firmly believes that this trend is unlikely to change. He further emphasized that Bitcoin stands as a true free-market asset, unaffected by government bailouts or circuit breakers, which contributes to its inherent volatility.
Anthony Pompliano's insights on Bitcoin provide valuable perspective on the cryptocurrency's present state and its prospects for the future. As Bitcoin continues to play a significant role in the financial landscape, discussions such as these help investors and enthusiasts better understand the dynamics of this digital asset.
