 Now, when it comes to Bitcoin, it has such asymmetry to it. It basically is kind of this Apex Predator, if you will. It can do everything. Anthony Pompiliano, often simply known as Pomp, is one of the most bullish Bitcoin investors around. Over 50% of his net worth is in Bitcoin and he has never been afraid to say it out loud. Over 50% of my net worth is in Bitcoin and I don't claim to sell it. I forbid that. That's insane. I forbid that. Last year, he predicted Bitcoin will reach $100,000 by the end of 2021. But after the latest Bitcoin rally, how have Pomp's views changed? More educated investors, better infrastructure and the new market entrance with large pockets end up driving the price of a scarce asset high. Find out about Pomp's Bitcoin outlook for 2021 and beyond in our latest Crypto Market Show with Michael van der Popp. Welcome, Anthony. How are you doing? Doing great. They saw what's happening. Recently, we've seen that Bitcoin approach is all-time high within a completely different landscape than when it was during the peak high of 2017. In your opinion, how is the current rally different from the previous one in 2017? Yeah, I think the main difference is just there's been much more time for people to get educated on what exactly this asset is. And then also at the same time, there's been a lot more infrastructure that's been built out. So when you have a more educated kind of investor base also giving them more infrastructure to buy, sell, custody, et cetera, you're going to end up having something that looks much less like a blow off top or kind of bubble type mania. And instead, you're basically going to get true adoption. And so not only does that help the people who are already in Bitcoin in terms of 2017 and before, but also now what you have is you have new market entrance. So you've got many large kind of institutional investors, whether they're pensions, foundations, endowments, or they are Wall Street financial institutions, you're starting to see more and more of them kind of look at the macro landscape, understand the challenges there and seek Bitcoin as a kind of portfolio exposure. And so those three things, kind of more educated investors, better infrastructure and the new market entrance with large pockets end up driving the price of a scarce asset higher. Yeah, I should just say that one of the primary drivers of this recent run is institutions and big parties coming into the markets with Michael Sederlis from MicroStrategy is one of the examples and he's been actually buying up in the recent week. How do you think that this will be affecting the markets from now on as they are the key place in the current markets and not retail as what it used to be in 2017? And when you start to look at very, very large asset managers, hedge funds with billions of dollars, you start to understand that they're not going to invest small dollars here, right? They're going to look to put hundreds of millions of dollars, if not single digit billions of dollars into the market. And so naturally when you have a larger average kind of purchased amount, you're going to have a much bigger impact on the market, right? It takes way more retail investors to match those institutional investors. And so that's just a classic market dynamic. That's not special to Bitcoin or cryptocurrencies. It's just how markets work. And when you have a market cap that's still relatively small in the grand scheme of things, it's only $350 billion, then you're starting to look at a world where you say, it doesn't really take that much money to move the market price higher either. And so I think that's where institutions are kind of faced with a situation where they want to get exposure, they want to put it in their portfolio in the size that they want, but they also are trying to be very kind of slick about the way that they get the exposure without moving the market price. And so I think we'll continue to see this trend over time. I think that we've really only started to see the beginning of that institutional adoption. But as it kind of cranks up here, I think we'll see a pretty aggressive increase in the US dollar price of Bitcoin. Well, as the Bitcoin market cap is relatively small, isn't the overall institutional interest not just a self-fulfilling prophecy? I mean, they have a narrative to use or to see the price of Bitcoin go up as they are now having Bitcoin in their portfolio. Or are we actually seeing that there's a major trend shift in which bigger players start to understand the potential of Bitcoin in those markets and in our current financial system? That's the big question, I would say. Really where a lot of the institutional world has focused is they've been kind of fanatical about how do I drive returns? How do I drive yield? How do I drive alpha? And really tried to outpace the inflation. And so if there's, you know, it's called 2% inflation targets, they're looking to, can they get 6%, 7%, 8% type returns? And so on a real basis, it's, you know, something that continues to grow their pool of capital. What I think now is happening, though, is people are saying, wait a second, there actually may be an asset that one has the store of value mechanisms that we need in terms of protecting us from what could end up being higher levels of inflation. You've got the Federal Reserve in the United States saying that they want over 2%. You've got an incoming Treasury Secretary, Janet Yellen, or at least who's been nominated, who is notorious for tolerating higher levels of inflation. And so you've one got to think about how do I protect myself in this situation? But then two is the difference, let's say a gold and a Bitcoin, gold can serve as a store of value, but it doesn't provide any sort of real upside potential. Right, it's more let's protect you rather than gain some of that increase in value. Now, when it comes to Bitcoin, it has such asymmetry to it. It basically is kind of this apex predator, if you will, it can do everything, right? It can basically protect your wealth at the same time it has incredible asymmetry to it. And so I think that's becoming more and more attractive. And the beauty of this is this isn't the first time something like this has kind of shown its face, right? To go back to 1971, Bitcoin's up, or I'm sorry, gold is up more than 40X, right? And so what I think we're seeing here is Bitcoin going through a similar trajectory in terms of adoption and price discovery. It's just happening on a more compressed timeline. And as institutions wake up to that, you're right that it just becomes more of a self-fulfilling prophecy. And eventually kind of you go from a contrarian trade in Bitcoin to a consensus trade. And when that happens, kind of all bets are off. Well, during 2020, we've also seen the massive expansion of quantitative easing, what you just discussed in which they try to achieve the inflation target of 2% a year. This has cost the dollar to become relatively weaker in one of your previous interviews. You've argued that this might be the end of the fiat experiment. You know, the US dollar will fail, right? And whether we like that or not, that's just how history has played out. However, right now, countries are starting to use vaccines which might open up the economy in the near future. What effect do you think this will have on the markets and their policies? And how will Bitcoin do in this scenario? Yeah, there's a whole bunch of stuff in there, right? So first, kind of from a fiat experiment standpoint, I think it's pretty clear that, you know, the system is working as designed. And so what that has led to is the greatest wealth and equality, you know, at least in our lifetimes for sure, and it's kind of ever increasing. Two is we have created an addiction where our economies can't operate without the intervention of central banks. And then the third thing is we basically have gotten to the point where there's the point of no return, right? We can't stop doing this. And so as we know, every global reserve currency in the world that fell has fallen because they devalued it away. If you think back to even just last year, it was pretty clear that we were getting to the later stages of an economic cycle, right? You saw everything from inverted yield curves. You saw repo markets kind of seizing up. You saw a high level of CEOs leaving their jobs. Like all these kind of notorious red flags. But again, nobody knew when was the market going to crash, right, or correct. And so obviously the virus ended up being that catalyst, kind of the pin that pops the bubble. You get this market crash. Now, to the Federal Reserve's credit, in their job of trying to manage employment and the economy, they basically stepped in with monetary policy kind of bombs, right? They were like, we're gonna throw as much money at this as possible, over $3 trillion. And what they basically did was they inflated asset prices again, artificially. And on that kind of action, they actually punished those in the bottom 50% of the population. And so really what we ended up is in this case-shaped recovery, which feels great if you hold stocks, doesn't feel great if you have no investable assets. And so that's where you get kind of the bifurcation. But I tend to think that as the virus and the vaccine kind of work themselves out, what we're going to see is a continuation of what we've seen now. Like we're gonna have interventionism economics. We're gonna have central banks think they can solve all the problems. And so individual citizens are faced with a choice. Either you can continue to participate in that system or there's a new system being built. And do you wanna participate in that one? I personally think that the new system is better. And frankly, it provides much more equality for people around the world and better opportunity. And therefore I choose to focus my time and energy there. Well, that's a very decent answer. Thank you very much. Well, we have discussed that currently to keep the system going, governments actually have to continue the money printer actually as that keeps the inflation going. That's the only way why the system is still continuing as it is. However, it's getting harder and harder to keep that inflation at 2% or higher than 2%. So potential stack inflation or deflation is also on the tables to end this system. How do you expect Bitcoin to perform in the case of deflation? Will Bitcoin possibly act like gold as in the 1930s or will it be different? Yeah, so I tend to think that it's not really gonna matter. And what I mean by that is in the short term in terms of short term price movements, sure it matters. We saw in March, for example, when we got to this deflationary environment, investors were basically panicking. They were uncertain. There was a lot of chaos. They sold off all their assets that had liquid markets attached to them. So it didn't matter if it was stocks, bonds, gold, Bitcoin, everything sold off, correlations moved towards one. And really they just wanted dollars, right? And the dollar strengthened and asset prices weakened. Well, all of a sudden when the government stepped in, they flooded the market with liquidity. You've got this reversal. So you've got a weakening dollar, you've got a strengthening asset price. And so they've done well there. What I think that people are kind of worried about is in the short term, if we do enter this stage of kind of deflation, do you see some sort of price decrease or whatever when it comes to Bitcoin? I tend not to worry about that, mainly because I think that one, you're seeing actual people say that the new system is better. And so there's gonna continue to be this disconnect or non-correlation between the two systems. And I think that's one of positive things. But then also the second thing is I don't think that we're going to get into a world where the central banks just throw up their hands and say, oh, that's fine. We're just gonna go to no inflation at all. Like we're just gonna go in a fully deflationary environment. I think that we kind of underestimate their committedness to seeing some level of inflation if not over 2%, right? And frankly, they can only really do two things. They can print money or they can manipulate interest rates, but in a world where they wanna go negative on the interest rates and they wanna print 10 plus trillion dollars, I think that we would see some level of inflation, but obviously that just pulls forward kind of the end game or ultimately the demise of a currency. And so you've gotta kind of play this balanced game between what do you do now to affect the short term without causing too much damage long-term. And I think it's a really hard kind of task to do. And frankly, I do not think that humans are well-suited for making those types of decisions because we're too emotional. We care too much about the short term. We don't wanna make the hard decisions. We wanna make what sounds right and can help people today. And so I tend to just kind of opt out of the legacy system and focus my time on the new one. Well, as you said, markets are quite cyclical. This might be the end of this current cycle of our financial system. There's also another part, which is the four-year cycle in Bitcoin movements with the hall things occurring. And some people argue that the four-year cycle is going to last from now on and Bitcoin will be moving in those four-year cycles. What is your view on that perspective? Do you believe that this will last and Bitcoin is going to top out in December 2021 again? Or do you believe that the halving will have less effect over time as the price goes up for Bitcoin? So when you think about kind of the opportunity that we're looking at here, if there continues to be fixed supply, meaning that basically the code continues to execute as it's supposed to, and you get kind of that supply shock that just occurred in May of this year, and then that's coupled with a demand shock where there's a lot of people with a lot of money coming in and trying to adopt the asset, you're going to get a increase in the US dollar price of the asset. Now, one of the things that people always forget is they say, oh, there's 18.5 million Bitcoin in circulating supply, kind of. Yes, there are 18.5 million in circulating supply, but if you think about about 63%, 65% of Bitcoin haven't moved in the last 12 months. And so all of a sudden you couple that with let's say like a grayscale GBTC where they're basically buying Bitcoin and they're putting it in cold storage, almost like disappears, they call it the Bitcoin black hole. And so actually you've got about 60, 65% of Bitcoin that hasn't moved, which means out of 18.5 million, you're talking about 11 million or so that have gone nowhere, right? 10 million that have gone nowhere. And so really the addressable supplies, let's call it plus or minus 8 million Bitcoin in the market. And so when you start looking at that, you're like, wait a second, this is interesting because if all of a sudden only about 8 million Bitcoin are available and all this new demand is showing up, you're going to have a pretty aggressive price increase because there's just not any Bitcoin, right? And I keep saying that like Bitcoiners aren't selling their Bitcoin. And so I think that those market dynamics are going to drive a very aggressive price increase. You know, I earlier, I think this year or end of last year, whatever it was when we first broke 10,000, I wrote and said, you know, I think we're going to hit 100,000 before the end of 2021. Literally people were like, that's insane. You're crazy, you know, all the stuff. Now all of a sudden I'm somehow the most conservative person because everyone else is throwing out these wild numbers. You know, 200, 300, I have no clue, right? All I know is it's going to be pretty aggressive. Got pretty high confidence in 100,000 dollars by the end of 2021. We'll see what happens. Well, we have been focusing majorly on Bitcoin right now, but in one of your recent podcast with Raoul Paul, you were actually discussing Ethereum as probably it might be even better performer and a broader platform than Bitcoin. Massive amount of human capital, intellectual capital working in that particular space. I think there's a chance that Ethereum can have a larger market cap than Bitcoin. What are your expectations towards those other currencies for the coming year? And do you expect that those cryptos will get more of the spotlight of institutions as well? I think Bitcoin will be the king. It's going to stay the king. It's got the branding. It's got the kind of name recognition. It's the focus of most of the institutions. Yes, sure. There are some people who will look at other things, but I think that the majority of the time and attention is going to Bitcoin. Maybe that changes in the future, but for now that's definitely true. In terms of performance, the thing that Raoul and I were talking about that I think is important people to understand is market dynamics are true in every market. And so if you think of stocks, for example, if all stocks increase, the large caps usually increase at a smaller percentage than the small cap stocks. It's just that it takes less dollars to move on a percentage base as a small cap than a large cap. And so in crypto, that's the same thing. Now that doesn't mean that you should run and go buy a bunch of small cap type cryptocurrencies. In fact, the way that I think about it is I basically draw a Venn diagram. On one side, I put what is my confidence level in the success of this happening, right? And then on the other side, I put what is the return profile that I see from this asset? And so when I take those two things and I put them together, the thing that's in the middle where I have the highest degree of confidence is going to work and also has an attractive return profile is Bitcoin. And so that's where I choose to focus majority of my time. I've made a couple of investments in companies that are building in other places, but for the most part, Bitcoin is my focus and I tend to think that that's going to do just fine. I've got to ask you as there is also a bunch of new people coming into the markets, what advice would you give to them with a Bitcoin being at 20K right now and everybody just shouting six-figure numbers, even seven-figure numbers over where Bitcoin will be in a year from now? Yeah, so I definitely don't think we're going to see a seven-figure number. So whoever's saying that we should have a conversation and understand why they're thinking that, but I definitely don't think that. Look, the advice is basically the same for every asset is one, the first thing you got to do is you got to make sure you do your own research, really educate yourself, understand what you are looking at, how it works, why it has value, what the thesis is behind it, all that kind of stuff. So educating yourself is the most important thing. The second thing is understanding in your portfolio how you're going to construct this portion of your portfolio. So if you've got a 60-40 global portfolio, are you going to put 1% of your assets, five, 10, 15, 0.5? Whatever the number is, you got to figure out that component of it based on that education that you gave yourself. And then I think that the key piece here is to understand this is a super volatile asset. It is definitely something that you need to take a long-time horizon on. And then just dollar cost average into it. So say, hey, every week or every month I'm going to buy X dollars worth of it and I'm going to continue to kind of use it almost as a savings technology and I'm going to just accumulate. Bitcoin is a game of accumulation and I think that the faster people understand if I educate myself, if I figure out the portfolio construction and then I simply work just to accumulate Bitcoin, that tends to be kind of the winning strategy. And the part that I love is like, if you bought Bitcoin at $20,000 in 2017 and you basically dollar cost averaged your way through the bear market for two years, you actually would have been up even though the price was still down significantly. Now you look at it and you say, hey, if you had dollar cost averaged since the top in 2017 all the way back to now in 2020, you'd be up a lot. And so I think that people just have to remember that dollar cost averaging is a very popular, timeless financial kind of approach because it works. And so rather than try to time markets or think that you're the next great day trader, instead I think that just having that asset allocation kind of framework, staying very disciplined, very patient, having a long time horizon and simply just dollar cost averaging into your positions ends up being a very, very kind of prudent way to treat not only Bitcoin, but other assets in your portfolio as well. Well, I think that's quite helpful for all the new people that are feeling the FOMO, getting into those markets, but they have to get into the markets with a strategy. 2021 is going to be a massive year for crypto and a very interesting year. That's been a great conversation. I want to thank you very much, Anthony, for being here as one of the guests and I would say to everyone watching this interview, don't forget to subscribe to this channel. Thank you, Anthony. Absolutely, thanks so much for having me guys. You guys are doing great work. Cointelegraph, like, subscribe and hodl.