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To investors,

The Bitcoin Conference did not disappoint. There is way too much to cover in one letter, so I am going to focus on the four speeches that I believe are most noteworthy.

First, Microstrategy’s Michael Saylor gave a presentation on bitcoin, including his vision on how the asset can improve financial markets and his bull and bear case for the future asset price. You can watch the full presentation here.

Saylor used annual rates of return between 21% and 37% for the next 21 years to determine his three potential price outcomes.

It may surprise some to see Saylor’s bear case of $3 million per bitcoin, but remember this is over the next two decades.

That would put bitcoin’s annual return at approximately 2x the S&P 500 each year. The annualized return for the last 5 years is over 40% and you can see the year-by-year returns below.

Given the asset has a fixed supply, and the dollar continues to be debased at a healthy rate, it doesn’t seem crazy for bitcoin to increase in price by 21% a year for the next two decades.

Next, Presidential candidate Robert F. Kennedy Jr. gave a rousing speech that called for the United States to purchase 4 million bitcoin as a strategic reserve asset. His plan would be for the country to purchase 550 bitcoin per day until the full 4 million are purchased.

This sounds like a great idea on the surface, but I highly doubt it is mathematically possible. You can see that more than 50% of bitcoin’s circulating supply has not moved in over 2 years and the general trend is that bitcoin is becoming more illiquid over time.

This means it is hard to see a world where one country will be able to acquire ~ 20% of the bitcoin total supply. Again, the general strategy and idea are compelling, but it is more likely that the United States could acquire 1 million bitcoin, which would still make them one of the largest bitcoin holders in the world.

On Saturday, former President Donald Trump gave his highly anticipated speech. He hit almost every major talking point that the audience wanted to hear, including comments saying the cardinal sin of bitcoin was selling your bitcoin and professing that “bitcoin is going to the moon.”

Here is a summary from Reflexivity Research’s Will Clemente of the main talking points:

Notably, Trump did not call for purchasing more bitcoin at the national level. He chose to advocate for the US government to hold on to the approximately 200,000 bitcoin that is already in the government’s possession.

Instead of calling this bitcoin a “strategic reserve,” Trump chose to call it a “strategic stockpile.” Although that may sound like semantics, it suggests that Trump is not planning to back the US dollar with bitcoin or any other type of reserve activity.

This idea of a strategic stockpile from the leading Presidential candidate immediately makes me think other Presidents and countries around the world are going to be creating their bitcoin strategy this week. They can’t allow the game theory to leave them on the wrong side of history.

Another interesting point during Trump’s speech was the reaction to Trump’s promise to fire SEC Chairman Gary Gensler. You can see the Presidential candidate was shocked by the crowd’s support, so he chose to repeat the line with a degree of showmanship. This was another sign that Trump is quickly ramping up his pro-bitcoin support in an effort to court the growing voter cohort.

Speaking of political support for the industry, it is important to remember that everything we are hearing so far is talk. It is ultimately action that matters. Promises sound great. We won’t know till after the election whether any political candidate will actually do what they say they are going to do.

Lastly, Senator Cynthia Lummis followed Trump’s speech with a major announcement — proposed legislation that would require the US government to buy 1 million bitcoin (worth ~ $68 billion). Her thought process is that these bitcoin would be held for a minimum of 20 years and could help bring down the US debt.

Lummis stated “This is our Louisiana purchase moment,” which refers to the prescient investment of $15 million the US made to purchase 530 million acres of land from France in the early 1800s.

Overall, the bitcoin conference was filled with many amazing speakers and lots of announcements. The Bitcoin Magazine team did a fantastic job from the various talks. You can watch them all online by clicking here.

Hope everyone has a great start to their week. I’ll talk to you tomorrow.

-Anthony Pompliano

Founder & CEO, Professional Capital Management

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James Davolos is a Portfolio Manager at Horizon Kinetics.

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