To investors,

Bitcoin has unique properties that continue to prove valuable in the market. This value leads to increases in demand, which drive the US dollar price higher. As the price goes higher, previous bitcoin bears are forced to re-evaluate their prior analysis.

Some of the bears continue to conclude that bitcoin is over-hyped at best and worthless at worst. It is unclear if they reach the same conclusion because they truly believe their analysis or if it is the product of a lack of intellectual rigor. Either way, plenty of prior bears are still bearish today.

There are a few people, and I mean a select few, who have been previously skeptical of bitcoin publicly and are now changing their mind. The latest person to do this is Jeffrey Gundlach, the founder of DoubleLine Capital. For those of you who don’t know Gundlach, he is known as the bond king and has been a gold bug for years.

The revelation came from one of his tweets yesterday:

Jeffrey Gundlach @TruthGundlach

I am a long term dollar bear and gold bull but have been neutral on both for over six months. Lots of liquid poured into a funnel creates a torrent. Bitcoin maybe The Stimulus Asset. Doesn’t look like gold is.

February 18th 2021

323 Retweets2,162 Likes

The idea of Bitcoin: The Stimulus Asset has a nice ring to it. But what is more interesting to me is that Gundlach’s analysis is not a statement on bitcoin exclusively, but rather a three pronged analysis of the US dollar, gold, and bitcoin. This is exactly how someone should think of these assets — each can serve as a store of value in different environments or time periods.

Over the last 12 months though, holding bitcoin was a better decision over dollars or gold. In fact, it is becoming increasingly clear that gold is seeing outflows at the same time that bitcoin is seeing inflows. Bloomberg’s Lynn Thomasson explained it well by saying “Gundlach’s comments are another sign the investment case for Bitcoin is winning over institutional money managers and possibly siphoning cash from the gold market. Historically, traders have turned to the precious metal as a way to play rising inflation expectations. But over the past year, it has been range-bound and gold exchange-traded funds have seen outflows.”

While the chart is clear that gold is losing and Bitcoin is winning, that doesn’t necessarily guarantee causality. It is hard to argue against the data and results though.

Investors have a short memory unfortunately. If they did not, you would remember people were yelling and screaming about Bitcoin’s correlation to traditional assets during the start of the economic crisis in March of 2020. As I wrote at the time, we were not seeing sustainable correlation, but rather a liquidity crisis where all assets would sell off together.

As predicted, assets eventually were bailed out by government and central bank intervention. We saw an aggressive recovery and eventual decoupling of correlations that trended back to the historical non-correlation for bitcoin.

The question that I keep asking myself is “how long will gold bugs hang on to their gold while they watch the digital store of value gain market adoption?” The short answer is that no one actually knows. Some people are likely to bail in the short term because of the US dollar price of bitcoin. Some people will take time to critically think about their world view and then change their mind. And a few people are more focused on being “proven right” than actually “being right.”

Ultimately, everyone capitulates though. Bitcoin is the hardest, soundest money the world has ever seen. That may sound like a bombastic claim, but it is proving to be more accurate with each passing day. Remember, changing your mind when you receive new information is a sign of intelligence. We should encourage people to do it.

The real sign of stupidity is watching the market, and related data, tell a story that is impossible to ignore, yet you sit idly by submerged in your ignorance. Gold has done a fantastic job for thousands of years. We live in a digital world now and the old solution just doesn’t cut it anymore. You don’t send all of your communications via physical letters anymore. You’re intelligent enough to use email, text message, and phone calls.

Holding on to your gold is the equivalent of physical letters. Does it get the job done? Yes, in the most basic sense, but it is drastically inferior to the digital application of communication. This is what the world is waking up to and realizing at almost the same time. The world’s richest entrepreneurs and investors. The largest financial institutions. They all see the writing on the wall and they’re trying to figure out how they want to participate.

It is a beautiful thing to watch. Bitcoin doesn’t care though. It continues to produce block after block after block of transactions. Enough to process nearly $15 billion of on-chain transaction volume in the last 24 hours. That puts it on a path to $5+ trillion annualized transaction volume, which is approximately 50% of Visa and MasterCard.

Just as everyone eventually capitulates, bitcoin will eventually eclipse these monolithic payment networks. It is just a matter of time. Have a great day. I’ll talk to everyone tomorrow.

BONUS: If you want a job in the bitcoin and crypto industry, there are thousands of open roles at http://www.pompcryptojobs.com

-Pomp

SPONSORED: Even with 50% of my net worth in bitcoin...I know that portfolio diversification is important. And if you’re looking to invest outside of crypto then you should check out blue-chip art. Like bitcoin, there is a fixed supply of paintings that decreases every year as works get donated to museums and foundations (+ the Fed can’t print Picassos...). According to Citi, contemporary art returned 13.6% per year over the last 25 years - that’s 52% better than the S&P 500!

The 1% have dominated the art market for years. Because blue-chip paintings cost millions of dollars, there hasn’t been a way for regular investors to get into this exclusive asset class. Thanks to Masterworks, everyone can invest in blue-chip art from artists like Basquiat and KAWS at a fraction of the price. 

So if you’re sitting on some parabolic gains, it doesn't hurt to shave off a few Satoshis and diversify into one of the oldest and safest asset classes in the world. The best part? Pomp Letter subscribers can skip their 14,750 person waitlist today.* 

*See important info

THE RUNDOWN:

First Bitcoin ETF in North America Is Launching in Canada: The first exchange-traded fund tracking Bitcoin in North America begins trading in Toronto on Thursday, in a potential milestone moment for both the cryptocurrency and ETF industries. The Purpose Bitcoin ETF provides exposure to the world’s largest cryptocurrency by investing directly in “physical/digital Bitcoin,” issuer Purpose Investments Inc. said in a statement. The fund will be available both in Canadian dollar and U.S. dollar units. Read more.

Jeffrey Gundlach Says Bitcoin May Be a Better Bet Than Gold: DoubleLine Capital LP chief and long-time gold bull Jeffrey Gundlach has changed his mind on the metal and considers Bitcoin a better trade. Gundlach tweeted he’d been a long-term gold bull and U.S. dollar bear, but has turned neutral on both. Bitcoin may well be “the stimulus asset,” he said, a reference to the cryptocurrency’s rally amid a wave of cash pumped into the financial system during the pandemic. Read more.

Tesla Tapped Coinbase for $1.5B Bitcoin Buy: Coinbase’s institutional trading wing handled electric car-maker Tesla’s $1.5 billion bitcoin investment earlier this month, according to The Block. The report illustrates Coinbase’s growing role as corporate America marches deeper into crypto. Coinbase handled MicroStrategy’s early allocations; The Block reported it has five Fortune 500 firms as clients. Read more.

Coinbase, Readying for Public Listing, Gets $77B Valuation From Nasdaq Private Market: Cryptocurrency exchange Coinbase, which is preparing to trade publicly in the next few months, is being valued at $77 billion, based on trading of the company’s privately held shares on a secondary market. Those shares in the largest crypto exchange in the U.S. are changing hands on the Nasdaq Private Market at $303 a piece, according to two people with knowledge of the auction. That implies a total company value of about $77 billion – greater than Intercontinental Exchange Inc., the owner of the New York Stock Exchange. Read more.

US Lawmakers Looking Into China’s Role in GameStop Pump: U.S. lawmakers are set to question a trader named Keith Gill and the chief executives of Reddit and Robinhood about their roles in the GameStop frenzy at a congressional hearing later this week. But some have another concern: whether China is involved. Several Republican lawmakers on the House Financial Services Committee plan to examine Reddit’s ties to Chinese tech conglomerate Tencent and Robinhood rival Moomoo, according to a Politico report. Moomoo is a wholly owned subsidiary of Futu Holdings, which is also backed by Tencent. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

James Peyer, PhD is the Founder and CEO of Cambrian Biopharma, a Distributed Drug Discovery Company developing therapeutics targeting the biology of aging. Cambrian builds, finances, and manages a pipeline of therapeutics.

In this conversation, James and I discuss:

• Nine hallmarks of aging

• Molecular damage

• How to add healthy years to your life

• Prevention vs reversal of diseases

• Distributed drug companies

I really enjoyed this conversation with James. Hopefully you enjoy it too.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

1. If you own crypto in a lot of places like me you know how difficult it can be to keep track of it all. Whether you keep your crypto on hardware wallets, mobile wallets, exchanges, liquidity pools, or somewhere else, CoinStats lets you track it all in one place on your iPhone, Android, Apple Watch, or computer. Try it for free or go to coinstats.app/pomp and get 40% off your premium subscription.

2. OKCoin.com is the leading crypto exchange for both beginners and experienced users. You can fund your account in under 2 minutes, and get access to the most advanced trading engine, all while paying the lowest trading fees in the industry (0.1%). Visit www.okcoin.com/pomp and open your account today. 

3. Want to sell your wonderful internet business? Tiny partners with founders to give them quick, straightforward exits that protect their team and culture. We’ll make an offer within a week, close the deal within a month, and keep your business operating for the long term. Get in touch at tinycapital.com, and we’ll let you know within a couple of days.

4. Choice is a new self-directed IRA product that allows you to buy Bitcoin with tax-advantaged dollars, while still holding your private keys. You can go to retirewithchoice.com/pomp to sign up today.

5. Unstoppable Domains is working to make the internet operate how it was originally intended, which means anyone can publish anything from anywhere. You can go to unstoppabledomains.com and claim your censorship resistant domain today.

6. BlockFi provides financial products for crypto investors. Products include high-yield interest accounts, USD loans, and no fee trading. To start earning today visit: http://www.blockfi.com/Pomp

7. Crypto.com allows you to buy, sell, store, earn, loan, and invest various cryptocurrencies in an user friendly mobile app. Join over one million users today. You can download and earn $50 USD with my code “pomp2020” when you sign up for one of their metal cards today.

8. Diginex is the first company with a cryptocurrency exchange to be listed in the US. Their ticker is Nasdaq: EQOS, and they are the first crypto company that you can buy stock in. They also have a crypto exchange called EQUOS, which has been built to institutional standards, but is available to everyone. You can trade Bitcoin and Ethereum spot, as well as Bitcoin perpetuals, and get a 5% discount on all fees, by signing up using http://www.equos.com/pomp

9. Money On Chain brings Bitcoin to mass adoption with solutions to meet the needs of different types of users: a fully bitcoin-collateralized stablecoin (DoC), a bitcoin on steroids (BPro), and a dizzying bitcoiner option for lovers of leveraged trading (BTCx). All this, without requiring the delivery of private keys. Money On Chain - Bringing bitcoin into the mainstream.  Visit moneyonchain.com/pomp to learn more.

10. Use PrimeXBT - an award winning trading platform where users can trade Bitcoin and other top cryptocurrencies with leverage. They offer one of the best commissions structures in the industry as well as tight spreads on all Bitcoin trades. It also has some great features, including a copy trading module and more. Register with the link below and use promo code "Pomp" to get a 50% deposit bonus: http://u.primexbt.com/pomp

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable.

Nothing in this email is intended to serve as financial advice. Do your own research.