The bull case for bitcoin with Anthony Pompliano and Kevin O’Leary
For the purposes of debate, we’ve transcribed the above video for you to make up your mind on bitcoin and how cryptocurrency for business could work. We know where we stand, we’ll side with Anthony Pompliano 🙂
Andrew Ross Sorkin: What is going on here?
Anthony Pompliano: The Bitcoin bowls are back, look you know yesterday I see Bitcoin futures 1.2 billion dollars in volume. A lot of these exchanges are seeing all-time highs in volume and I think that we’ve seen the bottom of the bear market.
Andrew Ross Sorkin: But why and who are these people?
Anthony Pompliano: I think there’s things so one definitely institutions are starting to come in you see fidelity announcing that they’re going to start their custody and trading backed us at the deadline for July but retail also coming in and I think what you’re seeing is two things. One it’s a very scarce asset. We’re a year out from the happening. So it’s going to get about half as scarce in the monetary schedule.
Kevin O’Leary: That sounds really exciting.
Anthony Pompliano: So historically that’s been a big moment in terms of it is a really price driver because it reminds people that there’s only 21 million these.
Kevin O’Leary: Just an arbitrary thing right, to cut it in half in terms of unit.
Anthony Pompliano: Preset every four years basically the amount that is created every ten minutes gets cut in half. So right now its twelve and a half Bitcoin every ten minutes in May 2020 it’ll get cut to 6.25. So if you believe in scarce asset that’s a big moment and we’re about a year out from that and the other thing I’d say is I think that the trade war actually has a little bit to do with it. This idea that we’re watching, you know essentially a trade war play out on Twitter. You look at a non-sovereign currency and I think that there’s some kind of safety.
If this trade war gets solved does Bitcoin go down?
Anthony Pompliano: It could. I think that the big thing here is if you look at the macro trend Bitcoin has seen three drawdowns over eighty percent in its lifetime – the last decade. But it is the best performing asset and one of the core layers I draw is if you look at Amazon stock. Amazon’s drawn down over 90 percent twice the entry a year drawdown is over 30 percent on average. So it’s a pretty volatile stock in that sense. Bitcoins done very similar things but what it continues to do is set new yearly lows. So don’t look at the highs. Look at the lows and again it’s just supply and demand if you have a scarce asset and demand increases.
Kevin O’Leary: I want to explore the idea that there’s nothing here except raw speculation. No different that when I go to Las Vegas and put my money on black or red on a roulette. Because where is the intrinsic value inherent in deploying real capital, let’s talk real money here and putting it into Bitcoin as a storage of value. I get gold for 2000 years including the Romans, they saw value in owning that as an asset class. Tell me why this which is basically a digital game, that’s the way I look at it has any intrinsic value when people actually put real money into this; they make no interest, they can’t pay their taxes with it the regulator’s don’t lie it which is always a problem for compliance and where’s the long term value. Just this idea that they’re gonna cut the number of units in half cents is such a scam. That’s just totally BS.
Anthony Pompliano: I would say two things. One is its disruptive technology so if you look at it from a technology standpoint.
Kevin O’Leary: But that also has an odor of BS to it.
Anthony Pompliano: Look everything that’s new seems different in the beginning and I think what you’ve got to realizes with Bitcoin specifically money is a belief system so the U.S. dollar; the only reason why you and I use it is because we believe it has value so I’ll give you a dollar you give me a good or service in exchange. We believe that it has value. Bitcoin has value because two people who exchange it believe it has that value and what we’re seeing is the volume. Look at people using it. That’s ultimately what matters.
Kevin O’Leary: What about the other cryptocrap. There’s lots of other coins.
Anthony Pompliano: I believe Bitcoin is the king and is gonna stay the king for a very long time.
Kevin O’Leary: I taught a class at Harvard 18 months ago that young people in that class challenged me I put a hundred dollars into something called coin base which is a wallet thing.
Anthony Pompliano: You buy Bitcoin?
Kevin O’Leary: I bought them all. I bought all the cryptocrap I put $100 in it’s now worth 30. It’s a 70% loss on my cryptocrap. Now I bought them all. I think that really sucks and I think people should understand today the hot digital is Bitcoin tomorrow it could be whatever right.
Anthony Pompliano: Again, I think that Bitcoin the reason why Bitcoin is getting so much attention it’s the best performing asset in last decade. It’s drastically outperformed SPE every other kind of financial asset that’s out there and the second thing is the institutions are coming in because Bitcoin is actually a better store of value it’s more transparent and more secure. So regulators they actually like Bitcoin in the sense of law enforcement can track criminal activity. Every single transaction is done on a public ledger, you can see.
Andrew Ross Sorkin: I am sure the enforcement loves Bitcoin.
Anthony Pompliano: I’ve interviewed a DEA agent who came on and they would love for criminals to use Bitcoin over U.S. dollars in cash. It’s much more traceable and so what law enforcement is saying is they want these digital currencies used Bitcoin specifically because of the public nature of the transactions easier to track the criminal activity
Andrew Ross Sorkin: After the fact.
Anthony Pompliano: After the fact, yeah of course. Well US dollars you can’t track it before or after.
Kevin O’Leary: Last time this had a big run up to twenty thousand and people started talking about assets with it; the SEC where it was handing out subpoenas like birthday cards.
Anthony Pompliano: They were doing it for the ICOs; so ICOs are essentially people who took the concept of a blockchain or a crypto currency token and they’re using it for fundraising for companies and so you can imagine if you go out and solicit funds from investors and you do nefarious things. The SEC cares and come talk to you.
Melissa Lee: The fact that matters is Bitcoin has been acting written pretty well in respect to the recent bad news hitting the sector we had a hack of finance and then we also have the New York AG bringing charges against tether and BitFenix and the coin has done remarkable.
Kevin O’Leary: Why can’t I pay my taxes with it?
Anthony Pompliano: You can.
Kevin O’Leary: Why don’t the IRS take it?
Anthony Pompliano: You can in the state of Ohio they accept Bitcoin as for taxes and there’s other states that are working on it now.
Kevin O’Leary: Federally if they could ever get there.
Anthony Pompliano: For sure.
Kevin O’Leary: Wow! You’re an optimist.
Andrew Ross Sorkin: When?
Anthony Pompliano: I’m not in the business of making bets on the federal governments regulatory decisions.
Melissa Lee: Do we hit the past highs again.
Anthony Pompliano: I definitely think that we will right again.
Melissa Lee: What sort of timeframe?
Anthony Pompliano: Look at that’s the hard part. The way that I think to look at this it’s a non-correlated asymmetric return asset and we definitely in my opinion we’ve hit the bottom of the bear market we’ve now entered into this bull market. Historically about a year out from that happening period is when that kicks off. It wouldn’t surprise me if we enter a kind of a two to three year bull market now and 20,000 I think will be a blip on the radar just like previous past highs.
Kevin O’Leary: Only Bitcoin.
Anthony Pompliano: Only Bitcoin.
Kevin O’Leary: No other cryptocrap.
Anthony Pompliano: I’m not here to talk about anything else but Bitcoin.
Kevin O’Leary: It seems like you would think that if it’s all boats would rise in this tide of crypto.
Anthony Pompliano: So for your portfolio here’s the number one thing I can tell you as to why you should own Bitcoin. It’s a non-correlated asymmetric return asset that the value drivers of all of your equities everything else is tied to earnings GDP interest rates etc.
Anthony Pompliano: Well neither is US dollars and how big is your cash …
Kevin O’Leary: You know I love your optimistic view of it you haven’t changed my mind at all it’s still a garbage and I’m not gonna take real money and put it into this thing it’s never gonna happen real dollars. I mean not real money, taking real dollars that I’m making in cash 2.1 percent on.