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Author: Jennifer Sanasie, CEO of Professional Capital Management, Melissa Montañez, CoinDesk; Compilation: Tao Zhu, Bitchain Vision
Jennifer Sanasie:In this episode, we will explore the current form of the cryptocurrency market and provide insights into the broader financial landscape.Whether you are actively trading or just fascinated by cryptocurrency market volatility, this episode is your compass to understand what’s going on, where we are and where we are going.Good morning everyone.Our guests today absolutely don’t need venture capital or podcast introductions.He really did everything.Anthony Pompliano, welcome to Markets Daily.Of course, thank you for coming.So as you know, in this episode, we really want to dig deep into the cryptocurrency market.We want to hear from those who have successfully navigated the cryptocurrency market.So the first question I want to ask you is,How do you allocate your portfolio this morning, or if you look at the cryptocurrency market this morning, how do you plan to allocate your portfolio?
Anthony Pompliano:Thank you very much for your invitation.Yes, so I’m not actually just thinking about the cryptocurrency market.I consider general finance and all asset markets more broadly.Cryptocurrencies dominate our portfolio, with over 50%.However, we also allocated a lot of money to Osage Ventures.Then we have some real estate.Then, we are doing more and more things in the open market.When it comes to cryptocurrencies, I want to say, you know, most of it is Bitcoin.This is a position we hold for a long time.We have been increasing our holdings of Bitcoin for years and we see it as an investment of over 20 or 30 years.We don’t actually trade at all.We will not consider selling based on price levels.It’s really just buying, always holding a great asset and then hoping I leave it to my grandchildren.The second largest position in the portfolio is Solana.This is a relatively new thing.Last year, we started setting the position around $45, 48 and then continued to increase as we rose.The position size has increased significantly and is now the second largest position.Then I would say, the other thing that really excites us in the cryptocurrency space is that earlier this year we sold a company called Reflexivity Research to a publicly traded company called DeFi Technologies.DeFi Technologies operates ETP business across Europe to find long-tail assets for crypto assets.
And, their business is very strong and seems to be doing well.So, you know, if crypto is the area we want to invest in, then how you get exposure in many different aspects, including liquid cryptocurrencies, private companies in venture capital, and some public companies.
JS: You mentioned Sol, most of the people who participated in this show hold two of the largest cryptocurrencies, Bitcoin and Ethereum.But you just said Sol is your second largest cryptocurrency.I know you’re optimistic about Sol.Talk to me about your investment philosophy in Solana, not Ethereum.
AP:Yes, I mean, you know my experience investing in Solana, we are LPs of Multicoin Fund I, who invested in Solana.I think they completed their investments for less than a dollar, like a few cents.So there was an explosive trend in the bull markets in 2020 and 2021.I think those guys managed that position very well and made a lot of profits there.Then, you know, when they allocate us physically,
I said to myself and my partner, I don’t know what this is, right?We didn’t actually take the time to study it, to understand it, and to know how to deal with Solana.Do we want to hold it?Want to sell it?Where are we going?Obviously, in the bear market, it has fallen sharply all the way, and I think it has fallen to $8.Then it starts to pick up.One thing that interested me when I started researching was, why didn’t it die?It reminds me a lot of bitcoin, right?repeatedly.Why didn’t it die?But secondly, I started to see the start activities on Solana starting to eat up some Ethereum activities.It’s not because Ethereum won’t strengthen or token prices won’t rise, but because of the opportunity to make a wrong pricing, right?If you think both activities will increase, then Solana’s activities may increase at a faster rate.They may actually suck Ethereum’s market share in some aspects (such as DEX activity or token offerings, etc.).So if this happens, then you can expect the sol token price to rise more than the ether token.This is indeed an analysis.As I shared before, I sold all the ethers I personally held late last year or early this year, when the sol traded around $70, $70, $73.So far, it’s over.and,I still believe Solana’s activity data, along with various macro factors, will make the asset continue to perform quite attractively.So we just hold it.
JS: Anthony, what is the worst investment you have ever made?
AP:The biggest investment mistake is definitely the investment I didn’t do, which is a bit like a stupid answer.But if you have never obtained capital or lost capital, there are many different companies I have seen in the early days, but just didn’t take action.I remember when I was working on Facebook, I met an executive at DoorDash.The company is small in size and has been established for a short time.I had the opportunity to invest, but I didn’t.So when you see these things, you learn over time that very large asymmetric bets are sometimes worth taking the risk because the risk rewards are so unbalanced.But these are definitely what cost me the most money, what I didn’t do but should have done.
JS: Let’s take DoorDash as an example.Why don’t you invest?Tell me about your analysis…What aspects of DoorDash have made you give up on investment?
AP:I’ve never made any investments before.I have a very operator mentality.I was working on Facebook at the time.I focus on my work.Frankly, if I were going to work with them, I might be thinking, hey, maybe I should go there to work, help in the growth team or something like that.But now I know, I will talk to them from an investor perspective.I’ll say, hey, can I put my money in it?So when you see this, partly the reason is not just about evaluating a specific investment, but also about your mindset?Before I realized maybe I should have invested money in these companies, I talked with the founders of many different early-stage startups whether I have helped founders over the years.So it was a huge unlock for me personally, making my career meaningful, letting capital work, not just help, and obviously bringing financial returns.Another thing I want to say is to understand the construction of portfolios.One thing to say…hey, I’m very confident in bitcoin and something like that.It may not fall to zero.So maybe I might lose 10%, 20%, 30% of my money, but that doesn’t mean I’ll lose everything.In venture capital, you may lose everything.So really understanding this dynamic, you have to build a portfolio to drive overall returns, you know, it took me a while to learn.Once I understand it, you know, I can allocate my capital better.
JS:You mentioned at the beginning of the show that you plan to hold Bitcoin for 20 or 30 years.Over the weekend, we heard Senator Lamas’s speech at the Bitcoin Conference in Nashville.She proposed a proposal to recommend that the government hold bitcoin for about 20 years to begin solving the country’s debt.I know you saw these remarks.I know you commented on this.But, I’m very curious,Want to hear your thoughts on the Lummis plan and the idea of putting Bitcoin into the state reserves to start solving the country’s $35 trillion debt.
AP:Yes, I understand what Senator Lummis means.I think this is a very smart idea.I think,Whether the U.S. is using Bitcoin as a strategic reserve or strategic reserve on its balance sheet, in fact, to support the US dollar, I think this is separate and different from the national debt dialogue.It is hard to imagine that the US-owned Bitcoin will have a significant impact on this.You know, if you consider buying 1 million bitcoins, it’s equivalent to $68 billion, $70 billion.If this number rises sharply, say, up 20 times, it still cannot cover 10% of the country’s debt.In fact, our debt is growing faster than Bitcoin.Therefore, the debt will continue to expand.But I do think that’s the right mindset.Frankly speaking, I think that Senator Lummis is commendable not only to do this work, to formulate legislation, but to propose legislation, and to invest his own social capital to do such things.So now, whether you think it is for national debt or other purposes, people are forming a consensus that people in all parties want the U.S. government to hold bitcoin.And then you see that in some leading presidential candidates, and now you see that in the Senators and the Representatives as well.You see this in regular voters, whether it’s Republicans, Democrats, or independents.They are all interested in this matter.So we may not have reached the point where consensus is enough to make it happen tomorrow.But I do think,There may be enough consensus in the next five years or so that you will start to see this happening at the national level.
JS: You know, we talk about elections almost every day on this show.I’m curious and wondering what you think Trump’s election as president means for the crypto industry, not Harris’ election as president.
AP:Yes, I mean, this is one of those things that have a lot of narratives and then there are facts and data.If you look at the current government, you will find that they are making more progress in the crypto industry than any previous administration.Coinbase is on the market.We got the Bitcoin ETF, we got the Ethereum ETF.These three things may contribute more to the crypto industry than all the other things before combined.
As far as the regulator allows certain activities.So while the industry takes it for granted that the current government is rough, considerable progress has been made in such a rough environment.So if we have a president, no matter which president, as long as he says, hey, we’ll be more friendly, you’re expecting a series of positive developments.Now, follow this clue.
So,What other things do you really want regulators to do?right.Perhaps it is the approval of more ETFs.So you start looking at things like token market cap lists or ETFs.Maybe there are some clear guidance for early stage startups, you know, in terms of token issuance or token use.But this list may have only five or fewer things, and regulators can actually do it specifically.Now, if you add Congress, the Senate, or even the President.
There are also some legislation that can be passed.We have seen several bills on accounting rules and more that are not necessarily made by the SEC or the CFTC.This list could expand from five or fewer things to maybe 25 things to do.So, I do think that most of the work people want to accomplish is actually in the legislative process and does not necessarily come from regulators.Although people want regulators to do three or five things very, very important.
So what we are talking about here is actually an institutional change or a mentality change, not just around regulation, but also the entire political class.If you travel around the world, you will find that this has happened before.People kind of ignore it, and then they fight it, and eventually, the industry wins.So I think this will eventually happen in the United States, and we are about to get out of the stage of resistance and enter the stage of victory in the industry.
JS: I want to expand the scope of the topic and talk about areas outside the United States.I know you recently tweeted that after the weekend’s speech, governments around the world may be talking about what benefits Bitcoin might bring to them.But you think governments are watching the progress of the U.S. election and starting to think about how their policies might affect crypto innovation there, and how they start using Bitcoin as a reserve?
AP:I absolutely think governments around the world are paying attention to the United States, right, besides understanding the situation, maybe even to follow suit.You see, central banks of various countries are a good example.The European Central Bank once said that we will not raise interest rates, and we will not raise interest rates.Then they also raised interest rates after the United States raised interest rates.So I thinkThe United States is a leader on the global stage, especially in the financial markets.People look forward to our guidance and leadership.If you are presidents somewhere in the world and you hear that two of the three leading presidential candidates are talking about building a strategic reserve for the United States, you start asking your team that our Bitcoin strategy isWhat?What should we do?Should we buy some before them?If they buy bitcoin, the price will rise.The cost of buying Bitcoin will be higher in the future.Therefore, global game theory among governments will eventually come into play.I think ultimately, presidents around the world will say to themselves, you know, I won’t just stand by and be a follower.
Maybe we should be leaders ourselves.So, you know, it remains to be seen whether this will actually happen.But, for me, the interesting thing is that if you are a country and you want to build a strategic reserve, then you should buy bitcoin and then tell people you do that.You shouldn’t tell them you’re going to buy it and then go buy it because you may have a negative impact on the price.
JS: It makes sense.How likely do you think the United States has a strategic Bitcoin reserve in the near future?
AP:Well, the United States already has about 210,000 bitcoins.The United States has had more bitcoins over the years, but their strategy is to sell these bitcoins and get cash.So, does the U.S. government hold Bitcoin now?Yes.Is this a strategic reserve?I don’t think they think so.But I do think that there will definitely be some bitcoin on the balance sheet in the U.S. over the next 10 to 15 years, or some kind of strategic reserve.I think the question is really just, how positive are we in this regard?
What else is possible, you know, obviously Robert Kennedy (RFK) said the U.S. should buy 4 million bitcoins.Given the lack of liquidity in the market, this lack of liquidity trend, and the amount of capital needed to buy Bitcoin in a 15-20 year period, I think this is mathematically impossible.You know, it’s hard to imagine a world where we can spend so much money to do it.So it’s more likely, you know, that’s a smaller number, but I think that’s sure to happen at some point.
JS: Interestingly, you mentioned that you think this is mathematically impossible.This reminds me of this question.Do you think politicians are talking about Bitcoin to get industry attention without real plans to take what they say is a harsh measure.Because like you said, in many cases, this is mathematically impossible, or actually has no meaning to solve the country’s growing debt problem.
AP:Yes, four million may not be possible.One million may be possible, right?So we’re still talking about the same thing.It’s just that the order of magnitude or size will end up being slightly different.The most important thing is, you see, politicians are politicians, right?Part of the work they should do is representing the will of the people.One thing most people misunderstand is that they feel that I try to evaluate them based on the beliefs of politicians.Actually, politicians should represent the beliefs of our people, so you know, the negative view is that they are catering to us, they are basically saying what we think we want to hear, and then they will get an office to do whatever they wantThings to do.The positive view is no, they are listening to voters, and their voters tell them, I hope you support Bitcoin.So smart people will say I support Bitcoin.So, you know, anyway, yes, their campaign promise, commitment plays a big role in this sentence.So do they have to fulfill their promises?uncertain.But I do think there are a lot of people going into the ballot box and they’ll say, OK, I have two candidates, I’m going to vote for three candidates, I’m going to evaluate today’s commitment.One promised me something I like, the other promised me something I didn’t like, no matter what they were going to do.I can only evaluate the commitment today.So obviously, I’ll choose someone who promises me positive things.So it’s weird, you know, people are always struggling with whether politicians will fulfill their promises?Well, you should expect that they may not fulfill their commitments 100%.And, one thing I always point out is how many presidents have talked about, you know, publishing some kind of information.
Regarding the archives of Kennedy’s assassination, I think Trump once said, hey, I want to release this information, but I didn’t do it after taking office.According to people I know who are close to the government, he basically got new information and then decided not to publish it.So if this is true and that’s how things happen, then, we don’t know what this information is.So how do we evaluate?Maybe if we had this information, we would agree not to publish it.So this creates a strange dynamic where voters and the people want to criticize politicians, but we don’t have all the information they have.That doesn’t mean we should trust them, right?We should actually be skeptical of the promises they make and what they say they want to do.But I do think that sometimes we should understand that if we have all the information, we might actually make the same decision, which is a little strange because I think most people are very despised by the political class.
JS: I think these are all good points to come up before the November election.I know we have only a few minutes left and I’ve been waiting to ask you this question because I know you’re a former Army sergeant, it’s not uncommon for former military personnel to become founders now or hold senior positions in venture capital.I’m curious, what do you think makes people with military experience such a successful founder and CEO.
AP:If you think about the risks they are when they are training.This is often a matter of life and death.So when you take that risk to the business world, you need leadership.You need to be able to understand and stay resilient and thrive in this uncertain environment.But the risk is much lower.So I think people are already under some extreme pressure from military or combat deployment.They end up thriving in a more relaxed environment in the business world, where the stress is a different type of stress.So, you know, I think it’s a very natural process because at the end of the day, business is just guiding people to get something done.This has many similarities with the military’s practice.
JS: When you are looking for a business worth investing in, do you focus on founders and their past experiences?Maybe not military experience, but when you consider investing in their company, will you focus on the extraordinary experiences of the founders?
AP:We are looking for successful people, and success can take many forms.But when you evaluate a founder, you want to find someone who can get the job done.In this regard, it may vary greatly depending on the industry, the stage in which the company is located, and the many competitive elements they are engaged in.Sometimes you need someone with a very A-type personality, someone with a long-term record of success.But other times, you actually need someone who is more introverted, younger, more technical, frankly, too naive to understand if what they are trying to do is possible.So, really understand what the task at hand is and what type of people are most likely to succeed here.This is a specific case.
JS: OK, there is one more minute.I have to ask you, what is the worst investment you have ever made.What is the best investment?
AP:Maybe investing in my family.You know, if I keep a scorecard for all my financial investments, you know, I might be proud of it.But frankly, all financial investments are not comparable to investing in relationships and ensuring you are happy every day.You know, if you can remember this, all investments are just games we play on the internet.Don’t be too excited when things are going well, and don’t be too frustrated when things are going well, it’s much easier.
