On Friday (March 13), Anthony Pompliano (aka “Pomp”), a co-founder of crypto-focused asset management firm Morgan Creek Digital Assets, talked about the ‘bloodbath’ in the financial markets that occurred on Thursday (March 12), a day when Bitcoin fell below $4,000 (before midnight U.S. time) on some exchanges.
Morgan Creek Digital Assets is “a multi-strategy investment firm focused on providing access to blockchain technology and digital assets for institutional clients and wealthy family offices.” It was founded by Mark Yusko, Jason Williams and Anthony Pompliano, and is “backed by Morgan Creek Capital Management, a multi-billion dollar asset manager based in the United States.”
In the February 13 issue of his weekly newsletter, Pomp discussed Thursday’s “bloodbath across markets.”
This is the tweet Pomp sent out roughly half an hour before midnight — Eastern Time (New York) — on March 12:
Started Thursday at $8k.
Dropped all the way to $3800.
Now trading at $5600 with 30 minutes until midnight.
Incredible intraday volatility.
— Pomp 🌪 (@APompliano) March 13, 2020
Pomp says that Bitcoin’s market is very different from traditional financial markets:
- “no hours of operation”
- trading “24/7/365 on a global basis”
- “the market can go up as much as it wants and it can go down as much as it wants”
- no circuit breakers
He says that although “most traditional investors” cannot handle this “level of volatility,” the current liquidity crisis is “screwing up that level of comfort” provided by the usually “non-volatile, traditional asset markets.” He then goes on to say that “Bitcoiners are used to the volatility, while the stock investors are acting like the world is ending.”
Pomp also points out that if you look at the historical volatility of Bitcoin and the S&P 500, the S&P 500 going down 9.5% “on a relative basis” is the equivalent of Bitcoin dropping 51%, i.e. on a relative volatility basis, Bitcoin and the S&P 500 displayed the same level of volatility on March 12.
He also talked about the $1.5 trillion “monetary stimulus” announced by the Federal Reserve (aka “the Fed”) on March 12, the rate cuts that are expected to be announced this week, and quantitative easing measures the Federal Reserve might need to take soon:
“… the market doesn’t believe that the monetary stimulus will work.
“We already know that the market has priced in a near 100% chance that the Fed will cut rates at the next rate decision and most people believe an eventual 0% interest rate is a foregone conclusion at this point.
“This leaves the big decisions on the quantitative easing side — how much money can the Fed print?
“The short answer is that the Fed can print as much money as they want. It is literally backed by nothing other than the belief of people.
“If the market is unresponsive to $1.5 trillion in stimulus, this may be a sign that the Fed will have to print trillions of dollars…
“The Federal Reserve will have to print so much money to get the market to respond that they actually risk high inflation at minimum and full-on hyper-inflation at a maximum.”
Pomp sees this potential scenario as being perfect for Bitcoin:
“Bitcoin was built for this scenario.
“While all the nonsense and wealthy socialism is going on in the traditional markets, the decentralized digital currency will keep doing exactly what it is supposed to do.
“Block after block after block being produced. The strongest computing network in the world continues to march on.”
And the praise for Bitcoin did not stop there:
“The real capitalism is happening on the free markets of Bitcoin.
“The decentralized, digital currency allows anyone to live and die by the decisions they make.
“And I, for one, am so glad that we have this escape route as an option during this upcoming financial crisis.”
Earlier today, Pomp described the Fed’s $1.5 trillion monetary stimulus as a “bailout”:
The Fed is working on bailing out hedge funds, banks, & corporations.
Literally said they have unlimited liquidity.
That is because they can just edit the numbers in their electronic database at will.
Unfortunately, I’ve never seen them do that for the people’s bank accounts.
— Pomp 🌪 (@APompliano) March 15, 2020