Anthony Pompliano, founder and partner at Pomp Investments, appeared on CNBC’s “Squawk Box” on 5 January 2024 to discuss the upcoming decision on spot Bitcoin ETFs by the U.S. SEC and its implications for the crypto market.
Pompliano described the anticipation for U.S.-approved spot Bitcoin ETFs as “The Greatest Show on Earth,” highlighting Bitcoin’s status as the best performing asset over the last 15 years. He noted that Wall Street has been largely excluded from this market, leading to pent-up excitement.
He warned that Bitcoin should not be traded like other assets due to its volatility. Citing a report from Reflexivity Research, Pompliano mentioned that Bitcoin saw a 800% increase from the pre-pandemic period to its peak, along with significant drawdowns.
Pompliano emphasized Bitcoin’s attractive risk-return ratio but cautioned about its volatility. He pointed out that since 2017, Bitcoin has experienced two 80% drawdowns and numerous 30% drawdowns, underscoring the need for caution among investors.
He expressed belief in Bitcoin’s long-term price increase, driven by persistent demand from spot ETFs. Pompliano also highlighted that other publicly listed funds and ETFs are considering allocating up to 15% of their AUM in spot Bitcoin ETFs.
Pompliano argued that Bitcoin’s value lies in its backing by the world’s strongest computing network, making it an attractive asset for those who value computing power over traditional commodities like oil or gold.
He clarified that owning a Bitcoin ETF provides exposure to Bitcoin but not direct ownership. Pompliano advocated for self-custody of Bitcoin for those seeking direct ownership, as opposed to relying on ETFs or exchanges.
Addressing rumors of the SEC potentially rejecting the Bitcoin ETF proposal, Pompliano suggested that either approval or rejection would lead to short-term volatility, but the market would eventually stabilize. He highlighted Bitcoin’s resilience, referencing its recovery after China’s mining ban.
Pompliano acknowledged his past overestimation of Bitcoin’s price but maintained that its volatility would likely decrease with the entry of more persistent holders and the influence of ETFs. He also pointed to the upcoming Bitcoin halving and a potential shift back to loose monetary policy as factors that could significantly impact Bitcoin’s price.
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