Is The Bitcoin Decoupling Upon Us?

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The Nasdaq is down 2%, the S&P is down just over 3%, gold is down 3.5% and TLT has fallen nearly 5% since February 28th. But the two shining lights in investor portfolios are oil and bitcoin. Oil is up approximately 45% because there is much less global oil production going on. Remember, about 20% of all global oil flows through the Strait of Hormuz, so if demand stays constant and supply drops materially, the price has to rise to accommodate everyone. Supply-demand from your Economics 101 class is essentially a law of the universe. And it doesn’t seem to matter what announcements or actions are coming out of the White House right now. Many developed nations claimed they were going to collectively release 400 million barrels of oil. Trump was rumored to use the War Powers Act to facilitate more oil production in Southern California. We even saw the headline that the US military and our allies would help escort various ships through the Strait of Hormuz. None of it changed reality though. Oil keeps appreciating in price and it likely won’t come down until the conflict is over, the uncertainty fades, and the Strait of Hormuz is opened again. But the most interesting story to me in global finance is the performance of bitcoin. The digital currency has been trading with high correlation to software stocks over the last few months. But stocks are down, as is gold, yet bitcoin has appreciated approximately 10% since the first bomb was dropped on Iran. On one hand, bitcoin is doing exactly what you would expect it to do. Bitcoin investors have long bragged about it being decentralized and uncorrelated, so the chaos hedge is doing its job during global turmoil. On the other hand, bitcoin has become much more popular in institutional portfolios, hence the software stock correlation, so my guess is that non-institutional buyers are rushing to the largest digital asset looking for safety. It is almost like the world is remembering that bitcoin is a borderless asset that operates outside the traditional financial system. Or that bitcoin serves as the most sensitive macro asset to global liquidity, so price appreciation will be basically guaranteed if nation states need to print money to fund the ongoing war for a prolonged period of time. If bitcoin’s outperformance continues, I would expect sophisticated investors to begin looking at the asset more deeply. They dream of having a non-sovereign, geopolitical hedge to add to their portfolios for moments like this. Historically, these investors were highly skeptical of bitcoin and the cryptocurrency industry. Many of them doubted the longevity of the asset or they questioned the unpredictability of an 80 vol asset. Those fears and concerns will quickly dissipate if bitcoin is perceived to pass this geopolitical test. Investors put capital where their confidence grows. And bitcoin’s best argument right now is not hype, but instead substance. Performance is a hell of a drug. The global asset scoreboard has bitcoin beating most of its peers. If that outperformance continues, bitcoin is going to have a lot of new friends in the coming months. Hope you all have a great start to your week. I will talk to everyone tomorrow. - Anthony J. Pompliano Founder & CEO, Professional Capital Management The Next Bitcoin Bull Run Could Start In A Crisis Jordi Visser is a veteran macro investor with 30+ years of experience and the author of the VisserLabs Substack . In this conversation , we discuss the growing cracks in private credit, rising oil prices, inflation pressures, and why Jordy believes the market is underestimating the risk of a broader financial shock. Podcast Sponsors Figure – True DeFi Democratized Prime to earn ~9% APY! They also have the lowest industry interest rates at 8.91% with 12 month terms! 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With support for 3,500+ exchanges, wallets, and protocols, Summ makes crypto taxes simple. Visit Summ.com and get 20% off with code POMP20. Bitget - Bitget is the world’s largest Universal Exchange (UEX) , serving over 125 million users with access to over 2M+ crypto tokens, and TradFi markets such as 100+ tokenized stocks, ETFs, commodities, FX and precious metal like Gold. Abra - This podcast is sponsored by Abra. Abra is the secure way to access crypto and crypto based yield and loan products through a separately managed account. To create an account, click here for individuals and here for entities. Simple Mining offers a premium white-glove Bitcoin mining service. Want to grow your Bitcoin stack? Visit https://www.simplemining.io/pomp 🚨READER NOTE: If you want to sponsor The Pomp Letter, you can fill out this form and someone from our team will get in touch with you. You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. 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