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Tuesday, April 2, 2024

Pomp Weighs In On CNBC Anchor’s Claim That Bitcoin Is Fairy Dust, Doesn’t Serve As Inflation Hedge

Pomp and Sorkin discuss Bitcoin’s nature; Pomp sees it as both a speculative asset and inflation hedge, varying by user context.

Sorkin’s scepticism grows from African encounters, viewing Bitcoin as speculative, while Pomp notes diverse global uses and adoption stages.

Pomp highlights Bitcoin’s success versus the dollar’s decline, and addresses crypto’s gambling aspect in today’s economically strained society.

Pomp Investments founder Anthony Pompliano is a regular on CNBC’s Squawk Box—hosted by Rebecca Quick, Andrew Ross Sorkin and Joe Kernen—and they often discuss Bitcoin. But this time ↗ Sorkin was a little doubtful about the crypto king, saying he couldn’t get his head around the question if Bitcoin is a risk-on asset or a hedge against inflation.

Related: Fidelity Files S-1 Application, Seeks SEC Nod of Approval for Spot ETH ETF with Staking ↗

Source: CNBC via YouTube

According to Pomp it can be both, adding that it can be a different thing to different people.

“If you talk to Wall Street, why are they buying it? They’re buying it because they want the price exposure via the ETFs. But if you talk to someone in a country where they are worried about seizing their assets—they’re buying Bitcoin because they literally want to make sure they can hold on to the economic value.”

Anthony Pompliano

South Africa And Bitcoin, A Different Game From Nigeria And Bitcoin

But Sorkin was still not convinced, citing his recent travels to Zimbabwe and South Africa. He said he asked anybody he got a chance to ask about Bitcoin and literally no one owned it. This left Sorkin surprised, noting that previous discussions in the studio about Bitcoin and the unbanked had led him to expect that individuals in high-inflation countries would be more inclined to invest in Bitcoin.

Sorkin also said the maths wasn’t there, speaking about Bitcoin flows, which made him question if “the hedge argument on inflation is actually a real one.”

This has led the co-host to believe that Bitcoin is purely speculative and people hold on to it to sell it to the next highest bidder.

And I just wonder whether it’s sort of used to sort of sprinkle fairy dust to other people who then are speculating. I think a lot of people out there speculating and want it obviously go higher and it’s a risk-on asset. That’s my take on it at the moment.

Andrew Ross Sorkin

Some Prefer Bitcoin, Some US Dollars, Some the Lottery

Pomp countered saying that there are countries in which people are buying Bitcoin—presumably to hedge against inflation, although he didn’t discuss this further. While he wasn’t sure why this is not happening in South Africa, he also admitted that there are countries where people prefer the US dollar.

Then if you go somewhere like Argentina, there are some people buying Bitcoin, but there’s a lot of people who want dollar backed stable coins and they actually want the dollar, not Bitcoin.

Anthony Pompliano

This shows that different countries are in different stages of Bitcoin adoption, but Pomp says it’s not only emerging markets wanting to get in on Bitcoin.

If you look at the United States dollar, it lost 25% of its purchasing power since 2020. Bitcoin is up 800% during the same time period. And so, if we go back to 2020, if you remember Paul Tudor Jones, Stanley Druckenmiller. People came out and said: Look, I think it’s an inflation hedge.

Anthony Pompliano

Aside from that, Pomp admitted that there is an element of gambling to crypto, saying we have become a “society of gamblers.”

Related: Judge Sides With SEC, Advancing Case Against Coinbase in Setback for Crypto Industry ↗

Adding that memecoins are trading like 1980ies boiler room penny stocks, he said Americans had lost hope—looking to crypto for a shot at getting rich.

We have $1.1 trillion of credit card debt. We have 43 million Americans that have federal student debt. […] People have lost hope. How are you supposed to live in a country where it is cheaper to rent than buy a home in 50 major metros? When you buy a lottery ticket, it’s 300 million to one odds. I think there’s people right now saying, you know what, a memecoin has better odds than a lottery ticket.

Anthony Pompliano

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