To investors,
There are two goals when investing — protect your downside and optimize your upside. Most investors focus on the latter, but protecting your downside is critically important when investing in new asset classes.
A good investor must understand the risks. They must underwrite all possible situations. The more you know what you can lose, the more you can mitigate those situations.
But some investors take this too far. This is where the pessimists thrive. These doomsday advocates will find a low probability situation and harp on it endlessly. Their goal is to scare people, while believing they look smart.
That is not how markets work though. Probabilities live in the math discipline, not psychology. No amount of fear-mongering can change the probability of an outcome.
This is a point that I have been explaining for years now. The bitcoin critics are a prime example of what happens when you let sloppy thinking trick you into believing math doesn’t exist.
One of the main arguments that bitcoin critics have had for awhile is that the US government is going to ban bitcoin. These individuals point to the executive order criminalizing gold almost a century ago. They pontificate on academic theories for why bitcoin or crypto is bad for America.
It is all nonsense. Pessimists sound smart, optimists make money.
The truth is that these critics have been proven wrong. Bitcoin mining is solving many of America’s energy problems, bitcoin is protecting Americans’ purchasing power better than any other asset, and stablecoin issuers have become one of the largest buyers of US debt.
Crypto is solving real problems for the country.
Don’t just take my word for it though. President Trump met with many of the largest bitcoin miners yesterday at Mar-a-Largo. Bitcoin Magazine described the situation with the following:
“Donald Trump met with Bitcoin Magazine's CEO David Bailey and several prominent U.S. Bitcoin miners. The meeting saw Trump commit to championing Bitcoin mining both in Washington D.C. and on the global stage.
Among the attendees were representatives from leading Bitcoin mining firms, including CleanSpark, Riot Platforms, Marathon Digital, and other notable industry players. Key figures present included S Matthew Schultz from CleanSpark, Jason Les and Brian Morgenstern of Riot Platforms, Salman Khan of Marathon Digital, and Amanda Fabiano of Fabiano Consulting, formerly Head of Mining at Galaxy and Director of Bitcoin Mining at Fidelity.”
This situation would have been unfathomable just a few months ago. It doesn’t stop there. After the meeting, Trump took to Truth Social to confirm his interest in protecting bitcoin mining in the United States.
Forget the politics of who is saying the message. Focus on the fact that the leading Presidential candidate is openly supporting the industry. It is getting harder to see a world where the US government would ban bitcoin, shut down mining, or kick the crypto industry out of the country.
The technology has proven that it can solve too many problems.
Remember, investing is about protecting the downside and optimizing for the upside. Having the US government embrace bitcoin and crypto, rather than ban it, increases the odds that the downside is protected.
My guess is there will be more competition between Trump and Biden as we get closer to the election. Each candidate will make grand promises. They will do their best to gather votes from the industry. Some of the things they say will come true. Others will not.
It doesn’t matter though. Both candidates are headed in a pro-crypto direction. That will be a large tailwind for the industry in the coming years.
Hope you all have a great day. I’ll talk to everyone tomorrow.
-Anthony Pompliano
Will Clemente is the Co-Founder of Reflexivity Research.
In this conversation, we talk about Bitcoin, Ethereum, Solana, meme coins, portfolio management, ETFs, regulation, culturally relevant ideas, what you should be paying attention to, and where opportunities exist in the next 18 months.
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Presidents Want To Protect Bitcoin?