Today’s letter is brought to you by Bitcoin Investor Day!

I am hosting the first Bitcoin Investor Day in New York City this Friday in New York City. It is an annual meeting for sophisticated Wall Street investors who are interested in bitcoin.

Speakers include Cathie Wood, Mike Novogratz, Anthony Scaramucci, Mark Yusko, Head of Digital Assets at BlackRock, Bitwise CEO, Head of Research at Fidelity & VanEck, and many more.

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To investors,

Bitcoin hit an all-time high price over the last 10 days, but now many people are wondering why the price of the digital currency is dropping aggressively.

We have seen Bitcoin go from over $72,000 to as low at $61,000 in the matter of 5 days.

That sounds horrific, right? Is the bull market over before it even began? Did something break in the market? Should investors make different decisions with their portfolio?

Hold on. Everyone take a deep breath. There is no reason to panic.

Let me explain.

Bitcoin is currently experiencing a drawdown of ~ 15% from the recent high. While this may seem like a large percentage, it is actually quite small compared to what we have seen in previous bull markets. As I mentioned on Bloomberg yesterday, this is a drawdown for ants. Seriously, that was my message. You can watch the full segment here:

Alex Thorn, Head of Research at Galaxy, points out that the last two bull markets have consistently seen many similar drawdowns. In 2017, there were 13 different drawdowns of more than 12% as the price ~ 20x throughout the year.

In the 2020-2021 bull market, there were at least 13 different drawdowns of 10% or more.

To take the analysis even further, this current drawdown is not even the worst drawdown of the current bull market. You can see in this chart from analyst Jelle that there have been four drawdowns of at least 20% so far in 2023 – 2024.

On the left side of the chart above, there were 7 pullbacks of at least 30% in the 2017 bull market. In the middle, there were four drawdowns of 23% or more. And the average drawdown in each bull market, including the current one, is 21% or higher.

Bitcoin is a volatile asset. If you want to enjoy volatility to the upside, you have to stomach the volatility to the downside.

Wall Street is being introduced to a truly free market asset. There are no hours of operation. There are no circuit breakers. This asset trades based on global supply and demand. It goes up a lot. It goes down a lot. But over time, it has continued to outperform almost every other asset in the world.

A common phrase in finance is to “know what you buy.” Bitcoin isn’t your grandpa’s stock index. This is a new digital asset that is being re-priced by hundreds of millions of investors around the world.

Volatility is necessary to get to where we are going.

And the best part? The great investors seek out volatility. They understand that asset prices don’t go up in a straight line. It is understood that you don’t try to trade assets like this. You simply buy them and hold on.

And that has been a great strategy for bitcoin over the years. I don’t see that changing any time soon.

Take a deep breath. Drawdowns are normal. This one is a drawdown for ants. The world will keep spinning. Bitcoin will keep producing block-after-block of transactions. And we’ll likely be back to new all-time highs before you know it.

Hope everyone has a great day. I’ll talk to everyone tomorrow.

-Anthony Pompliano

Mark Yusko is the Founder, CEO & CIO of Morgan Creek Capital Management.

In this conversation, we talk about bitcoin, ETFs, macro environment, opportunities, memecoins, and future outlook of the industry.

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Mark Yusko on Institutional Demand for Bitcoin

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