07 May 2026 Bitcoin is…
One of the great financial crisis movies is Margin Call. Set over one night at a Wall Street investment bank during the early stages of the 2008 financial crisis, the film unpacks the moral pressure, fear, and self-interest that drive the characters as the collapse unfolds.
About two-thirds of the way through the movie, the bank’s CEO arrives–by helicopter, of course–to be briefed on what’s been discovered. After his second-in-command tries a few times to explain what’s going on, the CEO turns his attention to the young analyst that uncovered the mess. He encourages him to explain what he’s found, ending with this line:
“Oh, Mr. Sullivan, you’re here. Good morning. Maybe you could tell me what you think is going on. And please, speak as you might to a young child, or a golden retriever.”
Which is how I want people to speak to me about Bitcoin.
On a recent podcast episode of Interesting Times with Ross Douthat titled “A Bitcoin Evangelist Tries to Convert Me,” the host interviews Anthony Pompliano, Founder and CEO of Professional Capital Management and one of the leading advocates for the digital currency. I approached the podcast, tail wagging and ears aprick, eager for an explanation that would, once and for all, make clear exactly what purpose Bitcoin serves. Here are a few of Mr. Pompliano’s assertions.
It is scarce
There can only ever be 21 million Bitcoin in circulation. Just over 20 million have been mined and the expectation is that the cap will be reached in the year 2040. The scarcity argument does hold some water, especially if you think of it like real estate: there’s only so much land out there. As demand increases for anything with a fixed supply, prices tend to rise, and he believes this supply/demand relationship will hold. Notwithstanding that we’re discussing a digital currency still in its infancy, the scarcity argument is something I can get my arms around.
Countries around the world are going to have to print money
One of his central claims revolves around the world’s collective debt. Just a few days ago, our national debt hit 100% of our GDP, something that hasn’t happened since WWII. He believes the only way to tackle the global debt problem is to print money, which will lead to inflation, which will boost demand for Bitcoin. This is another argument that might hold some water, though just because there are more dollars or euros or yen doesn’t guarantee they’ll flow to Bitcoin. Nailing simple “if, then” trades are hard enough, and this seems like an “if, if, if, then.”
It’s volatile
Here, Mr. Pompliano compares Bitcoin to a technology stock (he uses the term “speculative” a number of times) and also links volatility with positive outcomes. Said another way, it’s a risky investment, and risky investments can have more upside than conservative investments like cash or treasury bills. But anytime you gain exposure to upside, you open yourself up to downside, too. Volatility doesn’t just work one way, and for proof you only need to ask people who bought Bitcoin last October.
If I were a golden retriever, it’s at this point that my tail stops wagging and my head cocks to the side.
It is a digital savings account
“I believe that Bitcoin is a digital savings account. That’s probably the easiest way to think about how this fits into an ordinary American’s life.” He continues, “Most people are looking at their savings as it’s money they hope they never have to touch over a long period of time.” Which is accurate, except that life is uncertain and if I do need to touch my savings, I don’t want to have just watched it fall 37%, as it’s done since last October. As my first boss said, “Your savings account isn’t about the return on your money, it’s about the return of your money.” You should never expose your savings account to anything speculative.
It is the “most pure truth teller in financial markets”
In his opinion, and using the post-COVID rally as proof, Bitcoin is THE canary in the coal mine, the ultimate signal for where things are headed. But this ignores the reality that its price is driven entirely by investors, which is no different than the price of stocks and bonds. It’s not as if there’s some magic built into its algorithm that allows it to see around corners and respond before other investments. No, its price is still dictated by sentiment and demand.
I find myself agreeing with Mr. Pompliano about the speculative nature of Bitcoin and how its scarcity might boost its price, though I’m a bit skeptical of the latter argument. Lots of things are scarce, but that doesn’t make them a worthy investment, and maybe it’s just the old guy in me that chafes at the comparison to real estate, which I can see and feel. Isn’t Bitcoin just lines of code? Maybe we’ve reached the point where that’s as real as anything else.
Overall, I found many of his arguments to be contradictory. Something can’t function as both a savings account and a tech stock, nor can its volatility only be viewed as a positive. He also asserts that it will do well during periods of both inflation and deflation, though it hasn’t existed through the latter environment yet. Should it live up to his claims, it would be an outlier.
So, what is Bitcoin? I believe it’s a scarce, speculative digital currency without a proven, real world application yet. It’s reason for being may materialize over time and/or there may be one I am unaware of, but I remain unconvinced that as an investment it is superior to stocks or as a savings account it’s superior to options already in existence. That said, I keep an open mind and am willing to be proven wrong on all my points. In the meantime, it isn’t something I’ll invest in or recommend to my clients.
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