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ChainRift Research

The $1 million bet on Bitcoin

For those of you just waking up from a year-long coma, I have some bad news.

Bitcoin isn’t at $20,000.

In fact, it’s much lower than that. Much, much lower.

Bitcoin is down over 80 percent from its all-time high, and some are even suggesting that it could drop even further.

It’s a nasty state of affairs, and the drop has wreaked havoc on investor sentiment.

Analysts, pundits, and Facebook day traders have officially declared Bitcoin’s death. For the 329th time.

But not all is lost…

We’ve been here before, and we’ll likely be here again.

In 2014, Bitcoin saw an equally traumatizing fall from glory and got stuck in a nearly-two-year bear market before surging by 8000 percent.

Now, I’m not saying that’s going to happen again anytime soon, but there is some hope for better days on the horizon.

Why? Smart money is betting big on the burgeoning crypto sector.

The Intercontinental Exchange is gearing up to launch its new futures product, Nasdaq is finally opening its doors to cryptos, and some of the biggest financial institutions in the world are going long on Satoshi Nakamoto’s innovative ‘sound money.’

Bitcoin still has its share of believers.

Asset Manager Bets Big On Bitcoin

Despite the downturn, Anthony Pompliano, co-founder and partner at Morgan Creek Digital is ready to lay $1 million on the table, with a wager he’s dubbed the “Buffett Bet 2.0”.

A little history on this: just over a decade ago, renowned investor and Coca-Cola connoisseur Warren Buffett bet $1 million against Ted Seides, CIO at Protégé Partners, that the S&P 500 would outperform a group of hedge funds over a 10-year span. And last year, Buffett — “The Oracle Of Omaha” — collected his winnings after the market walloped a group of five hedge funds hand-picked by Ted with a return of 85.4 percent vs. 22 percent.

Now, Pompliano is doing the same. And the truth is, Pompliano’s bold bet may not be that far-fetched.

First and foremost, hedge funds almost always underperform. In fact, past studies have shown that 85 percent of fund managers fail to match or beat the market in any given year.

More importantly, however, are the growing signs of a looming equities bear market.

The House That Debt Built

Last week, one of Wall Street’s most reliable ‘crystal balls’ rattled markets — the dreaded ‘yield curve inversion’ is here.

The yield curve, or the difference between long and short-term Treasury yield rates, has flattened out. And more worrying, the gap between two-year and 10-year Treasury yields is getting dangerously close to inverting.

This indicator has predicted every economic collapse since 1960, and the disparity hasn’t been this small since the Great Recession. Indeed, one of the largest contributors to economic growth is bank lending, and to fund this growth, financial institutions often borrow short-term at lower interest rates and make long-term loans to borrowers at higher rates, profiting off the spread.

When short-term rates exceed longer-term rates, this is no longer possible, weighing on the banks’ ability to provide loans to growing businesses.

And the timing couldn’t be worse.

Between growing trade war fears and the ‘new tech bubble’ bursting right before our eyes, the alarms are sounding louder than ever, leading to some well-rooted beliefs that the longest bull run in history may be coming to an end.


More and more, it seems that betting against the status quo might not be such an unreasonable wager, even if Bitcoin is still currently struggling.

Pompliano gave his firm a 10-year window to bring the hammer down on traditional markets, but will he succeed?

Cryptos are still in uncharted territory, and despite a wave of bullish news, the space is struggling to gain its footing.

Regulatory worries, self-sabotage and a general shift in perspective are all contributing to the crypto market’s growing pains…

But if Bitcoin has taught us anything, it’s that a lot can change in 10 years.

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Michael Kern

Michael Kern


I am a journalist and financial copywriter. My work has been featured on CNN Money, Business Insider, The Guardian, and Nasdaq.