Scaramucci: Why Bitcoin Will Hit $1M (But the Dollar Needs Value)

I want Bitcoin to be a million dollars, but I want the dollar to be worth something when Bitcoin is a million dollars, right? You don't want hyperinflation that knocks Bitcoin to a million dollars, but it's $500,000 to get in an Uber to go around Manhattan, right? You don't want that, right? So, it's a bad situation right now.

If I had to rank them, I think it's going to be institutions first. I think I'm going to surprise people by saying governments second, but I really do think, as we're talking generationally, Bitcoin is going to be seen as a digital store value. You're going to be able to buy Bitcoin in your 401k, and you're going to be able to buy it someday inside your bank app.

Well, I mean, you know, listen, I mean, you're the blonde broker, I'm the outspoken one. I don't know. I got a worse nickname. But anyway, great to be on with you. Thank you.

Oh, thank you. Yeah, listen, I'm very super surprised by that, but very, very nice. Do you listen? Do you listen to the podcast?

You're referring to Katty Kay, who I tell people is not my better half, she's my better 9/10s because she really is terrific, and she's very personable and incredibly knowledgeable. And you know, she makes me smarter. So, I'm glad to do the show with her, and I will tell you that this is sort of a weird thing to say, but this could be the reason why it works: I like listening to Katty Kay. I want to hear what she has to say. So, I guess it's a good give and take on the show.

All right. Well, that's easy. You can consider that done, Erin.

Well, I mean, there's a couple of things. I guess the big headline from today, which I don't think people are as focused on, is Secretary Hegseth is asking for $200 billion. He thinks he needs $200 billion to finish the job. So, I don't want to make your podcast political, but the president's saying that the job is over, everybody's decimated, but then you're contrasting that, well, look, I need $200 billion. So, if you factor in the cost of the war, and you factor in the tens, if not hundreds of billions of dollars of damage that's been done to the infrastructure, and as you mentioned the gas facility in Qatar, that's a state-of-the-art gas facility. It took 14 years to engineer that. They brought down about a third of it last night with missile attacks, and what I don't like about that is that those two countries share that offshore gas field, and they have had an alliance. They've been natural allies as a result of that. And I would call that the friendly bridge, if you will, the friendly bridge between the west side of the Gulf and the east side of the Gulf. And last night, the diplomats and the military personnel from the Iranian government were asked to leave Qatar. They were told they had 48 hours to leave. So, I'm not in love with that. I don't like the way this thing is going. And as you and I are speaking, crude is $116 a barrel. It's up from 55, 60. And so, you know, these things are keeping me up at night. The Strait of Hormuz is closed, but I think you know this, lots of tankers are getting through that are Iranian-flagged tankers that are on the way to China. Now, the president and Secretary Hegseth could bomb those tankers, but then that would be a huge escalation, and I don't think we want to do that. So, the strait is closed for allies of America and Israel, but it's basically open for China for now, but I have to tell you, those purchases are denominated in RMB, the Chinese currency. And so, I'm a little worried. This is a macro podcast, you'd have to put up on the list of worries the dollar reserve status.

You and I both know that the Fed held rates steady at 3.5%, 3.75% yesterday. Powell basically said that the outlook is uncertain, which is Fed speak for we have no idea what the hell's happening, okay? You're also seeing some stagflation, which none of us like. And Powell also said something in his remarks that I think people should know, is that he's accused the president's tariffs of creating inflation as well. So, I don't know. Again, I'm not a supporter of President Trump's. I want to be objective on your podcast. I certainly want the Americans to win this. I'm all about our troops and helping them, and I pray for our troops every day, but I don't think the people that voted for Donald Trump were expecting additional Middle Eastern war after he campaigned on no more forever wars. So, you know, listen, I mean, that February PPI number, Erin, came in very hot, okay? And of course, Bitcoin went from 74,000, boo boom, down to 69,000 over the last couple of days. And if I can keep going, if you don't mind, I'm also watching the flows coming into US Treasuries, and guess what's happening, which I've been telling people: foreign central banks are diversifying. They're buying gold, they're buying other treasury assets from other sovereigns. And listen, you know, I'm worried. I'm worried because you've got a real bifurcated economy going on right now. You know, that thing that they call the K is real. The upper class is doing reasonably well; the lower and middle-income people are in a huge affordability crisis. So, anyway, those are the things I'm worried about.

Well, I mean, you could be looking at $6 a barrel coming into Memorial Day. You went from high twos to mid to high threes, but at $115 a barrel, you're heading for fours, okay? And that's $4 a gallon. And that you're going back to Joe Biden inflation territory post-COVID, right? So, it's interesting. The president gave a speech, State of the Union, praising the reduction in gas prices. Let's give him credit for that, but now we're going the other way. We've had a 50% increase in gas prices in the last 10 days. So, look, I'm worried because gas is regressive, Erin. First of all, we all need gas, but guess what? The very wealthy, it's a much smaller percentage of their consumption. But if you're a middle class, lower middle class person, you got to get back and forth to work, it's like a tax. It's like a regressive tax on you, and it then causes this whole deconsumptive negative circle, if you will, vicious circle.

Well, again, I think you were very close to a deal on February 27th, okay? Some of our allies had said, "Wow, that deal was right there. It could have manifested into a deal, which would have meant broad-scale de-escalation." I guess the problem now is, again, I don't want to make this overly political, but if I were in the room, I would be asking people the following question: "What is victory? Tell me what victory is to you," cuz it's been moving around what victory is. Some would have said regime change, some would have said missile degradation, some would have said reduction of ability to make a nuclear bomb. Tell me, what is victory now? President, by his own admission, he said it this week, "I didn't expect them to close the strait. I didn't expect that they would attack our allies in the Gulf." He did say that. I'm not saying that. I mean, one would have to say, "Well, why would he not expect that? That had to be on the war game chart in terms of the game theory of outcomes." But I really think he thought this was like the 12-day war last year, or the strikes that took place on the bunker-busting situation. He felt that there would be minimal retaliation, and there would be a return to the negotiating table. I think ultimately, when we judge this, killing the supreme leader of Iran probably touched off a checklist, a well-planned 25-year orchestration of what they would do, recognizing that they're a weaker military power, but they have the home field advantage of being right there at the Strait of Hormuz. And so closing that puts economic leverage in their hands, and it's also upsetting the global economy. So, I don't know. Could they get back to the negotiating table? Yes, anything could happen. Would I like to see that? I certainly would, yes.

Well, I mean, there's a lot of different things to unpack there, but I think the biggest macro signal is coming from the Fed. What is the Fed saying? Maybe one rate cut this year, possibly not. If that is telling you you've got slower growth, less job opportunity in the country, higher inflation, okay, so I'm the product of the 1970s, that's stagflation. So when you look at that, as I said, the PPI number came in super hot in February. That's inflationary, so you can't sit here—you could have sat here three weeks ago and said lower gas prices, reasonable amounts of productivity, the Fed should cut rates, okay? Remember, I think Kevin Warsh has told the president, "Yeah, I'm ready to cut rates for you," but he's not going to be the Fed chair anytime soon because you have a criminal investigation going on against Jerome Powell, which Thom Tillis has said, "Hey, I'm on the Senate Banking Committee. We're not even going to put him up for review. He's not even going to have a chance for Senate confirmation until you drop that case." And so there's a lot of north-going and south-going Zaxes—I don't know if you remember that from Dr. Seuss, but we're right here at loggerheads in Washington. So I'm looking at that saying, "Wow, if the markets want relief in terms of rate cuts, you're not getting it." And capital flows on the margin, sovereigns and others are placing capital on the margin outside of the United States. And those are things, frankly, I'm not in love with.

Let's see. So that is such a great question, and I'm going to answer it by saying that it's actually both in my mind, okay? It's not a super satisfying answer, but I think it's the most honest one, because Bitcoin's 30-day correlation, if you look at it with the S&P 500, it's sitting at about 0.55 right now. So that's more correlated than I would have liked it. I would have thought Bitcoin would have broken, and I would have thought Bitcoin would have been more like gold was last year. But if you even look at Bitcoin today as an example, oil prices up, Bitcoin is weaker, it's down about 3%. So that's high, okay? And Bitcoin sold off alongside of equities when the war started. It then diverged for a temporary period of time, but it's back in that correlation again. So, I don't think until we get the GENIUS Act completely clarified and then we get the CLARITY Act passed, I think you're going to see this sort of coupling still. I don't think you're going to have full decoupling until you can domicile your Bitcoin, you can custody your Bitcoin with every bank in America. So that's me, but it's on the trajectory. You know that I would just tell people stuff happens longer. It's like house construction: you want the house done yesterday, but it's like 6 months later than you thought it was going to be and way more expensive. That's Bitcoin.

I mean, it would explode. I mean, that would be full-on rocket fuel for Bitcoin. I don't think that's going to happen anytime soon. If you look at the dot plot from yesterday as an example, it's only signaling one cut this year, maybe a first quarter 2027 cut now. Powell is basically telling you, "I'm stuck. I'm in an oil-driven, inflation-based economy right now." You know what I found interesting yesterday? The president wasn't beating up on Powell. He didn't have any legs to stand on. You just knocked oil prices up 50%, and so how the hell are you going to beat up on the guy? And also your Fed governors that you appointed were with Powell on the decision-making, because again, you don't want massive, rampant inflation. I mean, this would be absolutely devastating for us. But you're not going to go into a recession yet, I don't think so, but they've got to be worried about that. They've got to be worried about a recession plus inflation. Now, I'm not predicting that, but directionally we are more going in that direction than before. But are you telling me, yeah, we're going to cut rates? Novogratz says this better than me. Mike Novogratz once said to me, "You know, I want Bitcoin to be a million dollars, but I want the dollar to be worth something when Bitcoin is a million dollars, right? You don't want hyperinflation that knocks Bitcoin to a million dollars, but it's $500,000 to get in an Uber to go around Manhattan, right? You don't want that, right?" So it's a bad situation right now, but we can get to a world where it is that.

Yeah, I mean, listen, I would like to get to that world slowly. I think Ray Dalio, myself, Mike Novogratz, Paul Tudor Jones all see the one-way situation of this. You're going to have massive continued money printing and you're going to keep going on this, and I think that's a disaster for all of us. There's a way out of it where Bitcoin has got a nice price to it, but it's not a blowaway inflation runaway train, you know what I'm saying? I think we both know Lyn Alden, right? What does she say? "Nothing stops this train," is I think her exact quote. And so, yeah, I'm worried about that. How could you not be worried about that? And again, older people—which I happen to be older, frankly—my generation buys gold, they hate Bitcoin. Your generation loves Bitcoin because you understand the technical properties of it. And so as your generation ages into those economic positions, Bitcoin is going to become more and more relevant. And I said this about the web. When I was a kid, we didn't have—I know this is really dating myself, Aaron—but we didn't have email back in the day, okay? And then all of a sudden when I was in my 30s, we had email and I was like, "Oh, this is cool." And then the web exploded, and then a lot of people that were older than me poo-pooed the web. Even Bill Gates said it was a fad. And I'm like, "Well, this is not a fad." And guess what happened? The 30-year-olds that were getting email became 50-year-olds and the web exploded. And that's what's going to happen with crypto; that's going to happen with Bitcoin.

I was going to say, I like that. Could we restate that, please, and make that the top of the show? Unfortunately, that isn't the case for me. But at least I'm self-aware. At least I look at you and I say, you're the future. And I think people my age have to recognize that there isn't necessarily a generational divide, but there's generational learning. So I like spending time with people like you, Aaron, because I think you see the future from a vantage point that I honestly can't see it from, and I don't want to be close-minded to that.

It's a great question. So, I'm obviously guessing at this, but if I had to rank them, I think it's going to be institutions first. I think I'm going to surprise people by saying governments second, but I really do think as we're talking generationally, 10, 20 years from now, Bitcoin is going to be seen as a digital store value, and so therefore governments are going to have to be in there. Retail will be the largest in terms of absolute members, you know, some will have a 0.3 of a Bitcoin, a 0.1 of a Bitcoin, etc. But I'm talking about the magnitude is probably going to be from the institutions. You and I both know that the ETFs were a big game changer. You're seeing as a result of the ETF pension funds, endowments coming in. Family offices have gone from zero allocation to 1, 2, or 3%. Morgan Stanley, who yelled at me for buying Bitcoin 5 years ago and said that even though I have a macro direction of my fund that I was off-message and I was buying internet magic money, they're now recommending to their high-net-worth clients at a five times more price valuation. You know, I was buying it for clients at 16,000; they're now recommending it at 68,000, and God bless them for that cuz it is going to go higher. But that's what's going on, you're seeing that transition. And remember, you're going to be able to buy Bitcoin in your 401k, and you're going to be able to buy it someday inside your bank app. You're going to be able to be on your bank app—it's not just going to be Robinhood, Aaron. You'll go, "Oh, okay, I'm at Chase Bank. Let me put a little bit of this money into Bitcoin." So, all three waves, in my opinion, have been happening simultaneously. But I think the institutional wave is really going to be the one that pushes people over the next decade.