He Was Right About the Iran War. Now Jim Thorne Says "Buy Bitcoin"!

Key Concepts

• Secular Bull Market: A long-term market trend characterized by sustained price increases over many years.
• Supply-Side Fed: A shift in Federal Reserve policy focus toward expanding the economy's productive capacity rather than traditional Keynesian demand management.
• 40-Week/200-Week Exponential Moving Average (EMA): Technical indicators used to determine the intermediate and long-term health of a market trend.
• Tokenization of Real-World Assets: The process of converting rights to physical or financial assets into digital tokens on a blockchain.
• Power Law (Bitcoin): A mathematical model suggesting Bitcoin’s price follows a specific long-term logarithmic growth trajectory.
• Barbell Strategy: An investment approach that balances high-risk, high-reward assets (innovation/crypto) with stable, physical-economy retooling assets.

1. Market Outlook and Macro Framework

Jim Thorne argues that the current stock market rally is not a "parabolic move to sell" but rather a continuation of a secular bull market.

• Technical Indicators: Thorne emphasizes the "Munger Rule": as long as the 200-week EMA is upward sloping, any pullback to that level is a buying opportunity.
• Economic Cycle: He rejects the "midterm election cycle" narrative that predicts a 20% drawdown, noting that history shows no instances of back-to-back 20% correction years outside of a recession or financial crisis. He maintains a "no recession" outlook.
• Targets: Thorne previously set an S&P 500 target of 8,000 for the year but suggests that if the market enters a period of extreme optimism similar to the late 1980s/early 1990s, it could reach 12,000 by 2028.

2. The Shift to Supply-Side Economics

Thorne posits that the U.S. is undergoing a generational shift toward supply-side economics.

• The Fed’s Role: He expects the Fed to lower rates to a neutral level (approx. 2.5%) and hold them there. The philosophy is that if businesses or individuals cannot finance themselves at that rate, they should not be participating in those activities.
• The "Drunkenmiller" Connection: He highlights the influence of Stanley Druckenmiller on current policymakers, suggesting a focus on running the economy "hot" to grow out of the national debt.
• Energy Security: Thorne identifies energy security as the primary driver of the current global landscape. He notes that natural gas prices (the feedstock for AI electricity generation) are down 30% year-over-year, positioning the U.S. as a prime beneficiary.

3. Gold vs. Bitcoin: The Investment Thesis

Thorne provides a comparative analysis of gold and Bitcoin, favoring the latter for future growth.

• Gold: While he views gold as a long-term hold with a target of $10,000 by the end of the decade, he believes the "easy money" has been made. He notes that mining is a difficult, capital-intensive business, and gold returns will likely track with market beta.
• Bitcoin: Thorne compares the current state of crypto to the passage of the Telecommunications Act in the early 1990s, which catalyzed the internet boom.
  • Institutional Adoption: He points to Goldman Sachs’ covered call strategies and Michael Saylor’s (MicroStrategy) use of preferred stock to acquire Bitcoin as evidence that Wall Street is beginning to embrace crypto.
  • The "Pain Trade": He argues that Bitcoin is not in a bubble because retail participation is still low. He suggests that if Bitcoin follows its long-term power law, it could reach $250,000.
  • Opportunity Cost: Thorne asserts that for every $1,000 invested, Bitcoin is likely to be a "three or four bagger" over the next two years, significantly outperforming gold.

4. Notable Quotes

• "As long as the 40-week exponential moving average is upward sloping, the intermediate trend is intact."
• "Price always follows narrative."
• "I don’t think people recognize the fact that the crypto boys are coming after the stranded capital on Wall Street."
• "Do you know when it’s a bubble? When your grandmother wants to sell a US treasury and buy $10,000 worth of IBIT."

5. Synthesis and Conclusion

The discussion concludes that the global economy is undergoing a structural transformation not seen in decades. Thorne’s framework suggests that investors should move away from old playbooks. The core takeaway is a bullish stance on the U.S. market, driven by AI innovation, energy security, and the integration of blockchain technology into traditional finance. Thorne advises a barbell approach: retooling the physical economy while aggressively allocating to digital innovation (Bitcoin/Ether), as he believes the "pain trade" for the market remains to the upside.