Raoul Pal: Hedge funds, family offices, institutions, retail All ‘underweight’ cryptos
On Sunday (July 31), former Goldman Sachs CEO Raoul Pal talked about why he’s so excited about the long-term prospects for crypto (and Ethereum in particular).
Before founding the macroeconomic and investment strategy research service Global Macro Investor (GMI) in 2005, Pal co-managed the GLG Global Macro Fund in London for the global asset management firm GLG Partners (now called “Man GLG”). Prior to that, Pal worked at Goldman Sachs, where he co-led the European equity and equity derivatives hedge fund sales business. He is currently the CEO of the financial and business video channel Real Vision, which he co-founded in 2014.
In the April 2020 issue of the GMI newsletter, Pal explained why he believes Bitcoin, which he called “the future,” could one day have a $10 trillion valuation. In that edition, Pal said that the idea of a $10 trillion valuation for Bitcoin is not so crazy:
“After all, it’s not just a currency or even a store of value. It is a completely trusted, verified, secure financial and accounting system of digital value that can never be created outside of the cryptographic algorithm… It is nothing less than the future of our entire exchange system, and of money itself and the platform on which it runs.“
Since then, Pal has provided updates on changes in his crypto holdings, and currently seems much more bullish on Ethereum than Bitcoin. For example, on October 29, 2021, he tweeted:
Anyway, earlier today Pal took to Twitter to point out that “most people who have a crypto investment mandate are not fully allocated to crypto when they moved to share cash.”
He went on to say:
- “Above this level, retail will begin to be forced in, along with institutions. 2200 to 2300 is key for me…a break on that happens either pre-merge or post-merge. Once everyone gets back in, the market can correct sharply before rising again based on the macro.“
- “The macro is the key here. Global M2 is the big macro driver for crypto (liquidity cycle)… And it’s about to turn… ISM (inverted) is leading it… I think crypto is sniffing out the turn.“
- “Same with inflation – the other bogeyman. ETH is starting to price in the swing in inflation, which I think is correct. But I can’t help but think about the long term chart of BTC vs the second best performing asset since 2010 – NDX. NDX is down 99.9% in relative terms. It is also in central resistance…“
- “But the last 3 years have been all about ETH. It has outperformed the NDX by 90% since then. And that NDX/ETH ratio has posted a DeMark weekly 9-13-9 suggesting a full reversal. ETH should outperform by another 90% over the next few years…“
- “The support should be removed eventually… ETH is also breaking out vs BTC… This is being driven by the superior current network effects and network activity.“
- “Sure, other tokens will outperform ETH, but crypto overall will outperform all other assets, in my view. My hunch is that the market is caught underweight (as it is also in stocks) and the pain trajectory is higher. But those are only short-term thoughts. The long-term is clear.“
On July 3, Pal talked about a new Web3-focused business (ScienceMagic.Studios) he recently co-founded.
ScienceMagic.Studios describes itself as “a digital asset venture studio” that advises and implements “the creation of digital assets (eg NFTs and social tokens) and web3 economies for brands, talents and their communities.”
The three founders are David Pemsell, former CEO of the Guardian Media Group; Kevin Kelly, who is “co-founder of Delphi Digital, the leading research and consulting firm dedicated to web3 and digital assets, and a partner in Delphi Ventures, the firm’s investment arm”; and Raoul Pal.
As The Block reported on June 14, the firm “raised $10 million in pre-funding” from an impressive set of backers that included Coinbase Ventures, Digital Currency Group and Liberty City Ventures.
On July 3, the Real Vision CEO took to Twitter to explain what his new firm is trying to do:
He went on to say:
- “Our mission is to tokenize the world’s largest cultural communities—music, fashion, movies/book/TV franchises, and sports—using NFTs, social tokens, and the metaverse to build community, utility, and experience.“
- “There are $63 billion of intangible assets on global corporate balance sheets. Tokenization turns the brand and community into concrete things and shares the utility and network with the community. It is potentially the biggest change in business models in a very very long time.“
- “We have hinted at this for a long time! It’s one of the biggest opportunities in Web 3, helping big brands enter Web 3 the right way—creatively, but carefully and meticulously. We are already in talks with some monumental people/brands. Really, really exciting!“
