-Hey, everybody! Today, I’m very pleased to be joined by my friend, Raoul Pal. He’s a former Goldman Sachs analyst. And as you guys know, he’s very big in the crypto space at this point, founder of Real Vision. Not just Real Vision Crypto, but they do a lot of, you know, kind of macroeconomic issues. If you guys want to sign up for Real Vision, by the way, you find anything in this interview valuable, you can do that in a link down below in the description. Well, Raoul, let’s start, you know.
-If you’re not busy in crypto, then you’re not doing it right, I think. Exactly right. Well, let’s get in. What I really want to focus on here in part 1 of this interview is going to be just where we are at in the market.
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-So I guess, like, let’s just start with, basically, where do you kind of see us in the movement of Bitcoin? Are we still in a bull market? Do you consider this a bear market? Do you not really think about those polarizations? Just how would you summarize where we’re at? The answer is I don’t really know.
– And I’m not sure it matters.
– Kind of like, you know, if we’re looking at the longer time horizon, for those of us, I mean, there are two types of people in this market. There are traders, and there are long-term holders. I’m a long-term holder of crypto assets. I tend not to trade around them. So my view is, where are we going from here over the next five years, it’s up. So everything else is noise. But, you know, the market fell 50% last year, and then we went up to the highs, back down 50%, and kind of retest the low, didn’t make a new low, and it’s kind of been slopping around. It tries to go higher, and then doesn’t do it, then tries to go lower, doesn’t do it. And my general view is that I think it’s the economy that’s doing this. So this is where macro and crypto come together. A lot of people don’t realize that macro has a big impact. So, what am I talking about? I’m talking about the fact that inflation has gone up, so a bunch of people watching this, this video now will notice that their wages haven’t gone up as much as cost of goods, so they’ve got less money to spend. So if you’re dollar-cost averaging in or you want to buy NFTs, whatever you’re doing in the crypto space, you don’t have as much money. So that took money out of the market. And then interest rates are going up. So people who’ve got mortgages or rents, they’ve gone up as well. So there’s less money coming in. So when I look at the kind of volumes in crypto and the value exchanged, it’s not going up. It’s just trading sideways, which is why the market’s in this big sloppy range. There’s nothing really happening. So that’s what I think’s going on. Is that a bear market? Is it a sideways consolidation? You know, I don’t really know. I think the low was in last year. And I don’t think we’d go back to that. I actually think that we’re still probably still in a kind of the first phase of the next bull leg up. That’s what it feels like to me. But we need to see something change. Now, what is the thing that’s going to change to do that? My guess is if the US economy or the global economy starts weakening, then the market is going to say, “Oh, there’s going to be less rate hikes than expected,” and therefore, that tends to be good for crypto or technology, kind of Cathie Wood style technology investments. So I think at the margin, it’s those kinds of things. But the market’s still struggling with “How do we deal with this?” And the stock market’s the same, right? It’s up and down. And it just can’t figure out how long is this inflation going to last? What does it really mean? How much the interest rate is going to go up, and how much have they already been priced in? i.e. the rates have gone up anyway. So, you know, it’s a really complicated macro situation. But I think crypto has done pretty well, considering you’ve thrown a war, 8.5% inflation, you’ve thrown Russian.
– Chinese bans, you’ve thrown all sorts of stuff at it, and it’s kind of in a big range. Yeah, I think that, you know, one thing that’s really interesting about that is that, you know, when you’re factoring in what’s going on with the economy and the macro factors is that it’s not necessarily that we’re expecting the inflation to get better, but is it that maybe we’re going to see the targets for where they want to move inflation to to levels they’re comfortable with being higher? Like, at first, I think they were saying they want to get it down to 1% or 1.5%, but now the rumor is, the Fed is thinking more about, like, “Well, we’re at 3% inflation, maybe we’ll be cool with that.” Like, what are your thoughts? Do you think that could factor in? Just the level of inflation we’re comfortable with could get things heading back in the right direction? Because that would align with, you know, less cuts.
– Or less raise, I mean.
– Yeah, I think that, but I think that just generally, you know, the oil price hasn’t been making new highs and stuff like this, and the economy is weakening. All my forward-looking data of the economy is weakening. So inflation should start coming off anyway.
if the economy is weakening, and inflation is still at 4%, that’s what we had in 2008.
– And the Fed started cutting.
– Yeah. It depends how weak the economy gets. So that’s the key thing. Everything else is a red herring. If the economy starts looking like it’s weak, then all bets are off, and the whole narrative is going to shift. And that’s very, very bullish crypto. So if you’ve got to think of it, with rates at their highs now and maximum fear and maximum pessimism, the outcome most likely to happen is not everybody’s fear. It’s actually– the bond market cools off, inflation comes lower, interest rates start falling, and that’s very, very bullish. So I’m actually more bullish overall. And I’ve been buying technology stocks for the same reason. I just start to think everyone’s so bearish, they all hate it, that the chances are it goes up. Well, I’m going to fit in that category. You know? So. I’m a strong believer in the Bitcoin 4-year cycles. And, you know, we got a lot of flack at the end of last year because, you know, we said Bitcoin was going through $100,000, and it didn’t, and then it made us look real bad – because we thought we had some good info.
– – We’re all in that club, mate. We’re all in that club. We were all in that club, but the thing about it was is that we didn’t get there, so we didn’t get to those heights that we thought we would get to, but actually, for two years, I had been saying the end of the bull run would be between September and Thanksgiving, and that’s exactly where we got the top of the market. So in my opinion, there’s, you know, no reason to think that we’re not just still in traditional bull and bear cycles based on the 4-year halving countdown. And now, you know, we should actually be seeing prices get lower. But how low, we don’t know. The interesting thing is we didn’t get max euphoria. So I want your thoughts on this. Bitcoin didn’t go nearly as high as almost all of us thought it would go, so do you think that’s factoring in to why we’re not getting necessarily max pain? And can you see us not needing to get to the max pain level?
– I think the markets change because of institutions. – Okay. Institutions and hedge funds are in the market. And people like Michael Saylor are in the market. And people like Do Kwon of Terra are in the market. That didn’t exist before. So before, it’s retail. So retail rush in, they get over euphoric. Retail rush out, they panic at the lows. But here, we’ve got different participants, which is why I think it’s dampened the downside. So let’s say you’re right and we are in the bear market. There’s no reason to assume it’s going to go down 80% this time. Right. I agree. And so I looked at this with Amazon, right? So this is a network model, much like crypto is. Amazon, as soon as it launched, 2001, went down 95%. Much like Bitcoin did. Then it goes up to new highs, then it falls down 65%, then another 60%, then after that, the corrections were much smaller because more people are participating in the market. And before you know it, the corrections are 30% and then 20%. And I think that’s true. So you could still be right that we’re in the bear market, but maybe the downside is 50-60%, as opposed to 70-80%.
– Yeah. That kind of feels like that makes sense. Yeah. And I mean, I’m tracking with you 100%. I do agree with that. I don’t think we’re going to see, like, I think we could go back down and test $29,000.
– I don’t see us necessarily going lower than that.
– I agree. We could. If we did, I’m thinking 24 to 27. I’m not thinking worst case scenarios here. I don’t think we’re going to see that mainly because we didn’t get the max pain. I think what you’re saying about the market changing is interesting because, you know, if I were to go back over, you know, there’s probably six or seven different instances over the last four years where people would say that. They say, “Oh, well, from this point forward, we think things are going to be different.” The institution. But then every single time, you know, the numbers have reflected we’ve stuck to the traditional 4-year cycle. But if you look at what happened in November, that would kind of support that institutional theory because people say, you know, there’s a lot of evidence to support this from address, you know, chain analysis and, you know, fundamentals and all the Glassnode metrics, is that the retail “left” in May. The retail didn’t ever really come back.
– It was the institutions.
– Right. that drove the price upwards, you know, in November. And they also tend to rebalance because they had a decent year.
– They rebalance at the end of the year.
– Yes. I did kind of warn people about it. I didn’t warn myself because I was, you know. I remember you were on the show talking about that. I’m pretty sure last time you were on for an interview, you mentioned it.
– Yeah. And I bought ETH calls thinking,
– Yeah. you know, it’s going to go– it’s going to go higher. But retail came out in May. And the reason they came out in May was because inflation started rising. And so people had less money in their pocket. – So we just saw less activity from retail.
– Yeah. But the institutions have been there. And I’ve set up a fund off hedge funds that invest in crypto hedge funds. That money goes directly into the market because you give it to a hedge fund and they invest it. So I know I’m seeing institution asset allocation. I’m speaking to all the biggest pension funds, family offices, banks, everybody. And they’re all setting themselves up. People are starting to allocate capital. People keep thinking there’s going to be a wall of money where, one day, everybody comes in at once.
– It doesn’t work that way.
– Yeah. It’s like a tide that comes in. And before you know it, you’re that deep. That’s how you get the parabolic move at the end. Exactly. And then what happens is, you know, the reparabolic moves happen once you start to see the price move. I know that sounds ridiculous, but, right now, retail will come back in
– Yeah. if they sense they can make money. But they won’t do it if they can’t because they can’t take the risk. They’ll come in at $69,500. As soon as it passes a new all-time high, that’s when all the retail, you know, will come rushing back in. But I mean, you know, as well as I do, Raoul, that, you know, as an investor, you know, you and I, we don’t look at the short-term daily movements, but yet, as people that are plugged into the culture of crypto, we do, you know? Like, it doesn’t matter to us through our portfolios. Like, I don’t even look at my portfolio these days.
– I just let it run. I’ll look at it back.
– I don’t. – But I do look at, like, the hourly chart of ETH and Bitcoin.
– Yeah. Of course. Right. But I don’t trade it. So we don’t look at the actual portfolio. We look at the charts for the channel. But, you know, the interest levels in crypto reflect the prices. And I’m sure you’ve seen like maybe on Twitter or through Real Finance or Real Vision, excuse me, Real Vision Crypto, that the people interested in crypto has gotten much lower over the last six months. But here’s what I find to be even more fascinating. It’s so much more higher than it was than the 2018 bear market. Yes, definitely. I mean, there’s still a lot of interest.
– And nobody’s freaked out by the price action.
– Right. People are doing other stuff, right? Because it’s not going anywhere. So they focus– The people who remained in crypto have gone to NFTs. hey did the other layer 1s for a while. And now they’re all punting NFTs because everyone’s looking for a bit of adrenaline. “How do I make some cash?” So they’re doing that. Others have just kind of stopped doing stuff and walked away, whether they take their money out, or just leave what they’ve got in, and they go about their business doing other stuff. So, yeah, definitely, interest has waned. It’s because price action. As soon as price action starts picking up, I don’t think it even needs to get to sixty-something-thousand because so many people are so waiting for the next run. My guess is by the time it gets to, like, $50K, $55K, you’re just going to see everybody piling in.
– And that’s institutions, too.
– We’ve all been waiting and watching. Like, we’re in no hurry to do it, but the moment it starts going up, it’s like everyone’s going to scramble to get in. Well, the theory is that, you know, the reason why people leave during these times is not necessarily because they’re selling their crypto. It is because, like you said, they’re doing other things. And I was playing in a poker tournament, and a guy that watches my channel was at my table, and, you know, it’s just so interesting to listen to him talk about why he’s not watching crypto videos right now. He still is in crypto. It just reflected that exactly. He’s just like, “Look, it doesn’t matter where the price is going day to day right now. It’s not moving a lot. I don’t have to keep tabs on what the news is because it’s not moving massively. So because of that, I’m just, you know, I’m taking time doing other stuff.” I don’t know if you’ve done it, but we’ve done it at Real Vision, is we looked at engagement on crypto videos and mapped it against the price of Bitcoin. It’s the same. Yeah.
– It’s the same.
– Exact same. You know, and you look at, even look at the year-on-year rate of change and basically the same thing. It’s like, if the crypto price is low, there’s less interest. If the crypto price goes up, there’s more interest. – Yeah, absolutely. – There’s still a big group of people as you say, you know? Definitely, the amount of people interested is much higher, and the people who’ve come out of the space aren’t not interested and don’t feel like that misery of 2018 where they all hated it. – Oh, my gosh, that was awful. – They just really like, “Okay, fine. I’m going to go do something else.” Well, it’s even like a snowball, you know? The snowball is getting bigger. Every time we have positive price action, the amount of people in crypto that are dedicated, and that’s how you get these constant long-term holders who aren’t selling, you know, like, more Bitcoin has not moved over last twelve months than ever before. Well, in theory, that should always be increasing because each price rally, we’re bringing more and more people that, you know, it’s the people that really deeply believe in crypto. They’re not just here for, you know, to buy some Dogecoin and make a thousand bucks and get out, you know? They’re really looking to be here long-term, so. But also that point about the fact that so many of these wallets are inactive, it just shows you that they’re bored, you know? That’s like, “Fine, I’ve just got my stuff, and I haven’t touched my crypto stuff for ages.” “Yeah, I’ve bought a few NFTs. That’s all I’ve done.”
– “Other than that, I just completely left it.”
– Well, we had certainly we took some profits over this year, you know? I mean, we wish we’d have taken more last year when the price has been up. We’ve been rolling some stuff into real estate. And, of course, you know, we’ve been buying some NFTs. I’ve gotten really like, I’m like really degen about wanting, like, blue chips, you know? So I’ve got a CryptoPunk and a Bored Ape, a Mutant Ape. We’re getting ready to mutate my Bored Ape into a Mutant Ape because it had not been done before . Getting into that, and it is, it’s that little adrenaline kick. But speaking of institutions, we’ve been talking about institutions pretty good bit, kind of the last thing I want to touch on in this part of this interview is the Bitcoin ETF, you know. You were on Crypto Banter, a friend of the channel, and, you know, they would rant, and you said you believe that in April, we were possibly going to see a spot ETF for Bitcoin approved. I want to know, do you still believe that is the countdown and April’s getting shorter? And, you know, like, are there sources you have saying that? Is that inside info? Is it murmurs? Or was that just your opinion? So, there’s a couple and I don’t even know one of the people involved in one of the ETFs that’s coming, so they’ve all got a schedule of approval, and I don’t know which are the ones, and I don’t want to name names about who’s telling me stuff.
– Yeah. he thinks he has a very good chance. And he’s been involved with the regulators for, I don’t know, five years now? Four years? On this.
– He’s suggesting that it is very close.
– Okay. For whatever the regulator has been asking. And he said, “Oh, the ARK one, that will get rejected, the next one get rejected, but then we’ve got a chance.” Let’s see. Now, whether the GBTC gets accepted in that.
– They have been raising a lot of noise.
– Making a lot of noise lately.
– That’s right. So, you know, nothing is a certainty. But, you know, this guy’s a serious guy. He’s not a, you know, a shiller.
– He’s like, “I think we’re going to do this.”
– And everybody else has said, “I don’t think we’re going to do it.” And he’s been rejected, I think, before, or he didn’t even put it up because they told him: “You’re not going to get it yet.”
– Right. So, it’s kind of like, who knows? But there’s a higher probability than I’ve seen. And whether that’s April or May, who knows? Right? Yeah, well, it’d be really interesting to see if that does happen, if that could get us going in the right direction and, you know. But the problem is, who’s going to buy it because the markets aren’t going up? – You kind of need the markets to be going short-term pump.
– You get a short-term pump and a follow-through. – Yeah. You need something at the margin to change. Now, the Bitcoin ETF plus the ETH 2.0? Okay, you start to change the structure of the market maybe. Plus? Plus? Plus? Plus? Plus XRP. – If that happens, – The decision on the case, right?
– I agree. Right. These three. That would be a powerful trio. There are three big catalysts. And if I’m right that the macroeconomy changes and inflation is not our biggest enemy, those four things? Well, that’s a basis for a shorter bear cycle than you would be expecting. But we’ll see. Well, I tell you what, that all sounds very interesting. In the next part of this interview, we’re going to get into, you know, what you do see happening in the future of crypto, kind of maybe what the new hot trends you think there’d be. I have some ideas. We’ll talk about that on the next one. And everybody else, make sure to check out Real Vision. Incredible information. I’ve gotten so much out of the videos there. You guys can check that out down below in the video description. We’ll have a link for you guys. Raoul, thanks for joining us.
This article is a transcription of a video made by BitBoy Crypto
Original video: https://youtu.be/J4-cImMdVjk