Former macro hedge fund manager Raoul Pal, who believes that Bitcoin is “a priceless reserve and collateral asset,” said that due to the increasing institutional adoption of Bitcoin he is considering selling his gold to buy more Bitcoin.
Prior to founding macro economic and investment strategy research service GMI in 2005, Pal co-managed the GLG Global Macro Fund in London for global asset management firm GLG Partners (which is now called “Man GLG”). Before that, Pal worked at Goldman Sachs, where he co-managed the European hedge fund sales business in Equities and Equity Derivatives.
Also, currently, Pal is the CEO of finance 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 that Bitcoin, which he calls “the future”, could have a $10 trillion valuation in the future.
In that issue, Pal said that the idea of a $10 trillion valuation for Bitcoin is not so crazy:
“After all, it isn’t just a currency or even a store of value. It is an entire trusted, verified, secure financial and accounting system of digital value that can never be created outside of the cryptographic algorithm…
“It is nothing short of the future of our entire medium of exchange system, and of money itself and the platform on which it operates.”
Pal started by saying that we are currently moving to the insolvency phase of his three-phase thesis for Bitcoin:
“I start to see the narrative pick up that that the economy’s not going to recover for a lot longer than we expect, there’s no stimulus around, and we’ve got more problems that will come in Europe, the U.S., and elsewhere, and businesses don’t have enough cash flow. They are closing in droves, and that’s what I call the insolvency phase.”
Next, he explained why Bitcoin has a 50% allocation in his personal investment portfolio:
“That’s has been an ongoing narrative. I’ve been involved in Bitcoin since 2012. It’s been an ongoing narrative that at the beginning of this I knew the only answer would be cut all interest rates to zero and probably negative and then massive stimulus beyond anything which we’ve ever seen before.
“So the first phase I want to be involved in Bitcoin. So, I bought into the sell-off, added to my positions, and now I’m starting to see the ship towards insolvencies and the only answer is more from the central banks.
“So, that’s why I started to buy more and more Bitcoin. Technically, the setup’s right. Obviously, we had the halving, and just the adoption phase — what’s happening with the institutions — it’s like the perfect timing…
“It’s probably above 50% now. Really, I’ve reduced cash, put that into Bitcoin. My trading positions are relatively small because I don’t think there’s as much opportunity as in Bitcoin. So, really, mainly a bit of cash, some gold, and Bitcoin, and I’m even toying with the idea of selling my gold to buy Bitcoin more Bitcoin.”
Later in the interview, Pal said that he found interesting the idea of “people adopting a different monetary unit for their savings and reserve assets.”
He then talked about the increasing institutional adoption of Bitcoin:
“It’s all got to come in waves, right? It started with retail. It has started to move into hedge funds; we’re not there yet. You can’t prime broke Bitcoin assets, but that’s coming.
“We are starting to see family offices in the space. Next, it’s the institutions — the endowments, the pension plans — and within that, you’ll find some government — it would be something like Nicaragua — somebody will suddenly say we’ve allocated 5% to Bitcoin… that’s going to come and it’s going to be another huge story, much like the Michael Saylor story… that will come out of nowhere…”
Next, Pal talked about his Bitcoin price prediction of $1 million within the next five years:
“Yeah, I think that’s about right… just from what I know from all of the institutions, all of the people I speak to, there is an enormous wall of money coming into this.
“It’s an enormous wall of money — just the pipes aren’t there to allow people to do it yet, and that’s coming, but it’s on everybody’s radar screen and there’s a lot of smart people working on it. So, I think it’s going to be not because the world’s collapsing — it’s because there’s going be adoption by the real large pools of capital.”
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.