In a recent interview, former Goldman Sachs executive Raoul Pal talked about his investments in the crypto space, and more specifically, he explained why he more bullish on Ethereum than Bitcoin and why he got into Dogecoin.
Prior to founding macro economic and investment strategy research service Global Macro Investor (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. Currently, he is the CEO of finance and business video channel Real Vision, which he co-founded in 2014.
On 30 November 2020, Pal revealed that he was about to sell his entire gold holdings and use the money to invest in Bitcoin and Ether.
“I have a sell order in tomorrow to sell all my gold and to scale in to buy BTC and ETH (80/20). I dont own anything else (except some bond calls and some $’s). 98% of my liquid net worth.“
Then, on Janaury 18, Pal provided this update on his crypto portfolio allocation:
“#irresponsiblylong BTC and ETH. My split is now 70/30.“
On April 21, Pal explained why he has become much more bullish on Ethereum:
He then went on to say:
- “The ETH space is growing at 100% YoY (vs 50% YOY for BTC) and it is attracting a massive proportion of the developer talent and applications too.“
- “At this point in the risk cycle and with ETH 2.0 coming (cheaper fees and less supply), I’m struggling to not sell all my BTC to move my entire core position to ETH. To be clear – I’m a massive BTC bull, but I think ETH is the better asset allocation for performance right now.“
Pal’s latest comments about Bitcoin and Ethereal were made during an episode of the “UpOnly” podcast that was released on YouTube on June 15.
He got really interested in Ethereum once he realised that those people who were saying that Melcalfe’s Law only applies to Bitcoin were wrong:
“So I started then trying to understand more about Metcalfe’s Law, how it affected the mobile phone industry, the internet, and then stuff like Amazon, Facebook, Google, and all of that. And so that was the huge breakthrough for me was figuring out all of this and that ETH was actually gaining faster adoption than Bitcoin.
“And we know it by the number of developers working on it, the number of applications working on it, and the number of wallet addresses. The rate of increase is growing at about twice the speed of Bitcoin right now. So ETH’s growing about a hundred percent a year and Bitcoin’s growing about 50 percent a year. The entire digital asset space is growing about 113 percent a year, which is twice the speed that the internet get at. So, this is the fastest adoption of any technology in all recorded history, and ETH is the frontrunner right now. That doesn’t mean it always will be, but right now it’s clearly winning network effects and therefore I think the network is undervalued.“
Pal also said that after investing in Bitcoin and Ethereum, he decided to invest in some other cryptoassets:
“I wanted to allocate money into a basket of other alts. I didn’t know which ones. I knew ETH and Bitcoin I wanted. I have no idea which other project is going to get proper network effects. Everybody kind of screams about them all day on Twitter, but there’s not many of them that have yet. Some of them are starting to. So I just said right, I’m just gonna choose a kind of basket of 10. And I’m gonna have a mix of protocols like Cardano, Polkadot for interoperability, I’m gonna choose some DeFi stuff… I just watch it and they all went up 250% or something in a month and a half… and then I was now fully invested.
“I had no cash left… so I thought ‘OK, what do I want to do here?’. So I added to my ETH because this is the biggest bag I wanted. Switched more Bitcoin into ETH, and then I thought okay, I want to get involved with some other stuff. I want to make some proper macro bets, and I will also want to enjoy some of the fun.
“So, the two enjoying the fun that I want to learn from — I bought DOGE because I got I’ve got a thesis on it, and the reason being is I don’t think people understand that it has a higher probability of network effects than people imagine. Because you’ve got so many retail investors in it, all you need to do is create applications for it, and you change the entire game. So it’s one half the war. So I thought ‘you know, that’s interesting’, and everyone tells me I shouldn’t do it, so I’m gonna do it… so that was my idea with that.“
Later in the interview, he talked more about Dogecoin:
“So it’s become accessible. It’s become a bit of a joke, and we know that actually drives adoption right now, and then Mark Cuban started adopting for Mavs merch and tickets, and I was like, ‘OK, that’s interesting’ because you know Mark’s a good guy and he gets this stuff, and then you know, Elon’s all over this, and my guess is he’s gonna try and capture that attention of all of these people that invested in this joke and turn it to something real. Then they feel part of it… whether it’s useless streaming payments from Tesla cars or whatever. It doesn’t really matter. The probability of a network of that size now being turned into an application is extremely high.“
https://youtube.com/watch?v=UA-KZxHKVZA%3Ffeature%3Doembed
DISCLAIMER
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
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