Raoul Pal Is Today's Guest

Raoul Pal joins the show and Ran spends the entire hour with him covering a variety of topics.

Where Are We In This Market Cycle?

Raoul says that we're still in Bitcoin's logarithmic channel with an end of year BTC target of $250K+. Raoul believes that traditional financial institutions take a lot of time to onboard into crypto and sees more institutional money coming into Bitcoin.

Sheldon chimes in that the short-term target of $41-$43K is still intact. He then expects a pull-back before another push to the $48K range.

Raoul sees leverage in crypto as what drives volatility. He doesn't see any systemic dangers to leverage in crypto markets and notes that crypto is generally an over-collaterized market. He also points out that margin calls don't happen in crypto - the exchanges automatically liquidate you instead of calling and asking for more money. That said, Raoul doesn't use leverage and doesn't recommend it. He doesn't even really actively trade and thinks that most crypto investors would be better off buying and holding.

Raoul Sees Governments Making Financial Decisions That Hurt Future Generations

Raoul says that governments hope to get enough inflation over the next 20 years to inflate away their debt. The problem is that all savings and investments are a form of future consumption. If the government needs to create inflation, that means the resulting rising asset prices makes everything in the future less affordable. By creating inflation, the government is essentially robbing future generations. The devaluing of the dollar makes asset prices appreciate in value, which is great for the small percentage who own most of the assets. Crypto is an opportunity for more people to find a safe haven from devaluing fiat currencies like the dollar.

Raoul says that the existing banking system is too hampered by regulations to be responsive enough to fiscal policy. Governments such as the United States have started sending stimulus payments directly to its citizens. Central bank currencies given directly to individuals can be a way for governments to bypass the broken banking system to better implement fiscal policies.

Is Doge Coin For Real?

Raoul looks at Doge not with derision but with curiosity. Elon Musk has taken the worst possible coin as a joke and pumps it to show that anything can possibly have value. Raoul thinks that Elon really wants an "Elon" token, but chose Doge coin for its meme potential and especially because it already had a network established. Raoul says he has a small position in Doge because he doesn't know where it will end up.

Will ETH Replace BTC As A Store Of Value?

Raoul notes that there needs to be some accounting rules changes for more corporations to jump on board the BTC as store of value narrative. These accounting changes are necessary so that BTC holdings don't show up on quarterly earnings. Once they can keep their BTC holdings off of balance sheets, more big companies can jump into BTC as they don't have to worry about BTC volatility roiling quarterly earnings.

He also notes that BTC will remain preferable for corporations for a a store of value versus ETH. EIP-1559 will have deflationary effects for ETH, but Raoul seems skeptical that it'll be enough get any traction in the "ETH as store of value" narrative for corporations. He does note that companies will add ETH if they are actually using it to conduct transactions, something we should be seeing more of especially as Defi becomes more accessible over time.

Ran did note a big old-school investor recently joined the ranks of the crypto believers, Carl Icahn. 

Icahn is relatively more bullish on Ethereum compared to Bitcoin, a sentiment that Raoul shares as revealed by his portfolio allocation.

Raoul's Portfolio - How Much Is He In Alts?

Raoul says that in a bull market, alts will outperform ETH, and ETH will outperform BTC. Raoul balances his growth picks with the safer large cap cryptos. His portfolio balance is as follows:

• 55% ETH
• 25% BTC
• 20% alts

For his alts, he wants exposure to exchanges, Defi and protocols. His picks are quite conservative, mostly sticking to large caps. A sampling of his alt portfolio includes the following:

• AAVE
• SNX
• SUSHI
• DOT
• ADA

He says that he doesn't know which of Cardano, Polkadot etc. will emerge as winners so he just sticks to a bunch of larger market caps in his alt basket. He calls it his "dumb money" basket.

When Ran mentions that people are earning 70% on Defi stablecoin farming, Raoul responds that no one knows the true risks of staking assets in Defi.

Raoul Pal's 2 Big Themes For His Small Cap Investments

Raoul has two big themes he's investing in for the 100x part of his portfolio:

• Community & social tokens
• Metaverse tokens

Note that the following are only given as examples of these thematic narratives. Raoul doesn't want to name the projects he's investing in for fear of unnaturally blowing them up.

For community / social tokens, the biggest one that most people know of is Chiliz which has become the major network for football club fan tokens. Artists and musicians with followings can and will have fan tokens. He says every community will be tokenized: Raoul's community will have one, and Ran's Crypto Banter community could have one as well.

Metaverse is the world of digital assets and one of its biggest applications right now is games. Some examples of metaverse projects that Raoul cites as examples include RedFOX Labs and Axie Infinity.

Resources:

Video for today's show: https://www.youtube.com/watch?v=0KVnbWZtb9s

Raoul has plenty of free resources at http://realvision.com/crypto