Former Goldman Sachs Executive Makes a Massive Bet on Bitcoin
Macro investor Raoul Pal yet again talked about his personal portfolio that is divided into 25% each into gold, bitcoin, cash in the bank, and trading opportunities where most of his bets are long bonds, US dollars, and gold miners.
He is not net short equities yet but is looking to stop shorting the big indebted US companies like general electric.
Pal is a staunch bitcoin supporter who believes the world's leading digital currency will climb to one million dollars in the coming years.
USD is going to eat itself
The reason behind such a massive bet on Bitcoin is that the dollar standard is going to break the system. It has already eaten its competitors and “now it's going to eat itself by going up” and there’s almost no way of stopping it.
The US dollar is currently ruling the market which accounts for 70% of all trade and currency transactions. We are already seeing a surge in the demand for USD with everyone in the world having dollar-based debts while having massive declines in USD cash flows, making it harder to pay off those debts.
Central banks know it and want to move to digital currencies to circumvent the strength of the dollar and create a new way of moving currency, said the former head of Goldman Sachs’ hedge fund sales operation in Europe.
Legacy systems, custody, and trusts are outdated relics that have to change and Bitcoin is going to force this change.
“We are moving towards a digital currency world,” said Pal during his interview with Cambridge House International Inc.
However, USD won’t go anywhere, it just has to be used less.
Magnitude of opportunity with bitcoins
Bitcoin is the poster child for the digital currency which acts like the gold — the personal reserve asset that everybody needs. It is the truth in the digital world just like gold is in the currency world, he said.
Being a digital gold makes it an extraordinary store of value which Pal believes will be trading at one million dollars per coin in five years.
“The magnitude of opportunity with bitcoins is like nothing I've ever seen before.”
The flagship cryptocurrency also has a tremendous store value as while the world is basically debasing fait currency, Bitcoin, on the other hand, is hardening its currency. This supply in reduction makes it extremely hard as an asset and the more Bitcoin grows, the more adoption will grow.
Another reason to be bullish on BTC
The co-founder of Real Vision shared that there are three phases of a market crash starting with liquidation panic that we saw in March 2020. Currently, we are in phase 2 which involves mobility and rebound. After this will come debt inflation and less cash to service the debts.
Meanwhile, central bank balance sheets are going to expand because the slow-growth will continue for a long period and deflation will come, which is another reason he is bullish on Bitcoin. Moreover, no investment has ever performed as well as Bitcoin has in the history of the world.
As to prepare for a recession, he emphasized on cash and “everybody here who has cash in a recession is king because you are the guy who can buy stuff when everybody has to sell it.”