Expert Reveals When and Why He Is Going to Sell His Crypto Holdings

  • Raoul Pal identifies a four-year crypto cycle aligned with Bitcoin halving and US presidential cycles, crucial for timing investments.
  • He stresses setting long-term goals, forecasting significant growth in crypto’s market value and recommending buying during sell-offs.
  • Pal highlights the importance of a balanced selling strategy, advocating for profit-taking at strategic times rather than market peaks.

Renowned former Goldman Sachs executive turned crypto investor, Raoul Pal, recently shared his insights on the cyclical nature of the crypto market and his strategy for selling his holdings.

Pal’s comprehensive analysis offers valuable guidance for investors navigating the volatile world of digital assets.

Step One: Consider The Cyclical Nature of Crypto

Raoul Pal’s investment philosophy is heavily influenced by the cyclical patterns he has observed in the crypto market.

As we know, crypto is very cyclical based on this everything code thesis that I’ve built, which is: there’s a debt refi cycle that happens every four years.

Raoul Pal

This cycle, he explains, is closely aligned with the Bitcoin halving cycle and the US presidential cycle, creating an intricate web of repeating patterns.

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In his framework, Pal describes a four-year cycle: year one as “crypto spring,” year two as “crypto summer,” year three as “crypto fall/ autumn,” and year four as the most challenging, often leading to significant market drawdowns.

Source: Raoul Pal/ LSEG Datastream/ Global macro Investor

Emphasising the importance of understanding these cycles, Pal adds:

Year four is the worst, and the worst is what scars people and people want to know how to deal with this.

Raoul Pal

Step Two: Establishing Investment Goals

Pal’s word of advice to investors is to define their long-term goals and time horizons. He believes that the crypto market, currently valued at approximately US$2.5 trillion (AU$3.7 trillion), could grow to between US$10 trillion (AU$15 trillion) and US$15 trillion (AU$22.4 trillion) by the end of the current cycle and potentially reach US$100 trillion (AU$150 trillion) by 2032.

Pal asserts:

We’ve got the largest wealth-generating macro trend of all time, and it’s still in front of us.

Raoul Pal

To navigate these cycles effectively, Pal recommends a disciplined approach:

If you’ve got a long-term time horizon, you will definitely make more money by following that route. Buy the sell-off, embrace it, have cash ready for it.

Raoul Pal

Step Three: A Balanced Selling Strategy

For those considering when to sell, Pal suggests a balanced approach. He advocates for taking profits based on time rather than trying to pinpoint the market top.

Take maybe a third off the table for lifestyle chips,” he suggests, recommending this strategy towards the end of a year following a US election, typically a period of strong market performance.

Raoul Pal

This method allows investors to secure some profits without fully exiting their positions, ensuring they remain part of the long-term growth trend.

Being in the game is the secular trend. That’s the most important thing to me.

Raoul Pal

Related: Coinbase Eyes Australia’s $600 Billion Superannuation Market Amid Rising Crypto Demand

Final Step: Embracing the Down Cycles

Pal’s strategy also includes a proactive approach to market downturns. He encourages investors to view these periods as opportunities rather than setbacks:  

Expect to see an 80% drawdown. Maybe it’s less this time, maybe it’s more. Embrace it because every time you buy those lows, you get a 10/20/50X depending on what you’re buying.

Raoul Pal

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Pal’s final conclusion:

Let the cyclicality be your friend. Understand that there are seasons that you can use to your advantage.

Raoul Pal

Aaron Feuerstein
Author

Aaron Feuerstein

Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.

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