Jamie Coutts and Raoul Pal on Crypto, Ethereum ETF and AI

By Aaron Feuerstein March 23, 2024 In AI, Cryptocurrency, ETF, Ethereum
  • Pal identifies cryptocurrencies as a key opportunity in the face of global financial challenges, seeing it as the most dynamic asset class amid debt cycles.
  • Pal is excited about AI’s potential but notes the investment landscape is complicated by rapid innovation and dominance by firms like OpenAI.
  • Coutts highlights the early success and challenges of ETFs in crypto, criticising the SEC’s inconsistent stance on Ethereum ETFs as stifling innovation.

Pal: Embrace High-Growth Assets

Raoul Pal, founder of RealVision (RV) and Jamie Coutts, RV’s Chief Crypto Analyst recently discussed the current economic system and came to the conclusion that the world’s financial and economic systems are disproportionately favourable to those already possessing wealth.

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While some advocate for gold as a safe haven, noting its capacity to preserve global purchasing power without necessarily generating wealth, Pal himself advocates for a more dynamic approach. He identifies the digital asset class, particularly cryptocurrencies, as a standout opportunity within the macroeconomic landscape.

I got to the conclusion that if everything is correlated and driven by the same debt cycle, then you just want to back the fastest asset and by a long way it’s crypto. This is the biggest macro-opportunity of all time. Since the first time I talked about Bitcoin on RealVision it’s up 450,000%.

Raoul Pal

Pal views this as indicative of a transformative moment in economic history, suggesting that in a world where traditional assets are increasingly correlated and influenced by the same underlying debt cycles—backing the “fastest” asset class (in this case, crypto) presents the most significant macroeconomic opportunity of our lifetime.


Bullish on AI, But… 

The former Goldman Sachs manager views AI as an exciting area—however, to invest in it is difficult, because of the lack of a clear investment vessel.

There’s not even an AI company to trade. I mean, yeah, you can trade Microsoft, but it comes with a bunch of other stuff.

Raoul Pal

But there are other challenges too. Pal views the AI investment landscape as fraught with challenges stemming from the rapid pace of innovation dominated by entities like OpenAI, significant resource requirements, and the potential for AI to autonomously generate or improve upon business ideas.

I’m not sure that AI is even going to generate any returns. Every time there’s a bunch of new start-ups coming along, Open AI just basically destroys them. I think it’s very, very, very difficult to generate value in this space.

Raoul Pal

This environment makes it exceptionally difficult for new players to enter and succeed, signalling a future where the dynamics of value creation and competitive advantage are fundamentally altered.

Former Aussie Bloomberg Analyst Weighs in on ETFs

Jamie Coutts, a former Bloomberg analyst and now the Chief Crypto Analyst for RealVision, observes the unexpected success of ETF products, highlighting recent outflows as a momentary pullback from their initially-robust performance. 

Despite these fluctuations, Coutts emphasises the nascent stage of ETFs in the market, suggesting that a gradual adoption is likely to unfold over the years as more platforms welcome ETFs.

I think this will be a drip feed into the market over many, many years. But Bitcoin is still going to be subject and crypto is still going to be subject to the same cycles that we’ve seen before.

Jamie Coutts

Criticism of SEC Approach – ‘An Institution Beholden to Certain Ideas’

Coutts also had some criticism for the US Securities and Exchange Commission (SEC) over its contradictory stance on Ethereum ETFs—approving futures while resisting direct ETFs, despite previous indications Ethereum isn’t a security.

The real big question now in regards to the ETFs is what about Ethereum? Obviously, we’ve got an SEC that is still outwardly against the idea of an Ethereum ETF—which is just bananas when you think about it.

Jamie Coutts

This confusion is seen as contradictory and possibly unlawful, given the regulatory communications under the previous SEC chairmanship that did not classify Ethereum as a security.

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This inconsistency is bewildering for the market and indicative of a regulatory body that is, in Coutts’s view, struggling with legacy issues and misaligned interests that do not support innovation or the necessary economic progress.

It just is confusing to the market. I think this is really just the last gasping breaths of a system or an institution that is beholden to certain interests that are not aligned with the future.

Jamie Coutts

Aaron Feuerstein

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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