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Once in a Lifetime Gift: Raoul Pal and Scott Melker Dive into Crypto
- Raoul Pal believes the current economic situation is unique, while noting the resilience of liquidity in crypto and tech sectors.
- The four-year economic cycle aligns with Bitcoin’s halving.
- Pal pointed to the potential that still exists in crypto, giving retail investors the opportunity to front-run institutions.
The Wolf of All Streets, crypto advocate and investor, Scott Melker sat down with Raoul Pal to discuss all things crypto and macro-economics. The writer of the popular ‘Wolf Den’ newsletter said Pal, the founder and CEO of Realvision, is one of his favourite people to talk to. Here are the main points the pair discussed.
Options Play
Pal explained that the current economic situation differs from past instances when the yield curve shifts to a positive slope due to rate cuts. The issue now revolves around excessive spending and the challenge of bond buyers, especially as rates rise and more bonds are issued.
Pal said,
“So this is like an option play. Yes, we’ve got the ETF story going on as well. But it’s also, […] we know what you have to do. You have to yield curve control or you’re going to have to do something to stop this because if not, you’re going to blow up the banking system.”
Raoul Pal He explained that with liquidity expected to return, some investors remain optimistic and have been leveraging opportunities in both the crypto and technology sectors. Despite measures like quantitative tightening, the overall liquidity has not seen significant constriction.
The Synced Cycle
Pal suggests that due to the high levels of debt that need refinancing approximately every three to five years, we see a four-year cycle in the economy. This cycle started when interest rates were reset to zero in 2009. Interestingly, this four-year cycle aligns with the Bitcoin halving cycle.
He said,
“We get this four-year cycle. The reason being is everybody reset interest rates at zero in 2009 and we’ve been following this four-year cycle ever since. The whole economy is following it. It happens to be the halving cycle as well. It’s all the same thing.”
Raoul Pal Pal believes that the Fed is intentionally moving slowly to allow for inflation to undershoot, providing them a reason to refinance the debt. If not, the Fed might adopt Japan’s method of yield curve control, purchasing bonds at a fixed rate. This process will result in even more stimulus entering the system.
A Once in a Lifetime Gift
The former investment manager emphasised the revolutionary nature of Bitcoin as a truly global and fractionalised asset. Regardless of one’s wealth or location, everyone has equal access to this asset. This presents a unique opportunity where, for the first time, individual investors can get ahead of large institutions in an investment.
However, while the potential for profit is significant, the journey is not easy. Many get carried away, especially during bull markets, making impulsive decisions that lead to substantial losses.
Pal advises holding onto the asset, dollar-cost averaging, avoiding leverage, and securing investments on a Ledger device. This approach increases the likelihood of success, allowing individuals to outpace institutions, which are now seen as the “dumb money.” It’s also warned not to get overly optimistic and plan luxuries or significant expenses based on peak market prices, as the financial landscape can change rapidly.
Pal said,
“You have been given one gift. You can buy a fractionalised asset that can make you a billionaire. Just hold, maybe dollar cost average, don’t use leverage and put it on your Ledger device.”
Raoul Pal 
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.
