How to get rich in Crypto without relying on luck? Financial Crypto Veterans Raoul Pal's macro insights and investment strategies.

In 2008, financial crisis 'prophet' Raoul Pal talks about Crypto Assets for stable wealth and macro trend insights.

Organized by: KarenZ, Foresight News

Raoul Pal, the former Goldman Sachs executive, author of "Global Macro Investor," and founder of Real Vision, is well-known for successfully predicting the 2008 financial crisis. Recently, in a dialogue with "When Shift Happens" and during his speech at the Dubai Sui Basecamp, Raoul Pal delved into how to steadily accumulate wealth in the Crypto Assets space and discussed topics such as Bitcoin, Ethereum, Memes, AI, NFTs, the Sui ecosystem, Strategy Bitcoin strategies, investment strategies, macro trends, and market directions.

Raoul Pal Dialogues Highlights Output When Shift Happens

1. How to Get Rich in Crypto Without Luck?

How to get rich through Crypto without relying on luck? Just buy Bitcoin and adopt the DCA (Dollar-Cost Averaging) strategy.

Beginners often fall into the trap of pursuing quick wealth, and this mentality is actually fraught with crises.

When you start to envy others for getting 100 times your returns, you have already stepped into the danger zone, and once you lose your mind and become greedy, it is very easy to mess up your investment.

The Crypto field is filled with numerous risks, such as DeFi attacks and wallet thefts, which require investors to remain vigilant and adhere to rationality.

2. About Meme

Speaking of Meme coins, Raoul Pal stated that he does not hold Fartcoin, but holds SCF (Smoking Chicken Fish) and DODE. Although SCF has dropped by 90%, it is currently showing a good rebound trend. He specifically reminds investors that whether holding Fartcoin, WIF, or BONK and other Meme coins, they should not let these occupy too large a proportion in their investment portfolio, as there is a possibility of up to 85% that such coins could go to zero. He was even surprised that LUNA did not evolve into a Meme coin, as he originally thought people would go crazy buying it.

3. Stay away from market panic and return to value investing

If investors feel panic about the market, Pal suggests that it might be better to return to life with peace of mind and stay away from the trading screen. Those 5-minute candlestick charts and 1-hour candlestick charts do not actually provide substantial help in investment decisions.

Many people fantasize about becoming successful traders and earning 100 times their investment, but the reality is that in this field, those who can truly accumulate wealth are the investors who persist in buying and holding for the long term.

4. Beware of Crypto Yield Risks

Regarding Crypto Yield, such as earning income through staking, there are also risks involved. For ordinary investors, when faced with an opportunity that seems to offer a 20% return, it is essential to be fully aware of the risks involved.

5. How to view Michael Saylor's Bitcoin purchase strategy?

The Strategy's Bitcoin strategy is creating leverage within the system. The Strategy purchases Bitcoin through the issuance of convertible bonds, which essentially amounts to selling options at a lower cost. After these options are bought by arbitrageurs (options traders), they will hedge on the exchange to manage the price fluctuations of Bitcoin as well as the risks associated with MicroStrategy stock options.

At the same time, arbitrageurs will also take advantage of the fluctuations in the ratio between MicroStrategy's NAV and the price of Bitcoin to engage in arbitrage, and they will use market tools such as the price difference between perpetual contracts and spot, as well as the price difference between futures and spot, to conduct transactions.

Currently, the buyers of Strategy convertible bonds are mostly TradFi hedge funds and other institutions. Sovereign wealth funds like Norges Bank may only value the Bitcoin element within them, while large hedge funds such as Citadel, Millennium, and Point72 are also engaging in arbitrage. These institutions are experienced in risk management and may receive systemic support, with reasonable position size control, making them less prone to liquidation.

In stark contrast, those traders who excessively use high leverage face enormous risks, and cases of failed trades due to over-leverage are not uncommon in the market.

6. Raoul Pal's Capital Allocation

Regarding capital allocation, Raoul Pal stated that Sui accounts for 70%, now far exceeding Solana. The adoption of Sui and developer activity are performing well. In addition, he also holds some DEEP (DeepBook), which is a liquidity layer protocol in the Sui ecosystem.

Seven, the Value and Potential of NFTs

NFT, as an innovative technology that can permanently store and trade non-transferable assets, has Pal full of expectations for its prospects. From a macro perspective, the current Crypto Assets industry has a scale of 3 trillion dollars. Assuming it grows to 100 trillion dollars in the next 10 years, it will create a huge wealth of 97 trillion dollars; even a conservative estimate of reaching 50 trillion dollars will generate an additional wealth of 47 trillion dollars.

These assets will flow to different people. Art is upstream of everything, and digital art, as an emerging field, is expected to become an important destination for wealth. In the field of digital art, we have XCOPY and Beeple, which later gave rise to the generative art movement. I have spent a lot of time talking to some very famous people who are very interested in this field. After Crypto OGs have made enough money, their willingness to collect artworks is extremely strong. For example, CryptoPunks symbolize your identity and can help you meet like-minded people. From institutions to super-rich individuals, even ordinary people are gradually beginning to realize the importance of digital art. We are still in the early stages. I hold many artworks, and I believe this spans over a decade.

8. Advantages and Prospects of Ethereum

Regarding Ethereum, the network capacity of Ethereum has surpassed the current system demands, and adjustments may be made to some mechanisms in the future to revert to Layer1. The status of EVM is akin to Microsoft, as numerous banks, insurance companies, and large enterprises around the world rely on Microsoft rather than Apple or Google.

Once you have a business sales model, it is almost impossible to remove it from the company because you don't want to change it and don't want to take risks. From the perspective of the Lindy effect (the longer something has existed, the greater the chance it will continue to exist in the future), Ethereum has stood the test of time and is well positioned to meet the demands of the financial market. Will Goldman Sachs and JPMorgan build on Solana? Unlikely. Ethereum may bring a whole new narrative to the market and is expected to outperform Bitcoin in the short term. Looking ahead to the next five years, unless they mess everything up, its importance will only become more pronounced.

The concepts of Bitcoin's Lightning Network, payments, and others have limited effects on price increases; the core value of Bitcoin lies in its role as a store of value; the same will happen with ETH.

9. About AI

The development of AI is rapid, and its performance has surpassed that of 99% of analysts. After deep reflection, Pal believes that the rise of AI raises profound questions about consciousness and the future role of humanity. He suggests that people actively participate, deeply understand, and proficiently use AI technology.

Secondly, we do not know what this means for employment, how we create wealth, and so on, but I know what humans are best at. What is something that humans can do that AI cannot? That is to be human.

I developed an AI Raoul that can read the news daily, which is also written by AI. Additionally, I built a chatbot trained on its own voice, with training data covering all its X content, YouTube content, and 100 books. Now, Real Vision users can interact with this chatbot. Pal predicts that soon these two technologies will merge, and this transformation will have a profound impact on the podcast and media industry, with the media content everyone encounters in the future being uniquely personalized. Moreover, human memories and actions may ultimately become the "nourishment" for AI, achieving a certain sense of "eternity."

10. Market Attention and Selection of Quality Projects

This is an attention game. People's focus on key tokens is scattered, and the duration of many narratives is relatively short. Pal emphasizes that holding Bitcoin is always a wise choice, and additionally, buying Solana at the bottom of the cycle and purchasing SUI last year are also good strategies.

Investors should focus their attention on the top 10 or top 20 tokens, particularly those projects that can continuously enhance network adoption rates, as these projects often have higher investment value. Based on Metcalfe's Law, the potential of a project can be assessed from aspects such as the number of active users, total transaction value, and user value.

The Bitcoin network has a large number of users, and sovereign countries are involved in purchasing, which is why Bitcoin is more valuable; Ethereum has a huge user base and a wealth of applications. Although the emergence of L2 has made the situation somewhat complicated, it still possesses significant value. Investors should actively seek projects that see simultaneous growth in user numbers and valuable applications, such as Solana at the bottom of the cycle, where the developer community continues to grow, and the user base remains stable. The emergence of Bonk has further strengthened the market's confidence in Solana (note: the host mentioned that in a previous conversation with toly, toly stated that Mad Lads is a turning point for Solana); Sui is also the same.

Highlights of Raoul Pal's Speech at Sui Basecamp in Dubai

1. Macro Core Factors: Liquidity and Currency Depreciation. Crypto Assets and the economy exhibit a four-year cycle, driven by the debt refinancing cycle. Since the high global debt in 2008, we have maintained economic operation through borrowing new to repay old.

2. Aging Population and Economic Growth: The aging population has led to a slowdown in economic growth, requiring more debt support to maintain GDP growth. This phenomenon is widespread in many parts of the world, and the correlation chart between debt and GDP clearly illustrates this dynamic.

3. Liquidity Drives Everything: The net liquidity of the Federal Reserve is a key indicator. From 2009 to 2014, liquidity was mainly provided through balance sheet expansion, and later new tools such as bank reserve adjustments were added. Currently, total liquidity (including M2) is crucial, as it has an astonishing explanatory power for the trends of Bitcoin (90% correlation) and Nasdaq (97% correlation).

4. Currency Depreciation Mechanism: Currency depreciation is equivalent to a global tax, with a global implicit inflation tax of 8% per year, plus 3% explicit inflation, meaning you need an annual return rate of 11% to maintain your wealth without shrinking. This explains why young people are flocking into the Crypto Assets field—traditional assets (real estate, stocks, etc.) are yielding insufficient returns, forcing them to choose high-risk assets in search of excess returns.

5. Wealth Disparity and Crypto Opportunities: The wealthy hold scarce assets, while the poor rely on labor income (purchasing power declines year by year). The encryption system disrupts this pattern—young people seek breakthroughs through high-risk assets.

6. Crypto Assets Performance: Since 2012, an annualized 130% (including three major corrections), Ethereum 113%, Solana 142%. Bitcoin has accumulated an increase of 2.75 million times, which is extremely rare in the investment field. Crypto assets are gradually becoming a "super black hole" for attracting funds.

7. The Sui ecosystem has enormous potential. DEEP (DeepBook Liquidity Layer Protocol) has recently performed the best. The SOL/SUI ratio shows SUI is relatively strong.

8. Analysis of Current Market Misjudgment: People often interpret the current market narrative (such as tariff panic) using the liquidity conditions from three months ago, but this is biased. In fact, the tightening of financial conditions in Q4 2024 (rising USD interest rates, increasing oil prices) has a lag effect of three months. The economic surprise index (comparing the U.S. and the global economy) indicates that the current economic weakness is merely a temporary phenomenon. Looking back at the Trump tariff cycle in 2017, the USD rose then fell, followed by liquidity driving asset prices up significantly.

9. Global M2 and Asset Relations: When global M2 reaches a new high, asset prices should rise in tandem. Taking Bitcoin as an example, its price trend typically shows characteristics of breaking through, retesting, and then accelerating in the "banana zone". Compared to the 2017 cycle, Bitcoin's increase that year was 23 times; although the current market is somewhat different, a considerable increase is still expected. The current market is in the correction phase after breaking through the first part of the "banana zone" and is about to enter the second part, which usually brings about a rally in altcoins.

10. Business Cycle and Bitcoin Trends: The ISM Manufacturing Index is an important leading indicator. When this index breaks above 50, it signals a return to economic growth, increased corporate earnings, and active reinvestment of funds, leading to an accelerated rise in Bitcoin prices. If the ISM index reaches 57, Bitcoin prices may even reach 450,000 USD. As the business cycle warms up and household cash increases, risk appetite rises, and at this time, the investment logic for altcoins is similar to that of junk bonds and small-cap stocks.

Note: Raoul Pal is also a board member of the Sui Foundation.

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