"Most People Have No Idea What's Coming" | Raoul Pal’s Last WARNING
It is really bloody hard. I hardly know anybody at all of the worlds most famous hedge fund managers who use that strategy that that really made wealth. There is some the real wealth is made by spotting, something that is got a long term secular trend ahead of it and investing in that and then not doing anything, but just keep investing in that one theme. So, in this case lets say its bitcoin and ethereum weve talked about the role they both will play so in 10 years time. The probability of these being a magnitude higher in price, its huge with stock markets around the world getting crushed as well as bitcoin, ethereum and crypto markets alongside them, investors globally are beginning to panic. Where is safe, to store your wealth. In his latest interview on the topic, macro investor and famous crypto, bull, raul, paul explains why cryptocurrency may be the last big opportunity to make meaningful wealth for investors. Raul also speaks on bitcoin versus ethereum from an investment perspective and gives a new price prediction for bitcoin. In 10 years time make sure to stick around to the end of the video where i will cover the latest on chain ethereum data to see where its price is likely to go. Also, only a small percentage of my viewers are actually subscribed if you enjoy finance content, consider subscribing or liking the video its free, and you can always change your mind. Most millennials are now in their early 30s and in their early 30s they look at the world and they look at their income and you cant buy a house, and the stock market is expensive, its at all time record valuations and the bond market, and all of The investment world is incredibly expensive and so youre stuck where okay, you start saving a few hundred dollars a month.
The problem is, is theres no interest rates on your money, so it it doesnt grow. But meanwhile the cost of everything gets goes up more so youre. Actually getting poorer, so you have to save more and more money and it becomes almost impossible. So what is the factors playing out here? Why is this becoming so difficult? Well, we used to have higher interest rates, but because of this huge baby boom population who are retiring plus the amount of debt in the system, interest rates have fallen for three four decades now so now zero. So nobody gets any interest on their money, but we still have inflation, so the normal cost of goods normally has been running at like two percent a year. Doesnt sound a lot, but over time you know over a 10 year period that ends up being 30 or so of your money that, through your purchasing power that youve lost. So unless your income goes up – or you save more and more and more every year, youre kind of behind the game, but then theres a bigger thing. So right now were seeing high high inflation were seeing inflation. You know eight percent, so then youre really behind the game. Unless your salary goes up enough and you can start saving more so everyones behind the game. But then theres another crazy thing happen when interest rates hit zero and we got to 2008 that famous financial crisis, the central bank started using something like the federal reserve.
Being the central bank of the united states started using a different way of trying to stimulate economic growth and save the banking system, and that was called quantitative easing, which is a fancy word to say, were going to print more money and when you print more money, You devalue the money so to put it in laymans terms, if you are really thirsty and somebody says well, ive got a bottle of water, so lets see for five dollars. Youll pay five dollars. If somebody gives you a million bottles its worth nothing to you. In fact, you pay somebody to get rid of it because its cluttered up your entire house, so things that are that if theres too much of something it becomes valueless or less valuable, so one mona lisa is valuable. A million mona lisas not valuable and thats whats, going on with money, theyre debasing it, which means that they are lowering the value. Now you dont see it very easily. All you see is that these asset prices keep going up every time. They do. This quantitative easing magic, the price of the stock market goes up and the price of housing goes up and the price of crypto goes up and everyones like well. I can buy less of it now suddenly, but my income hasnt gone up, thats debasement, so youre now poorer and you didnt realize how it happened and you dont understand it and it makes people angry because they dont understand why they cant get ahead.
You know wages over the last 50 60 years, havent gone up and the reason being is the millennials are in the workforce with their parents. So youve got the two biggest cohorts of people ever competing for jobs and then theres globalization. I chinese workers and indian workers, mexican workers and then youve got technology. Youve got to beat the robots and ai who are taking everybodys jobs, so wages dont go up very much, but the cost of all these assets keeps going up because people are devaluing the dollar. So thats, why its so hard to get ahead and that forced me to look at okay? How do we get around this? What can we do, thats more sensible than what we were told because our parents were all told save money, but they were they had seven percent eight percent interest rates, so it adds up pretty quick, but this doesnt work. So what i did is, i started looking at all of these assets and dividing them by the size of the central bank balance sheet. So how many you know how basically, how much the the the fed have printed and what you found is the stock market didnt really do much the normal, the s p. 500. The property market didnt do much so they were just basically keeping in line with what was going on. So they protected your money, but you didnt make money. You didnt get richer, but when you looked at two things they were the only things that made the real difference.
One was technology stocks because we live in this technological age of incredible change, and so those things tend to do well, but the thing that beat them all was crypto. Crypto did extraordinarily well, because what youve got is some forces at play. One is this digital scarcity, so you cant print more of it. So if something is being printed, more of it goes up in value versus a thing being printed, so thats great, but the blockchain technology was like a call option on the future financial system and the future of the internet. So youve got something that looks like a tech stock with adoption and has the safety of lets say gold. So that became like the holy grail and then you know the speed of adoption. Everything else is whats driven the price rises, so thats. Why cryptos been such a good savings vehicle? I made a um a video on this. Several years ago, thats probably had three or four million views now on youtube, um about the retirement crisis and back then i probably did this in 2015 or so i said you know if you are a 30 year old. Your answer is to start saving in crypto, because that is the big opportunity, because the upside is so much larger, so yeah thats the only way i see it that you can get ahead or start your own business is the other way. So the internet was previously the fastest adoption of any technology.
This is growing at twice the speed so currently theres 300 million users of crypto worldwide, its growing at 185 percent a year. So that means by next year, youre at 700 million people well and then the year after that, youre at a billion and a half people. So whats amazing about it is yes, its amazing, the technology and web 3 and all of the power it gives back to the individuals and all of the great stuff. But the big difference here is by owning the tokens youre being part of the network as well. So you, you cannot only get the benefits of this new system in a social sense, but you get it in an economic sense too, because it goes up in value its like its like finding facebook back in 2010 and being given shares in facebook that everybody who Use facebook had shares, it would have made everybody rich. This is what this is doing, because you get the utility of all of this and you get the financial benefits. So what you want to do, then, is it change your mindset? You say well, every time it sells off like it did. You know over the last year its been down 50. Well, i should be buying it because my expected future return has just gone up because lets say somethings at 100 and you expect it to go to 500.. So that goes up five times if its. Now, if its fallen to 50 and its going to go to 500 its not going to go up 10 times, you make double the amount of money.
So you should be really happy to see these sell offs over time, because it means you can buy more cheap stuff and gives you a higher return for the future and thats. Why dollar cost averaging takes the stress of trading away and just says every month or every week, or every quarter im going to stick some money in and i dont care where the price is because – and i might rush my buys if i think its really fallen Or add a bit extra because its a good opportunity, but you just look at the long term trend and the way to look at these things, because if you look at long term trend on any normal chart, you go to trading view or something they all. Look. Like this, so it doesnt its not easy to look at use. Whats called a logarithmic trend where it changes the um scale, and then you can see these beautiful long trends emerge bitcoin fit perfectly amazon was the same. Google was the same theyre all the same. You just find this and then, when it starts getting down to the bottom of that trend, its a really interesting place unless something has fundamentally changed and that that particular token is is is not as robust or it may be failing because of the community or the Utility thats offering, but with with eth and bitcoin its pretty straightforward, and then it takes all the stress away, because what youre saying is i dont want to access my money for 10 years as opposed to well im, going to buy and sell this and im going To buy a watch – and you know im going to buy a holiday with this and and before you know it, you take too much risk because you cant afford your holiday and then you have another bet and then youve lost money and its a bloody show.
What you should do is say: listen i wan na i wan na be able to afford a great house in 10 years time. So my route to this is by investing in these cryptocurrencies and ill. Just do it over time and i wont even look at how much my money goes up and down and thats what i do. I dont i just dont look at my p, l, my profit and loss. I just think you know. Can i put my more money in and um because im just thinking its a long term trade, it doesnt matter its like we dont, look at our house price every day and like has it gone up its gone down? What did my neighbor sell for its like thats stupid? You know because youre in their house for five years 10 years, and so you think, okay well over time. Hopefully it does. Okay, bitcoin is still the big daddy of the space and its the og. It was the first one to launch now. Bitcoin has some very unique attributes, which is that it is, you know, got this very restricted, understandable, knowable non changeable supply. So you know how many bitcoin are going to come onto the market every year and when that stops, when we get to 21 million its also, the way its constructed is is a proof of work mechanism which means that theres lots of computers around the world. Bitcoin miners theyre called who have to solve this complicated algorithm and its expensive in a huge computing power, and that network of miners basically protects the network.
So theres, not a single person that validates everything its all of these people, so bitcoin is incredibly secure and robust. So for a system of money, meaning for savings or collateral, the things you borrow and lend against its amazing because its its so understandable, knowable definable, it is slow because it requires all of this computing power and expensive to do things on. So it has not been used as the kind of applications layer, its kind of the base layer of the money system, the new digital money system ethereum comes along and it does something uniquely different. It has its it didnt set out to be money, while bitcoin set out to be money in some respects. It set out to be an applications layer, a platform of which we could build on blockchain technology and its piece of magic was something called the smart contract. So bitcoin there is no nothing smart in it. In fact, its pretty dumb, it just does what it does, which is why its so perfect but ethereum said well. If we can make contracts code, then almost anything in life is a contract me coming on. Your podcast is essentially a verbal or written contract over email right. Almost everything in life is a contract. So therefore, if we can record all of these contracts and make them transferable in this new world, then weve created the whole applications layer for money. The internet of value and everything else so bitcoin is more single use case, specific, but very powerful in what it does.
Ethereum is like the whole internet, so its a much broader thing and so that so they theyre very different and people try and compare them and say you know well ones, not the other and theyre not supposed to be theyre, both amazing in their own way. So bitcoin itself, i think the next phase for bitcoin is being used as a long term. Investment asset for lets say theres. These things called sovereign wealth funds and theyre generally countries that have stuff like oil thats, going to run out. Eventually, what they do is save some of the excess money that they make for the future of the country. Theyre called sovereign wealth funds. Abu dhabi have them. Singapore has them for different reasons, whole bunch of these countries. Those people are starting to wake up and say this is a great asset for our future populations wealth, so they buy it and own. It so thats a trend that will happen. We will see some countries smaller countries that have problems with their currencies, holding it in their reserves and we will see borrowing and lending layers like were seeing with luna right now, using the collateral of bitcoin for their stablecoin, so thats. What i think about bitcoin itll be that kind of pure vehicle for long term savings and wealth holding and that be for governments. Countries, corporations people, so the lightning layer allows us to transfer money quickly around. Is that any better or different than using other ones? I think in 10 years time well have this conversation you and i will be using all sorts of applications of which we wont even know or care.
What blockchain theyre on and theyll probably go across six different blockchains. We dont care. Much like i dont know what computer youre using i dont know what internet provider youre on what modem youre using. I dont know what software youre running: nothing doesnt matter its called interoperability. You know where this works now digitally. We can connect with each other seamlessly without knowing anything about the underlying. So why should we care about what blockchain is? Yes, we can invest in them. Much like you could invest in cisco router that you may be using its theyre just different things. So so i think that bitcoin over time is in 10 years time. Its probably a you know: 50 trillion dollar asset. Also so thats a you, know, 50 x from here, maybe its less, maybe its 20 trillion dollars, but the whole space thats going to be 200 trillion dollars and its currently 200 trillion dollars. Now, as all of these different things get built out across uh, all sorts of different ecosystems and they all start interrelating and being interoperable with each other, so theres raul, paul with the magnitude of the opportunity that crypto represents and why it may be the last major Opportunity to make meaningful wealth his advice at dollar cost averaging into weakness. Being the best strategy for most people is pertinent advice with a spot, bitcoin etf, looking like it will be approved in the next few months, as well as the eth 2.
0 merge its not all doom and gloom on the horizon for the crypto space, but with the New lows and recent volatility what has been happening on chain well, turning to one of my favorite on chain indicators as to what investors have been doing is the ethereum supply held on all exchanges, as we can see, despite putting in a fresh low, the downward trend Of ethereum, being pulled off of exchanges is still very much intact, showing that long term high conviction. Investors are happy to buy into any weakness with eth 2.0 on the horizon and issuance being cut dramatically at some point.