“Most People Have No Idea What Is Coming” Raoul Pal Reacts To Bitcoin & Crypto Crash


I, I used a theoretical number. So I think it was, if you put 10 grand into that first bet, it would’ve been worth 1.4 million by doing the right thing, buying reasonably low and selling reasonably high and, you know, timing the market. That was a small fraction. It was in fact, I think I make 20% of what I would’ve meant if I held on.

And then I went back and looked at, okay, well, what did I actually do? Massively increased my position in, in, uh, in June, I still underperformed by five X and then I went, okay, what happens? Have I done the right thing? What I should have done, which was my framework, which was you buy it when people, when it’s on sale, when there’s blood in the streets.

So I went back and looked at the, the, the bottoms of the bear. Market’s assumed I’m an idiot. And I can’t catch the bottom of bear market and miss it by 30% and just put the same amount in each time that I started with that 1.4 million. Would’ve been three, you know, had I just doubled down each time or whatever the numbers go exponentially larger.

And that really stopped me in my tracks. It’s like, here’s me doing the right thing? You know, buying when it’s in a bull market of selling when it’s in a too strong, a bull market buying when it’s down a bit. And I still didn’t do as well as just holding it. My framework is this is a long term trend, right?

We’ve got at least another decade in this. At least probably two or three decades, but this part of it is gonna continue to do very well. Sure. Bitcoin, over time, as it gets more users more adopted, it won’t go up as much each cycle, but there’ll be plenty of others and plenty of op opportunities. So what we should be doing is using this thinking of the money you’ve put in as your retirement money and writing it off.

Um, and then just adding if you’ve got money, in a bear market. Now, the problem is, is most of us don’t in a recession, but a friend of mine taught me very early on. He said, Ralph’s a key thing I’ve learned is here. You has cash in a recession is king. So that’s that combination of income and opportunity.

You’ve got income, you’ve got some cash and now everything’s on fire sale prices. You’re the king prices rising inflation. Is evil for our savings because the dollar in your bank account is worth less than a year’s time. It’s currently worth 8% less, which is quite a lot. And so it’s, it’s that, it’s this weird situation where we have to take the pain.

We’re told we can’t buy as much. And we are forced into it by rising our mortgage costs and our food costs and all of this stuff, things will slow down. People will be put out of jobs a bit, that kind of stuff. And then the overall demand in the economy comes down and prices come down. So I, we are all collectively taking the pain for this inflation that was created out of a whole bunch of different things from the pandemic through to, um, supply chain issues through, to under investment in commodities, through to the shift to green.

um, all of these things have created this moment in time, which is tricky. And, you know, if we relate it to, for example, the crypto market Uhhuh so why did crypto stop going up? Well, it was macroeconomic factors. Isn’t people like, well, what’s that got to do with crypto? Well, really simple is it’s a retail based market and about sometime last year prices started to rise.

And so people could afford to dollar cost average less. So then there’s less demand for crypto and the price of crypto falls. It’s as simple as that, we know that, that there is the global economy is splitting regionally that the there’s a bunch of let’s go back. The us dollar, the us economy is 25% of the world economy it’s.

As we said, a huge amount of the world, debt’s a hundred percent the GDP in debt. The real problem is. 80% of all trade transactions on earth are in dollars. So the us is 25% of the economy, but dictates 87% of everything else that happens when the dollar goes up, the dollar goes down, everybody pays the price.

If the dollar interest rates go up, everybody’s pays the price. And everyone’s kind of had enough of it. It was known as the global reserve currency, but it’s too big. As, since the global economy in China, Europe, everybody said we need to change. and obviously having control over money is power. So the Chinese want to create regional power and that will happen.

There’s virtually no way we can stop it. I think we have a tendency to look at everything through Western eyes. What it is is a change of the global order system. There’s a great book called the fourth turning. I think I’ve recommended it before everybody should read it. This is the fourth turning it’s exactly what’s happening.

And that’s not like geopolitical doom and gloom. It’s actually driven by demographics and the changes and the opportunities and the threats that happen over it. But what we’re doing is we’re moving away from an old system into a new system. And I don’t think it’s going to be one currency system. I think we’ll just regionalize.

Is that the end of the world? No, we’ve been to many times in worlds like this before. People think of it as cataclysmic, because it’s changed from what we know, but really is somebody in Indonesia better or worse off if they don’t use the us dollar better off, you know, are they better to borrow and lend money with their main trading partner, which will be China better off.

So it’s gonna happen. And it’s just spitting apart. Now, does it end up in two economic zones or three, or does somebody try and build an Alliance of a globalized currency? which is something that’s been talked about, the bank core idea, something that better reflects global trade, maybe too. I don’t know, but change is happening and you can fear it, but you’re not gonna stop it.

When the, the Brits were the predominant power in the late 18 hundreds, early 19 hundreds, just before world war I, the world was pretty much the most globalized it had ever been. Well, world war I and two got rid of that. And then it created another re globalization, which was the rise of the us. And now we go to a deglobalization these things are kind of normal.

Now, how fractured do we get? Does Europe fracture into, you know, into different regions? Does Spain fracture into different countries? Does the us fracture? Is that on the table? Oh yeah. I mean the, the cattle lands wanna separate the basks, wanna separate, you know, we see this all over. Those could happen or they may not happen.

But over geopolitical time spans, they will happen because it’s always happened. You know, Italy, wasn’t a country and we forget this. We just we’d look at present state and assume that’s the same. So these things do move, but it sells a lot of newspapers and I eyeballs attention span to worry over it. And most of the time you shouldn’t, most of the time, the opportunity is.

And we wanna worry about the existential crisis is very human. Again, one of those human traits is go back and read literature over the millennia. It’s always about, we’re all gonna die. It’s a survival instinct within humans. It’s like, we’re all gonna die. Oh my God, everything’s terrible. And yes, it is terrible.

And it can be terrible if you are living in the Ukraine now it’s absolutely fucking awful. But as all of those people who came outta world war II, who end up having kids, things do go. Things do change over time. And so always at a bad times, eventually leads to good times. And it’s the same with investing that cycle is pretty common and it’s a very human trait.