For those who have studied macroeconomics in traditional finance for 20 years, which coins will they buy in this cycle? Raoul Pal’s answer is: 90% of the money is allocated to BTC, ETH, SOL, SUI, and DOGE. In a recent podcast, this “financial veteran” shared his “Crypto Millionaire’s Guide” - how to allocate assets and find potential coins. The essence is all here (1/)
Raoul Pal: Cryptocurrency is in the "banana range" Raoul Pal started his career in 1990.
In 1997, he knocked on the door of Goldman Sachs, where he worked in hedge fund sales.
Five years later, he went to GLG, where he managed the fund's portfolio until 2005. That same year, he founded Global Macro Investor, which provides quantifiable and easy-to-read research to the global macro investing community, which he continues to do today.
In addition, he founded a financial media platform, Real Vision, in 2014 to help its members understand the complex world of finance, business and the global economy.
As a staunch BTC bull, Raoul Pal judged long before the US election: liquidity is entering the market, and the debt refinancing cycle driven by macroeconomic forces will affect all asset prices, but cryptocurrencies are particularly outstanding: the market will enter the "banana range", within which cryptocurrencies usually rise vertically.
As an investor, the easiest way is to allocate most of your assets in major cryptocurrencies, maintain a core portfolio, then be patient and tune out the outside noise. (2/)
BTC VS ETH VS SOL, who will have the highest increase?
Raoul Pal believes that the market value of cryptocurrencies will reach 10 to 15 trillion US dollars in this cycle, which may increase 5-7 times compared to the current (at the time of the interview) 2.2 trillion US dollars.
And he believes that SOL will outperform ETH, and ETH will outperform BTC: BTC will probably triple or quadruple, SOL may grow 8 times or more, and ETH will be somewhere in the middle. In terms of asset allocation, Pal's rule is roughly 90% investment in mainstream assets and 10% investment in others.
But at a certain stage, one or several "new products" will be selected, and more bets will be placed on the "new products".
For example, for Sui, he may allocate 25% to Sui and invest 65% in other things in the near future.
Regarding Memecoin, he said that considering that Memecoin is still in its early stages, he only set aside a small amount of space to "bet" and did not want to make it too big. (3/)
Why are you optimistic about SOL, Sui and Doge?
In July 2024, Pal announced on his YouTube channel that 90% of his personal cryptocurrency holdings were invested in SOL, citing the fact that: Despite its large price fluctuations, SOL has shown extraordinary resilience.
Solana has a good community, excellent user experience, excellent technology, the ability to issue low-cost NFTs on the chain and fast transaction speeds. The popular Memecoin is also one of Solana’s breakthroughs in chain usage. The ecosystem is growing rapidly, just like ETH in the last cycle. Therefore, he believes that SOL is a low-risk area and a good place to invest larger funds.
In addition to Solana, Pal is also optimistic about Sui and Doge.
Sui was chosen because: Sui is technologically innovative and has demonstrated superior performance in the market relative to other major cryptocurrencies such as Solana and Ethereum.
Price performance is also important, and it wasn’t until Sui’s price performance outperformed relative to other cryptocurrencies overall that Pal felt confident that Sui might be “the new thing.”
Doge was chosen because of its strong cultural identity and international recognition, which means broad community support. Elon Musk’s support for Doge is also a factor that cannot be ignored. Elon Musk has the ability to promote the development of Doge through his social media influence and practical actions.
In addition, according to Doge's trading chart and historical performance, it has a huge price fluctuation at some point every four years, and this cyclical performance is part of his investment decision.
In his opinion, Doge is the Solana of Memecoin. (4/)
How to discover potential tokens?
Pal made a point: scarcity is not about tokens, scarcity is about attention. The real game is about grabbing attention.
Therefore, the key to discovering potential assets lies in identifying projects that can attract market attention and liquidity. This usually involves analysis of macroeconomic trends, such as monetary policy changes and global events, which may affect the attention of assets. This theory of screening tokens is also applicable to Memecoin. For Memecoin, the most important thing is to understand the cultural significance and community acceptance of Memecoin. Invest in Memecoins that resonate with a wide audience and have strong community support.
Pay attention to the community including social media, pay attention to price dynamics and market sentiment, and look for assets that can attract investors' attention when prices are stable or growing. This time the assets will have the potential to become the next big hit. (5/)
What is the difference between the popularity of Memecoin in this cycle and NFT in the previous cycle?
Although he holds a certain amount of Memecoin, Pal believes that Memecoin is more about trading and investment, and is usually associated with a specific community or cultural phenomenon. Its value comes partly from the sense of identity and participation among community members.
They may increase in value quickly due to community enthusiasm, but they also run the risk of losing value quickly.
NFTs represent a new asset class that does not simply mimic existing cryptocurrencies, but rather constitutes a new infrastructure for the Internet. Their value lies in their uniqueness, scarcity, and cultural significance. They can serve as proof of ownership of digital art and collectibles, which provides new opportunities for the accumulation of wealth across generations. (6/)
Pal suggests that the market cycle is very tight, and there may be 6-8 months left to make money, which means that before the market peaks, investors need to correctly adjust their risk ratios: Assuming the market reaches $12 trillion, your majority assets should make the same money as the market grows, and if so, you're doing it right. 1% of your assets goes up 100%, whatever it is, and the rest of the portfolio goes up x, if they all end up in line with the market, then you've mastered risk-adjusted returns.
Pal's suggestion is to find a balanced portfolio, that is, a higher-risk asset with a lower-risk asset. For example, Pal believes that Solana is a relatively safe top-ranked asset, while Sui is a newly selected higher-risk asset. If the market develops rapidly, Sol will grow into the top three tokens, and Sui will enter the top ten.
Likewise, in the Memecoin space, Doge is the safer asset, while other Memecoins are riskier.
Look at different cycles and look for tokens that stay alive, not Fomo. (7/)
"Doom sales, optimism makes money" In summary, Pal emphasized three points about investment in the crypto market:
- Build connections with the community and keep in mind the importance of value and community in your investments, rather than short-term profits.
- Tokens are not a scarcity game, but attention.
- Place a large position in a relatively safe asset and hold on to it, so that the asset can appreciate with the market cycle; use a small amount of assets to bet on higher-risk tokens, and select “new products” based on macro factors, community conditions, technological innovation, ecological development, and token development.
Finally, Pal also mentioned: "Doom sales, optimism makes money" In the financial field, successful investors in history (legendary figures) often make money by predicting and taking advantage of negative periods in the market, buying when the market falls and selling before the market recovers, thereby realizing profits.
Because most of the time, everything will be fine, humanity will not destroy itself, central banks and governments will take measures to prevent the market from falling sharply, and technological advances are improving our lives and creating more wealth. Although the market will fluctuate periodically, in the long run, the market tends to grow upward. This understanding tells investors: when the market falls, they should look for buying opportunities instead of panic selling. (8/)
