Macro investor Raoul Pal is adamant that Bitcoin will undergo exponential growth this cycle.
In an interview with investment publication Stansberry Research last week, the former head of Goldman Sachs' hedge fund sales division said that Bitcoin is likely to reach a price of $1 million in the coming five years. As to what will trigger this growth, Pal, CEO of Real Vision, cited the "enormous wall of money" that is being siphoned into Bitcoin:
"Just from what I know from all of the institutions, all of the people I speak to, there is an enormous wall of money coming into this. It's an enormous wall of money — just the pipes aren't there to allow people to do it yet, and that's coming. But it's on everybody's radar, and there's a lot of smart people working on it."
We're seeing the start of this "wall" of inflows with recent news events.
Stone Ridge Asset Management just disclosed that it owns 10,000 bitcoin, currently valued at $113 million. A week prior to this announcement, financial technology giant Square purchased $50 million worth of bitcoin to help hedge its balance sheet. Digital asset manager Grayscale Investments also recently revealed that over Q3 of 2020 alone, it secured $720 million worth of investment for its Bitcoin Trust, mostly from institutional investors.
It's worth noting that Raoul Pal isn't the only investor expecting Bitcoin to rocket towards six- and seven-figure targets in the years ahead.
Chamath Palihapitiya, CEO of venture fund Social Capital and Chairman of Virgin Galactic, recently said that Bitcoin could reach millions in the years ahead. In a podcast with Anthony Pompliano, the investor stated that macroeconomic trends suggest the U.S. dollar is on a slippery slope to either rapid deflation or inflation. This uncertainty gives Bitcoin a chance to act as one of the world's best hedges, or as Palihapitiya likes to call it, "shmuck insurance you keep under your mattress."
The early Facebook executive claims to have owned upwards of five percent of all Bitcoin in circulation in 2013 with two or three partners. It is unclear if he still holds those coins, though his fund Social Capital recently divulged it does have a Bitcoin allocation.
Kraken chief executive Jesse Powell, too, is convinced that Bitcoin has exponential growth potential.
He told Bloomberg in June that Bitcoin could "surpass" gold's market capitalization, which currently sits at around $9 trillion. The cryptocurrency doing so would mean it will trade above $400,000 per coin.
Indeed, Pal is putting his money where his mouth is.
In a recent edition of Swan Signal Live, hosted by Brady Swenson, Pal said that approximately 56% of his liquid net worth is currently held in bitcoin. He added that in the future, he wouldn't be surprised if his personal allocation to Bitcoin rose to "at least 75%, maybe 80%" as this cycle elapses.
The former hedge fund manager believes that compared to Bitcoin, almost all other assets are "inferior."
On why he thinks this is the case, Pal explained that Bitcoin is the only macro asset that has managed to outpace the growth of the balance sheets of the G4's central banks. He thinks this will continue as central banks continue to pump trillions in the economy to prevent businesses from going under en-masse.
In his interview with Stansberry Research, Pal further shared that he is "toying with the idea" of selling some of his gold holdings to buy more bitcoin, which he is "100% sure" will "massively outperform gold."
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